Group items tagged

Indeed, an entire consumer subculture has sprung up around counterfeit goods in China, what Chinese refer to as shanzhai or, literally, "mountain village" products (the name comes from the fact that, in ancient times, bandits would often build their redoubts in high passes, out of reach of the short arm of the law). Though its name suggests something remote and marginal, in reality shanzhai is now a mainstream phenomenon. It's estimated, for instance, that one of every five cellphones produced in China -- some 150 million devices -- are shanzhai.

One could argue that, by duplicating existing feature sets while striving to offer more, shanzhai may actually be driving innovation (of sorts), contrary to the argument made by those who suggest that without airtight and infinitely extended IP protection, there's no incentive for the development of groundbreaking new products and technologies. Of course, the truth is somewhere in between. Not all of the "innovations" of shanzhai products are particularly useful (one shanzhai Blackberry Pearl clone offers a built-in electric razor, for instance). But the knockoffs have certainly exerted downward pressure on price, forced major brands to compete on quality and service, as opposed to perceived prestige and appearance, and derailed artificial constraints imposed by manufacturers and governments that are ultimately harmful to consumers.

Which explains why, when Apple finally partnered with China Unicom to officially introduce the iPhone to the market earlier this month, the response was tepid at best: The official iPhone was crippled at launch (its WiFi connectivity disabled by government mandate), cost a cool grand and was locked to the Unicom network. "The rumor -- it's all water cooler gossip at this point -- is that they sold around 5,000 units in the first week," says Lam. "That's a shockingly low number. But you have to consider that anyone who's wanted an iPhone in China has been able to get one for years now, unlocked, fully functional, at a cheaper price. The 'official' launch is meaningless -- the unofficial launch happened so long ago that no one even cares." The estimated tally of grey-market iPhones in use in China? More than 1.5 million.

in today's frictionless global market it's harder to put barriers between consumers and the stuff they want. If something is available anywhere, people can get it everywhere.

Welcome to contemporary Korea, where a titanic digital public works program in the '90s resulted in 85 percent of the population having home broadband access that's faster than anything commercially available in the U.S. "What they think is normal in Seoul is vastly different from what we think is normal here -- the stuff we read about in Popular Science, they take for granted," says DramaFever's Seung Bak. "A show will air on TV, and 10 minutes later it'll be uploaded in HD quality to a sharing site where anyone can download it in about 10 seconds." So Korea can be thought of as something of a laboratory for the future of digital media, because it's just a matter of time before the rest of the world's bandwidth catches up.

Call it the can't-beat-'em, might-as-well-join-'em syndrome. Strict enforcement has prompted an endless game of whack-a-mole, with pirates moving on to new platforms as their old ones are shut down. But by giving filesharers and sharing platform operators incentives to offer legal, licensed services -- while ensuring that the user experience their audiences have been drawn to remains the same -- a solution emerges that might just allow everyone to benefit.

Two strokes of good fortune helped CrunchyRoll survive, both occurring in the fall of 2008. The first was the cable channel Cartoon Network's surprising decision to cancel its venerable Toonami programming block -- for years one of the most reliable sources of anime on broadcast television. The second was an unique deal the company was able to negotiate with TV Tokyo, the broadcaster that airs more anime than any other Japanese network. "TV Tokyo controls 40 percent of Japan's anime series, and we were able to get them to agree to let us put episodes of their shows up on our site within one hour of broadcast," says Gao. "Not even Hulu can do that. It effectively means that we're the 'first window' for content. And the reason they agreed is that they know we're growing their audience: We're getting them viewers they'd never be able to access on their own."

The deal prompted other broadcasters to fall in line. Now, CrunchyRoll simulcasts English-subtitled editions of 20 out of the 40 anime programs currently on the air in Japan. Free programming is bookended with advertising; a premium option costing as little as $5 a month eliminates the ads, provides access to high-definition content and subscriber-only programming, and puts a little premium member badge on a user's profile. "That's more important than you'd think," says Gao. "One of the things we realized early on was that CrunchyRoll isn't just a video sharing site, it's a social network for fans of Japanese animation. The little badge is social proof that you're a real supporter of the site."

That partnership between content provider and consumer is exactly what's missing in the Western world's debate over intellectual property, where movie studios and record labels talk about their customers as potential criminals. In Asia, media companies have a much closer and more interactive relationship with fans, treating them as partners in evangelizing their products -- even when that means blurring the lines of copyright restrictions.

"They realize these unauthorized spinoffs help to build the fandom, and ultimately drive sales of the original," she says.

"Japanese tend to resolve things in extralegal fashion, whereas in the U.S., Disney will send out a whole battalion of lawyers," notes manga historian Fred Schodt. "It's not an exaggeration to say that much of the current state of U.S. copyright law has come about due to Disney's efforts to keep Mickey Mouse from falling into the public domain."