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December 06, 2013 AT 11:25 AM
The website of China's biggest Internet video company Youku Tudou was once a haven for illicit Hollywood blockbusters and hit South Korean soap operas, until it realized piracy really doesn't pay. Now the company that controls almost a third of China's booming online video market forks out more than a billion yuan, or $164 million a year on licenses so it can legally distribute movies and shows like "The Walking Dead", a strategy expected to result in its first ever quarterly net profit. Executives say this is their biggest cost. And to protect this market share, Youku Tudou employs a dozen sleuths who scour the web for pirated content, highlighting how China's online video industry is courting higher advertising revenues and better relations with foreign media firms by cracking down on illegal content, even with so many grey areas.