Feilio works out solution to intellectual piracy


South China Morning Post

Tuesday, November 20, 2007

Sherman So in Hong Kong

While the world’s big four music companies have failed to stamp out piracy in the mainland, Feilio, a Harvard university venture, may just have the solution.

“We obtain licences from copy-right owners such as record companies, music publishers and film studios to let us distribute copies of their digital recordings to students of participating universities and subscribers of participating network service providers,” Feilio chief executive Eric Priest said.

“We also enter into contracts with universities and network service providers whereby they agree to pay us a flat monthly fee on behalf of each student or subscriber in return for our service. About 85 per cent of the user fees we collect are then paid to the participating copyright owners.”

Feilio started operating in Tsinghua University last month. It has won tow major contracts so far with China Education and Research Network (Cernet) in the mainland and Cyberport in Hong Kong.

Cernet provides internet access to all 24 million university students in the country. Feilio has a 10-year exclusive contract with Cernet but still needs to negotiate individually with each university. It would like to roll out services to 20 more universities in the next 12 month, Mr Priest said.

Cyberport supplies internet access to a smaller number of students and commercial customers in Hong Kong.

Feilio was also close to signing a contract with either China Telecom or China Netcom as an internet service provider, as Adam Bornstein, a director at Ymer Venture Capital Asia, which invested in Feilio.

Feilio was developed at Harvard in spring last year. In exchange for a stake, Harvard let the start-up use its technology in digital media research.

This “wholesale” rather than “retail” approach allows universities and network providers to supply users with music, movie and other data for as little as one yuan a month, said Mr Bornstein.

The cost was easily justifiable from savings in overseas internet bandwidth for network providers, said Mr Priest.

More than 95 per cent of the mainland’s online content was pirated and distributed freely on peer-to-peer networks, said Mr Bornstein.

Search engines such as Baidu make it easy for users to find and download songs, triggering a series of high-profile legal battles between the major recording firms and internet companies.

Feilio so far has signed up all mainland record labels and a large number of film and television content aggregators. It has licences from the largest independent music label in the west and is negotiating with EMI, Sony BMG, Universal Music Group and Warner Music.

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