China has eased new Internet controls that had limited video-sharing to state companies, saying private competitors already operating in the fast-growing arena may continue.
Any new video-sharing companies must comply with the rules, which took effect last Thursday, the government said Tuesday.
The rules, announced in December, appeared to be aimed at extending China's web censorship ahead of the Beijing Olympics and prevent unflattering videos from popping up. But industry analysts said regulators would be reluctant to enforce them strictly and risk damaging a promising industry.
"Companies that began operation legally before the regulation was issued and have not violated laws or regulations can be licensed and continue operating," said a statement issued by the two agencies that imposed the rules, the Ministry of Information Industry and the State Administration of Radio Film and Television.
A key question in the industry – how regulators will treat amateur videos – remains open. The statement gave no indication whether they would still be allowed.
Some amateur videos have made stars of their creators, but the phenomenon is at odds with the communist government's insistence that all media be state-owned.
All exiting video-sharing sites in China are privately owned, and the rules could have forced some out of business. Industry analysts had expected companies to try to comply by forming partnerships with state-owned broadcasters or newspapers. No such deals have been announced.
Online video has exploded in popularity in China, which has 210 million people online and expects to surpass the United States this year as the biggest population of Internet users.
Estimates of the number of video-sharing sites in China run into the hundreds. The most popular, such as Tudou.com, 56.com and Youku.com, say they get as many as 100 million viewers a day, a scale that rivals China's state TV channels. Some offer full-length television programs, but many popular videos are created by amateurs.
Online video revenues, mostly from advertising, are modest but nearly doubling each year, and investors are pouring money into sites. The government-sanctioned Internet Society of China forecasts total revenues of $22 million this year and $40 million in 2009.
The eight top companies in the field have taken in $190 million from private investors since 2005, according to BDA China Ltd., a consulting firm.
That rapid growth appears to have prompted regulators to rush new rules into place.
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