For Tudou.com, a Fourth Attempt at a US IPO Reveals Mounting Copyright Claims [UPDATED]

Tudou.com, which is a close second to Youku.com (NYSE:YOKU) for the title of China’s biggest video site, is pushing forward with its fourth attempt at a US IPO. Its newest US Securities and Exchange Commission (SEC) filing reveals that the number of copyright claims it faces has gone up a lot even in the past month.

Indeed since its last SEC filing in June we can see that there have been 46 more copyright claims slung at Tudou Holdings Ltd (currently TUDO:US, pending its listing). There are now 587 claims, versus 541 last month. You might like to compare the full SEC documentation for June against the July one. This newest attempt comes after the resolution of CEO Gary (Wei) Wang’s messy divorce, which finally saw the company in a safe place to go ahead with an IPO.

The July 8 filing at the SEC also reveals that of those growing number of copyright issues, 364 have been settled, while 223 are ongoing. Of the 364 settled intellectual property rights (IPR) cases, Tudou lost 182 of them – yes, Tudou has lost exactly half of all squared up IPR cases thus far – and won only 16. Of the others, 79 saw an unspecified reconciliation outside of the courts, while the remaining 89 claims were withdrawn by the plaintiff.

Paying up

So we can assume that Tudou has had to cough up cold, hard cash for up to 261 copyright disputes – which sounds very pricey. Of its 182 lost battles in a courtroom, Tudou has had to pay anywhere in the region of 1,000 to 50,000 RMB (about US$150 to 7,700), indicating that the individual claims have not been massive, but that pay-outs might have totaled millions of RMB.

Tudou.com does have a great deal of licensed content on its site, ranging from American TV dramas to popular Chinese romantic serials, which are ad-supported. Purchasing content is getting increasingly expensive, which is pushing some of the market leaders to commission their own dramas, comedies and animations. Tudou’s CEO recently signaled, however, that it’d focus on creating its own, cheaper video podcast-style content, rather than engage in an expensive ‘arms race’ with Youku and Baidu’s Qiyi.com for the biggest-name TV shows and movies.

Youku.com – which seems to be trying both strategies, whilst also increasing spending on Hollywood content – faced some daunting copyright claims before its own IPO. According to stats on Sina Tech news, Youku faced 250 claims in 2009, and spent a total of 1.5 million RMB (that’s US$230,000 at today’s weakened USD prices) in settling them. [UPDATE; July 14th – I messed up some basic figures that I sourced from Sina; so I corrected those. Also added official figures from Youku below].

Official stats from Youku’s IPO prospectus indicate 2009’s IPR pay-out figure to be 1.4 million RMB from 252 cases (almost agreeing with Sina’s). Youku lost some 30 percent of copyright claims, which is a better record than Tudou’s 50 percent rate of losses so far. Interestingly, Youku’s PR team indicate that post-December 31st 2009 Youku paid out 2 million RMB in claims and other liablities related to cases before that date.

Here’s an interactive graph showing video website market share in China, sourced from stats for June 2011 from 163.com: