China got a taste of defeat at the hands of the World Trade Organization yesterday, with a ruling that the communist country stop requiring foreign media to distribute content through government-owned entities. While United States trade representative Ron Kirk praised the ruling as a "victory" that will "level the playing field" for American companies, the media seems less celebrator. Indeed, many are questioning whether the ruling will have any effect on revenue for the US entertainment industry.
  • The Real Problem Is Piracy  According to Douglas A. McIntyre of 24/7 Wall Street, it's not the inability to directly distribute content in China that has lost money for US companies, it's China's lax attitude toward intellectual property rights and the thriving market of pirated US products. Therefore, the ruling by the WTO, he said, "means nothing."
  • No, It's Social Constraint  While giving an exceptional breakdown of the WTO and its functions, John Timmer of Ars Technica sided slightly with McIntyre but goes much deeper.  China's entire social system--and the state need to control it--is the core of the problem and ultimately its own trade barrier, he argued. 
  • Contributing Factor  Daniel Indiviglio at TheAtlantic.com brings up a good point about the role of China's current "review system" in which all media in the country is put forth in form of the Ministry of Culture, which determines whether the product will be accepted into the marketplace. "Could China just use censorship as a crutch," he asks, "to continue to prevent U.S. entertainment products from hitting its market?"
  • Industry Reaction  Recording Industry Association of America Executive Vice President Neil Turkewitz admitted that while the ruling was a victory for the U.S., it was also a victory for China and its entertainment market. Alluding to the effect of piracy on the legitimate market, he told the National Journal's Daily Tech Dose, "The adoption of rules that enhance the operation of legitimate markets will inure greatly to the benefit of the Chinese creative community and to Chinese society."