In December 2007, a report said Chinese video-sharing site 56.com had raised $20 million as it pursued the ambition of becoming “China’s YouTube.” The figure needs a caveat: 56.com had already been reported to have received a separate $10 million investment earlier that year, and the available record does not establish whether December’s $20 million was an additional round or a cumulative total. What is clear is that 56.com was trying to scale in a crowded market where infrastructure, content rights and regulation mattered as much as audience growth.
What the December 2007 report said about the $20 million
The December 7, 2007 headline described 56.com as aiming to become the “YouTube of China” and said it had raised $20 million. The surviving indexed record preserves that framing, but the original article text is not available for confirming the deal’s terms. The amount should therefore be attributed to the contemporary report, not treated as a fully documented financing announcement. The indexed record of the 2007 report does not establish the round’s investors, valuation, preferred-stock terms or exact use of proceeds.
There is a notable complication: a June 2007 report described a $10 million investment in 56.com from Steamboat Ventures, Disney’s venture arm, for hardware upgrades, product features and marketing. That earlier investment is distinct from the December headline. Without primary deal documents, it is not possible to say confidently whether December’s $20 million was incremental, cumulative, or reported on another basis. The June financing report identifies Steamboat Ventures, but that does not prove which investors participated in the December financing.
What 56.com was building
Founded in 2005, 56.com was a Guangzhou-based online video-sharing service centered on user-generated content (UGC): videos uploaded by users rather than produced exclusively by a broadcaster or studio. Its basic proposition was to let people upload, watch, search, share and comment on short videos, with entertainment as a major focus. The company’s official history describes its early platform and UGC positioning.
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Calling it “YouTube of China” was a compact way to communicate the upload-and-share model and the hope that a large audience could support advertising. It was an analogy, not proof that 56.com matched YouTube in scale or economics. The company’s later self-description presents it as an original-video platform with a strong UGC base; that retrospective account should not be mistaken for a complete description of its December 2007 business. 56.com’s later history also describes a subsequent evolution toward professionally produced content.
Why the financing mattered—and what it could not solve
Online video requires a platform to attract both uploaders and viewers. More creators can make a catalog more appealing; more viewers can give creators an incentive to post. But that network effect is costly to support: video files consume storage and delivery capacity, while a larger catalog also increases the work of moderation and rights management.
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The June 2007 financing report said the $10 million investment was intended in part for hardware, new features and marketing. That points to the practical demands of scaling the service, but it does not disclose 56.com’s bandwidth costs, server count, operating margin or cash burn. The December report does not provide enough evidence to assign its $20 million figure to specific spending categories.
Advertising was a plausible business model for a free, high-traffic video service, but audience size alone would not guarantee that ad revenue covered hosting, moderation and content costs. 56.com’s later movement toward original and professionally produced programming reflected a wider industry effort to improve content supply and user retention; it should not be projected backward as a strategy already fully in place in 2007.
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The China-specific constraints
Competition was fragmented
56.com competed with services including Tudou and Youku. These platforms did not necessarily have identical content strategies: services could combine user uploads with licensed television, film or other professional programming in different proportions. Renren’s later SEC filing described China’s online-video industry as competitive and fragmented, and warned that users could favor platforms with larger libraries of both UGC and professional video. The filing’s industry discussion is a later view, not a precise ranking of the market in December 2007.
Copyright affected both risk and content supply
A UGC platform could face claims over material uploaded without permission. Separately, securing professional television, film and music content could require licenses and added expense. Renren’s filing identified copyright regulation as one factor affecting the sector. The distinction matters: a service might offer a large user-uploaded catalog without having the licensed professional library that competitors could use to attract viewers.
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Bandwidth made growth expensive
Every increase in viewing could add delivery costs, so growing traffic was not automatically profitable. The reported plan to use the earlier financing for hardware upgrades supports the importance of infrastructure investment, but public information cited here does not quantify 56.com’s delivery expenses or show whether its video advertising revenue covered them.
The 2008 outage had competing explanations
In June 2008, 56.com went offline for several weeks. The company attributed the interruption to a server malfunction, while contemporaneous accounts speculated about regulatory action related to video content; the company denied being shut down by regulators. The available record does not conclusively establish the cause, and reports said the service was back online by July 11. A historical account of the interruption records the competing explanations.
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How the company’s trajectory changed
- 2005: 56.com was founded, according to its company history. Company history
- June 2007: A $10 million Steamboat Ventures investment was reported, with hardware, features and marketing among the stated uses. Financing report
- December 7, 2007: A contemporary headline reported a $20 million raise and cast 56.com as aspiring to become China’s YouTube. Indexed report record
- June–July 2008: The site experienced a multiweek interruption; its cause remains disputed in the available accounts. Historical account
- September 2011: Renren announced an agreement to acquire 100% of 56.com for $80 million in cash. Renren’s announcement
- October 2011: Renren later reported completing its acquisition of Wole Inc., the entity operating 56.com. Renren SEC filing
- 2014: Renren’s filing says it disposed of the business in December; 56.com’s official history says it merged with Sohu Video in October. These records establish the transition away from an independent 56.com, though their dates describe different corporate events. Renren filing · 56.com history
Did 56.com become China’s YouTube?
Not as an independent, enduring market leader. Renren’s $80 million cash acquisition shows the platform had strategic value, and linking video to a social network offered a different route to distribution than competing solely as a standalone video site. But 56.com did not retain an independent identity: Renren later disposed of the business, and 56.com’s history says it merged with Sohu Video.
The larger lesson is not that the YouTube comparison was meaningless; 56.com did pursue a recognizable UGC-video model. Rather, the analogy hid the harder questions that determined its prospects: whether it could sustain a compelling catalog, monetize viewing after infrastructure and rights costs, withstand regulatory uncertainty, and compete for distribution. The outcome was consolidation, not a simple story of one Chinese service reproducing YouTube’s path.
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