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Is the Chinese government taking down non-state-owned video sites? That seems to be the prevailing view of what caused the Chinese YouTube-l…

imageIs the Chinese government taking down non-state-owned video sites? That seems to be the prevailing view of what caused the Chinese YouTube-like site 56.com to cease operating on June 3rd, according to WSJ. The site, which has received $30 million — a $20 million second round was closed last December — from early backers Sequoia Capital and *Disney* Steamboat Ventures, among others. Visitors to the site are greeted with a message in Mandarin indicating that 56.com is dealing with a simple server problem.

It could be the worst server problem in online video site history or… something darker could be at work. Last December, the Chinese government began handing down new rules designed to curtail non-state owned sites, which tended to ignore officials’ censorship demands. In what was seen as possible reprieve, Beijing said that some private video sites could receive licenses, but 56.com was never issued one. Neither has rival Chinese site Tudou, which just raised an additional $57 million two months ago. More recently, another Chinese video site Youku said it secured a $25 million third round.

The shuttering of 56.com has caused a great deal of uncertainty about the future of the nation’s quickly growing online video business. The peril that private video sites have been in since December didn’t sneak up on investors, who as the recent fundings show, have expressed confidence that Chinese regulators would not take an iron fist approach to the new businesses — overall, BDA China Ltd., a Beijing tech consultant estimates the top eight online-video sites have taken in at least $250 million funding as of last month. But with officials increasingly nervous about embarrassments as the August 8th opening of the Summer Olympic games in Beijing approaches, the government perhaps senses an opportunity to finally do away with what it regards as nuisances.

  1. This is scary. 56.com was one of my favorite video sites because it had many important videos such as James Brown singing together with Luciano Pavarotti, which other sites did not have at the time. For the China government to arbitrarily shut down this worldwide service with NO prior notice or fair hearing for the users OR the investors makes me believe that they can shut down the Olympics or sales to WalMart just as FAST and just as arbitrarily, on the whim of a mid-level bureaucrat who doesn't have any clue to what is going on in the world.

    This is one more reason why the WalMart should find other sources for their stores, and the world's investors should CEASE putting ANY more money into China until China's bureaucrats lean that if they want to sell goods to the world, they have to LISTEN to those who BUY the goods and also to those who INVEST their MONEY in Chinese businesses.

    Maybe they want to go back to the good old days of Maoism, and return all their citizens to rural labor camps and pull out of world marketplaces. I don't think building sized photos of Chairman Mao will sell well in the US or UK.

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