TRANSFORMATION TAKES PLACE: China's biggest P2P file-sharing website VeryCD.com shuts down its music downloading service for copyright concern (CFP)

"The regulations are getting stricter and we're not able to legally provide a similar amount of content as before. That's why we have to change our content offering," said Huang.

But Huang also denied rumors

VeryCD.com would be turned into a social networking site. He said Internet users' habits have been shifted from downloading to streaming media, so the site's movie, music and TV channels now link users to other legal video sharing sites such as PPlive.com.

"I've been using VeryCD.com's downloading service since 2003. I think the site has given users like me a lot during the past seven years. However, I understand the importance of copyright protection. The site is wise to change itself," said Vincent Wen, a network engineer in Beijing.

Hong Bo, an Internet and Web technology analyst in Beijing, said it is hard for a pure P2P file-sharing website to find a practical business model.

However, as most overseas copyrighted entertainment content is still unavailable through legal channels, such sites rise up to meet Chinese netizens' demands, Hong said. He suggests the government relax import restrictions on foreign entertainment products.

According to Huang, it's inevitable that in the future licensed content will prevail on the Internet and VeryCD.com is likely to be shifted to a content navigating website.

The possible transformation of

VeryCD.com has left its many fans a bit disappointed. It may be good news for audio and video sharing websites such as Youku.com and Tudou.com that have been trying to work with foreign entertainment giants like Disney and Time Warner to obtain legal content.

"Internet users are changing their habits as well, from downloading to watching online," said Huang.

Getting used to paying

A recent survey shows the number of online video watchers reached 284 million in China by December 2010, but only 6 percent of them had paid for the service. Among non-paid users, 72 percent said they were used to watching online videos for free and they were not willing to pay in the future.

In the meantime, many paid-service users have complained about the charge standard and the quality of the content and service provided.

Though it's the trend to pay for the content on the Internet, a growing number of industry insiders believe it's not the only way for Internet companies to survive, citing the fact free providers are dominating the Internet in news, e-mail, instant messaging and security services.

"We had considered charging the users for downloading and making ourselves agents between the copyright holders and the users. But it will surely meet with little acceptance among users," said Zhang Gan, Chief Product Officer of VeryCD.com. "How to charge Internet users who are long used to enjoying online sources for free is still a challenge."