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Investors Jump Into Deep Water: China's Youku.com Raises USD30 Million

At the same time as China's State Administration of Radio, Film, and Television has been closing online video websites in China, investors using recondite information have decided to dump another USD30 million into Chinese online video website Youku.com.

"This investment will enable us to advance the company’s rapid growth, expand our sales and marketing network, and most importantly, accelerate our monetization process as the online video market matures and consolidates in the coming year," said Victor Koo, president and CEO of Youku.com. "With the new funds, we will be deepening our service to users, advertisers and media partners to give them the best and largest platform in China to distribute video content online."

Maverick Capital led the financing round, while existing investors in the company, including Brookside Capital, Sutter Hill Ventures, Farallon Capital, and Chengwei Ventures, participated. Those latter four had previously given USD40 million to Youku.com. An additional USD10 million equipment loan was provided by Western Technology Investment. Besides closing a new round of financing, Youku also announced it has entered into content cooperation partnership with over 100 traditional media groups including Shanghai TV, Beijing TV, Jiangsu TV, China Film Group, Universal Music, EMI Music, Huayi Music and a large number of top film, TV and music performers in China.

Rival Chinese online video websites 56.com and Tudou.com have each had problems in recent months with SARFT and other arms of the Chinese government. As of today, 56.com is still closed and rumors abound that there is little hope it will be re-opened. Tudou.com, on the other hand, is currently operational, but it too was recently closed for a 24-hour period cleansing period, during which the company said it was moving its servers but industry insiders said it was negotiating with SARFT over rules and regulations.

Last week, SARFT published a full list on its official website, detailing 247 organizations and websites that have been issued an Online Audio-Visual Broadcasting License. Most of the 247 license winners are state-owned companies. They are mainly local TV stations, radio stations, press and publishing houses. Firms like Xinhua News Agency and Chinanews which seem not to have yet set foot in online audio and video service, as well as 22 newspaper offices and three magazine publishing houses have been granted a license. However, Youku.com and Tudou.com, two of the most popular sites in country, had not received the licenses.

Non-governmental companies that have obtained the licenses include the five portal websites of Sina.com, Sohu.com, Netease, Tencent and Tom and pure online video providers Joy.cn, Ku6.com and 6.cn. The 27 newspaper offices that have received the license include People's Daily, China Daily, Chinese Electric Power Newspaper Office, Zhongshan Daily and Ningxia Daily.

Online Audio-Visual Broadcasting Licenses, also known as Information Network Audio-Visual Program Broadcasting Licenses, are permits issued by SARFT for companies to run online audio and video services in China.

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