Business Closed Loop: Starting with Ringback Tones to Take Down Giants

June 17, 2006, is an auspicious day for all activities.

At the entrance of the bungalow, Ding Ruru held a thermos cup and looked at Wang Song.

"Teacher, didn't you ask me what I was waiting for?"

"I'm waiting for the wind, they're waiting to die."

Ding Ruru looked at the young face in front of her, who was not yet twenty years old, and whose confidence, even arrogance, and self-assurance were evident.

Zhao Lan pushed a stack of documents onto the table: "Director, teacher, all the materials are ready."

The director of the school office opened it and looked at it bit by bit, very slowly.

He recalled that at the school office meeting last month, someone suggested that the school should not get involved in the matter of Xianming.

He didn't say anything at the time because he didn't know what to say.

Now he knows.

He picked up the pen and signed his name heavily at the end of the lawyer's letter.

"Show me! Do you dare to think that the Central Academy of Drama has no talent?"

……

Meanwhile, at Kongzhong Corporation's headquarters, chaos reigned.

"Hurry!! Hurry!! Shut down all local channels, and remove those illegally selected options immediately!!"

"Faster, faster! Check where the copyrights for the songs the middleman collected actually belong to!"

"What??? The record company's copyright isn't clean either?? What happened? Didn't they say they were completely compliant??"

"The operators are serious! It's not just about shutting down small service providers; they're taking down everything that doesn't comply with copyright regulations, quick!!!"

In the conference room, Old Chen stared at the computer screen, sweat pouring down his forehead.

Three days ago, the operator officially issued a document.

The special campaign to regulate ringback tones has entered the verification period, and all service providers (SPs) must submit copyright certificates for all songs they have uploaded within one week.

Anything that cannot be provided will be taken off the shelves, and anything with a record of illegal charges will be shut down immediately.

Remove from shelves! Shut down!

Old Chen gripped the phone so tightly his knuckles turned white.

"Mr. Zhang, tell me the truth, are those authorization letters you gave us complete?"

On the other end of the phone, Zhang Yuan from Taihe sounded weak: "Yes, of course we have everything! We're a legitimate company..."

"A legitimate company?" Old Chen interrupted him.

"The operator said the licensing chain is missing the songwriter and composer link! You only granted the recording rights, what about the songwriter and composer's authorization letter?"

Zhang Yuan remained silent for two seconds.

"Um... we're working on it too. You know, the songwriters are scattered all over the country, so it won't be a long time..."

"A short while?!" Old Chen's voice trembled.

"The operator gave me a week! A week! And now you're telling me it'll be over in a minute?"

Zhang Yuan's tone hardened: "Why are you yelling at me? Our own songs are being investigated too!"

"Those clients we acquired from small and medium-sized companies have terrible contracts and we can't even find their legal representatives. I'm more anxious than you are!"

Old Chen took a deep breath, suppressing his anger: "What about those online singers? Didn't you say you'd signed them?"

"Signed, signed, but..."

"But what?"

Zhang Yuan lowered his voice: "But it's a permanent buyout."

"The author who signed... we just discovered that it was a stand-in hired by the broker; the real person never signed it."

Old Chen was stunned: "You son of a bitch..."

"You think I wanted this?!" Zhang Yuan suddenly exploded.

"The ringback tone business is worth hundreds of millions a year now, who the hell was interested in it back then?"

"By the time you like it, the song has already become a hit, and you can't find the person anymore! Now you're blaming me? Why didn't your SP check when they were collecting songs?"

Old Chen slammed down the phone.

The meeting room was eerily quiet.

He leaned back in his chair and suddenly remembered the school gate that would never be opened again.

"Mr. Chen! Mr. Chen, something terrible has happened!"

The legal department staff burst into the conference room, their faces pale.

Old Chen, who had just been hung up on, was already seething with anger and had nowhere to vent it. Seeing this, he immediately exploded:

"What's the panic? Is the sky falling?!"

"It's worse than... worse than the sky falling down!" The legal department employee slammed the envelope on the table.

"A summons from the Haidian District Court! And a lawyer's letter from the Central Academy of Drama's legal team, Jing Shi Law Firm! The Central Academy of Drama has sued us!"

Old Chen's face froze instantly. He snatched the lawyer's letter, and after reading only the first part, his hands began to tremble.

The plaintiff is the Central Academy of Drama.

As the guarantor of the Xianming Cultural Innovation and Entrepreneurship Practice Base, a formal lawsuit has been filed.

"Kongzhong.com unilaterally removed the works and froze the settlement without verification, citing copyright disputes."

"Upon investigation, there is no dispute regarding the copyright of Xianming's works; Kongzhong.com's actions constitute a breach of contract."

"Settle the outstanding payment of 724,600 yuan and negotiate the penalty for breach of contract and compensation for losses."

"For any questions regarding the copyright of Xianming's works, please contact the National Copyright Administration or the Music Copyright Society of China at any time."

