Caijing reports:

Yet for many domestic startups in the industry, the Internet’s best years may be nearly over — or may have already passed. Big changes are under way affecting the investment climate and regulatory landscape for Internet companies, particularly those offering popular services for sharing audio and video files.

Major players now dominate the most important and commercially promising sectors while emerging firms fumble in search of profitable business models. Some small, struggling companies face being squeezed out or bought up. More importantly, because of tightening and strengthening regulations, new arrivals are unlikely to enjoy the benefits of doing business with the imaginative scope, time and adequate capital to get them past the infancy stage.

It’s still unclear how these regulations will ultimately affect the operators of these sites. The Caijing reporter, He Huafeng, has a terrific article that goes over the impact of this uncertainty on venture capital firms, the follow-on effect on internet video companies, a good overview of the growth of regulation, and some plausible speculation as to where regulation is going.

Further reading
Danwei and Ogilvy China Digital Watch have excellent coverage on this issue - highly recommended.

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