Tomorrow’s Headlines

Sohu announced on June 24， 2014， that it was suing Headlines Today（Toutiao） for copyright infringement and unfair competition due to its news feed app. Sohu asked Beijing Haidian District Court for an injunction to immediately stop Headlines Today from posting infringing information， an apology， and compensation of 11 million yuan. It was not the first complaint against Toutiao either. After the company announced it had acquired US$100 million during its third round of financing on June 4， Toutiao was sued by Guangzhou Daily and dubbed a plagiarist by The Beijing News.

Over the last two months， Zhang Yiming， founder of Toutiao， has faced intense censure from many sides. Is he a bandit or an innovator？

Worth US$500 Million

Zhang Yiming was born in Fujian Province 31 years ago. Even after graduating from Nankai University， Zhang retained his shy demeanor. Today， he is better known for Toutiao than its parent company which he also founded， ByteDance.com.

In most ways， Zhang is a typical IT entrepreneur. After graduating in 2005， he co-established a number of websites in China. Compared to his other projects， Toutiao has seen impressive growth. Founded in 2011， it has raised a total of US$120 million in three rounds of financing， with estimated value surpassing US$500 million. His staff has grown from 20 to over 200.

Today， Toutiao users exceed 140 million， and its daily active users total 40 million.

Toutiao， literally “headline” in Chinese， is a personalized information aggregator which supplies unique news content by automatically analyzing user data obtained from their social networking accounts and personal reading habits.

Technically， the concept is not new at all. However， in China， Zhang was one of the first to apply technology to “guess”what a specific user likes based on existing habits. The qualitative leap helped spread news more precisely， and brought his company monthly advertising revenues of 10 million yuan.

Of course， profiting off content created by others is the primary reason Toutiao has come under such intense fire.

Fight between Technology and Copyright

Throughout his career， Zhang Yiming has remained focused on compiling and distributing information. His engineers developed a complete set of web crawlers on more than 1，000 servers to scour the internet continuously for useful information and collect it on internal servers. The information is quickly analyzed， sorted and relayed to users， so every person sees unique headlines catered to their tastes.

Although the technology is already used by many foreign companies， Toutiao’s problem is that it reformats the information for transmission from its own servers， usually removing original ads and replacing them with Toutiao’s own. Toutiao has argued that search engines already do the same thing.

David Feng， CTO of dxy.cn， asserts that Toutiao differs from a search engine.“Search engines follow Robots Exclusion Protocol，” explains Feng. “The protocol defines categories of grabbing， which solves problems related to copyright infringement. Obviously Toutiao is something else.”

Another complaint derives from its deep linking and transcoding. Zhang argues that many mobile pages cause problems which he is eliminating. However， Zhao Hejuan， founder of TMTpost. com， sees the situation differently. “In fact， Toutiao presents a second edition of the webpage after grabbing the information. They’re not diverting any traffic to the original site， and the original ads disappear after ‘optimization.’”

Within a month after the lawsuit was filed， Toutiao had come to a settlement which allows them to reprint content under certain conditions. “About 70 percent of clicks from our app will link directly to the original sites and which eliminates any legal risks to this part of our business，”Zhang told Southern Weekly on June 8.“The remaining clicks will direct users to our reformatted pages where we will still keep the logo from the original website.”

Copyright and Tomorrow’s Media

Zhang Yiming believes he became a target for public criticism because he is sitting atop a “power keg” fusing traditional and new media after enduring the copyright storm.

Indeed， Toutiao has become a powerful leader of news portal aggregating apps. However， some media outlets still haven’t figured out the best way to cooperate with them.“Paying for copyrights is not a problem for me，” Zhang grins. “What I want to develop is win-win cooperation between content providers and us. I want to sit down and talk. This shouldn’t be a life-or-death battle.”

Li Xiang， editor-in-chief of Economic Weekly， stands alongside Toutiao. “The future could belong to companies like Toutiao because of consumers’ changing habits，” he opines. “The dilemma is finding the proper way to balance free culture with intellectual property protection.”

Li cited Napster， the game-changing music sharing service. Napster showed that piracy will always eventually be controlled， yet a mechanism to spread free information while protecting copyrights has yet to emerge. Public opinion shows that excessive copyright protection will ultimately smother innovation. Companies like Napster and Toutiao won millions of users so quickly because they were ahead of their time， not solely due to piracy.

Zhou Zhanhong， chief inspector of Beijing Gaolan Capital Investment Co.， Ltd. and former assistant managing editor of Fortune China， agrees. “Toutiao surely feeds users’ needs， evidenced by its meteoric growth. Nevertheless， it wouldn’t be surprising to see it fall like Napster some day if it cannot bring benefits to the original content providers， which remains an indispensable task.”