Zhou Zhengqing's face turned pale: "Are they crazy? They're dragging the Central Academy of Drama into suing us? Isn't this... isn't this making things even bigger?"

"President Zhou, it's not a question of whether we dare or not!" The legal department staff were so anxious their voices were hoarse.

"The telecom operator's investigation team will arrive in less than two weeks! And at this critical juncture, we've been sued by the Central Academy of Drama!"

"They're suing us for maliciously removing compliant copyrighted works and unilaterally breaching our contract!"

"If the operators find out, we'll be defying the rules! They'll just shut down our port!"

Zhou Zhengqing, standing nearby, felt his legs go weak and finally understood the importance of the matter.

Old Chen snapped out of his daze and quickly grabbed the phone on the table.

"Dududu~ This is the culture of immortal names."

Jiang Yilei's voice came through the microphone.

"Hey, is Mr. Wang here? Kongzhong.com will settle the matter immediately. Do you think it's possible to withdraw the lawsuit?"

Wang Song heard the commotion and came to answer the phone.

"Oh, it's General Manager Chen. Is General Manager Zhou here? I wanted to ask, is it fun to make a big deal out of nothing?"

Zhou Zhengqing stumbled over, trying to hang up the phone.

Old Chen shoved him aside, covered the microphone, and hissed in a low voice, "Let them vent!"

"The Music Copyright Society that Gao Xiaosong is currently setting up is quite something."

"When you removed the works, didn't you ask if the notification letter from the China Audio-Video Copyright Association (CAVCA) had legal effect?"

"Guess why I dared to throw the notice in the trash can right in front of him."

Is there any possibility, I mean, maybe?

"The Music Association is the real national organization, hahaha."

All eyes in the conference room were fixed on the instigator.

Zhou Zhengqing's legs went weak, and he collapsed completely into the chair.

He secured a major deal from a record label in just three days, which is a real achievement.

He skipped two grades.

Everyone was blinded by the era of ringback tones, where money seemed to be just around the corner.

They didn't even do the most basic compliance review.

When Old Chen heard that the other party didn't respond, he changed his tone, "Mr. Wang, are you calmed down now? What about the lawyer's letter?"

Wang Song, seeing that things were going well, decided to call it quits: "Settle the accounts, apologize, explain the situation, terminate the cooperation, and that's it."

"Making a big fuss will not benefit the school or either party."

"We won't kick you when you're down. Let's clean up our mess properly, okay? Bye."

After hanging up the phone, Old Chen rubbed his temples. "Let's all think of a solution."

……

"Boss, is that all? They...they..." Jiang Yilei almost choked on his breath.

"Who said that?" Wang Song waved his hand.

Ring ring~~ Ring ring.

"Look, here it comes!"

"Mr. Wang? Do you remember us?"

"We've heard from our sources that there have been some problems with your cooperation with Kongzhong?"

"We've always admired Xianming's work. Is there a chance we could discuss a new collaboration?"

Wang Song smiled and said, "President Zhao, you're so well-informed? You really are a man of good connections."

The other party wasn't annoyed. "Sixty-four split! You get sixty percent! Top placement on the entire platform's homepage! Monthly settlement!"

"We can advance the payment for the revenue sharing that was previously frozen by Kongzhong!"

Wang Song looked at the indictment on the table.

"Mr. Zhao, how did you know about our lawsuit against Kongzhong.com for illegally removing our works?"

"If this gets out, it will be a big deal, especially at this crucial time of rectification for ringback tones."

Mr. Zhao understood the implied meaning and said, "Okay, Kongzhong is our arch-rival."

"But what about the record companies?"

Mr. Zhao continued to assure them, "The record companies are also struggling to keep up with their own problems right now."

"Great idea, come to the Central Academy of Drama and talk to them yourself."

……

Late at night, the lights at Kongzhong.com were still on.

Old Chen stared at the computer screen and suddenly felt a bit ironic.

Two weeks ago, they pushed Xianming off the cliff with their own hands.

Two weeks later, they were all alone on the edge of the cliff.

He looked at the announcement from the Central Academy of Drama, which included screenshots of Gao Xiaosong's interview and Kongzhong.com's apology.

"If something goes wrong, will the school be held responsible? Will it have to cover for the student?"

"want!"

"Our students have no problems; their copyrights and procedures are compliant."

"If there was no violation of laws or regulations, why isn't the school taking responsibility?"

Looking at the announcement sent by Lingtong in my hand, they're really generous.

They messed up Kongzhong again; one wrong step and the whole game was lost.

And looking at the ongoing online flame wars, still denouncing the "Fairy Name" mode, Chinese music is going to play it too.

He gave a wry smile. "They can't stop you from doing business."

"But beyond business, there is also a struggle for discourse power and a struggle for business models."

"We SPs have no choice. Our business model has no moat, so we can't stay afloat for long."

He turned off the computer.