New rules requiring state affiliation for online video and audio sharing sites, which will take effect on January 31st, seemed not to have affected Youku. Gu seems unfazed—as he puts it, Youku.com is "clean" enough, adding that it's "not a bad thing" for the government to publish such rules.

In fact, Gu is not the only one who is optimistic. Network watchdogs are unlikely to sink the whole industry in one fell swoop, says the public relations manager of one media portal site. Most online video providers claim they are now just waiting for the corresponding implementation guidelines.

Who's the Target?
According to Regulations on Online Audio and Video Sharing Services co-issued by the Ministry of Information Industries (MII) and the State Administration of Radio, Film and Television (SARFT) half a month ago, online audio and video sharing providers must obtain a certificate of qualification before they can continue operating. The fundamental condition for applying for such a certificate is to be "state-owned" or a "state-holding" firm.

According to one manager of an online video sharing website, the new rules, which aim mostly at websites with pornography, politically sensitive content, or those producing their own videos, are actually not as serious as have been imagined by related companies.

"For example, sports videos won't be influenced much," says the source, adding that the move might have been impelled by "the recent upsurge of pornography content of online videos".

According to Gu, Youku.com has submitted information as has been required by MII, including introduction to the company and censoring procedures. "I believe regulatory bodies did this simply to create a better network environment rather than to suppress online video companies." he adds.

Wang Wei, CEO of tudou.com, noted that how to concretely interpret and observe the new rules will require further explanation from SARFT. Li Shanyou, president of ku6.com, said that the company will obey any regulation and is now also waiting for detailed implementing guidelines.

One senior manager in the industry told us that since the government has defined online videos as media, it will work to strictly control the industry. They say that the "state-owned or state-holding" requirement hopes to prevent people from funding websites with the purpose of disrupting society.

According to Liu Yan, CEO of 6.cn, watchdogs are open to new media, and have already realized that it's only practical to use it rather than to force it out. For example, the government let online videos play a more important role in advertising for the communist party during the 17th CPC National Congress. Drafters of the congress' documents were invited to 6.cn to give filmed lectures on party theory, which was broadcast to millions of times.