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The battle against online piracy in China and its unintended consequences

It’s been an uphill struggle to stop fans passing off popular stories as their own and sharing them without the author’s permission

What happened to China’s booming online fiction industry when it suddenly became harder to copy popular writers’ stories and pass them off as originals? Dr Xiaolin Li, an Assistant Professor in the Department of Management, was in the team that found out.

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Chinese authorities have spent billions in their battle to clamp down on online piracy and protect novelists and writers. Image by Tom Hermans via Unsplash.

China’s online publishing industry was in its infancy some 20 years ago.

Back then, it was mostly fantasy novels that took in elements of ancient mythology and martial arts.

Now, it spans diverse genres and is so popular that last year it netted revenues of £2.27 billion - 20.6 billion Chinese Yuan - and a readership of at least 509 million.

But it’s been an uphill struggle to stop fans passing off popular stories as their own and then sharing them over many different platforms without the author’s permission.

The protection of intellectual property rights - which give the creator of an idea rights over their work for a set period of time - has long been a sticking point in China’s dealings with the West.

Chinese authorities have spent billions in their battle to clamp down on online piracy and protect film-makers, novelists, writers, musicians and many others.

Do these efforts pay off? And what effect do they have on the online writers and their works?

A new study, Digital Piracy, Creative Productivity, and Customer Care Effort: Evidence from the Digital Publishing Industry, offered insignts that shed light on these questions. Dr Xiaolin Li, an Assistant Professor in the Department of Management, was part of the team, which included colleagues at The Chinese University of Hong Kong Business School and the University of Texas at Dallas.

The researchers looked at what happened when free storage service and the search function were stopped at V-Disk, a popular cloud storage service, which enabled fans to share online stories easily without accrediting the author who created them.

“We found that when readers could no longer easily access the V-Disk service, they returned to the original publishing platforms and purchased the digital books there,” says Dr Li. “As a result, writers who made money were not only rightly compensated by sales revenue, they no longer had to compete with pirated copies and could direct their full attention on writing their best work.”

The research shows that suppressing the threat of digital privacy can lead to writers becoming more productive, argues Dr Li.

“When there are strong rules against piracy, writers or creators are incentivised, so they put more effort into producing creative works and they aren't as worried about people passing these works off as theirs,” she says.

But Dr Li and her co-researchers found an unintended consequence. “We found that enhanced intellectual property rights will induce effort towards creative works, but an unintended consequence is that writers don’t engage as much with their readers. For example, they responded less frequently to readers’ comments. We believe this is primarily driven by the reduced incentive for these writers to improve readers’ experience by frequently interacting with them once copyright piracy is no longer a serious threat.”

The solution, she proposes, is to reward or incentivise online writers - and those who come up with creative works - so that they engage with their customers.

“This doesn’t have to be a financial reward,” she says. “Social rewards, peer recognition, platform badges or promotional coverage can all be effective measures.”

Dr Xiaolin Li is an Assistant Professor of Marketing in Department of Management at LSE.

Feature image: Tom Hermans on Unsplash.