Advance on-demand streaming is illegal; harming rights and interests is key.
Compiled from: Phoenix New Media, People's Daily, The Paper
On June 2, 2020, the Beijing Internet Court ruled on the "iQIYI 'Joy of Life' premium advance viewing case." The judgment stated that "premium advance viewing" was illegal and constituted a breach of contract.The "paid early access" clause updated after the plaintiff Wu purchased the membership service shall not be binding on Wu.The defendant iQIYI shall provide the plaintiff with the VIP membership benefits originally enjoyed by the plaintiff for 15 consecutive days, compensate the plaintiff 1,500 yuan for notarization expenses, and the plaintiff's other claims shall be dismissed.
Case background:
In December 2019, the hit web drama Joy of Life sparked high demand from viewers eager for more episodes. Many users paid for memberships on video platforms to watch episodes in advance. On December 11, iQIYI and Tencent Video introduced a premium on-demand model, allowing VIP members to pay 3 yuan per episode or a one-time fee of 50 yuan to watch six additional episodes beyond their regular membership on each update day.
In this case, the plaintiff, Wu, argued that members had already paid at the time of purchase and that members inherently enjoyed the right to "watch hit dramas first." iQIYI, on this basis, charged again under the name of "premium on-demand," which infringed upon the lawful rights and interests of its members. Accordingly, Wu filed a lawsuit against iQIYI with the Beijing Internet Court.
Wu requested the court to confirm that clauses such as “paid early access” in the “VIP Membership Agreement” updated on December 18, 2019 were either invalid or had not taken effect. Wu requested an order requiring the iQIYI platform to automatically skip all advertisements, including pre-roll ads, and to cancel the early access feature, and to supply Wu in advance with all popular TV dramas broadcast on satellite channels, including “Joy of Life,” as well as iQIYI original dramas. Wu requested an order requiring iQIYI to compensate Wu for notarization fees and other losses.
Court Judgment: Constitutes Breach of Contract
The Beijing Internet Court held upon trial that iQIYI, based on unilaterally amended contract terms, launched a "paid advance on-demand viewing" service during the broadcast of "Joy of Life," which harmed the early viewing rights and interests of Gold VIP members, caused the viewing experience of Gold VIP members to fall far below expectations, and significantly reduced the entertainment value and satisfaction of Gold VIP members in watching films and television dramas. Although iQIYI may unilaterally amend contract terms given the characteristics of its online services, it must do so on the premise of not harming users' rights and interests. Accordingly, the court ruled that "advance on-demand viewing" constituted a breach of contract, and iQIYI was required to provide the plaintiff with the VIP membership benefits to which the plaintiff was entitled for 15 consecutive days, the defendant was ordered to compensate the plaintiff 1,500 yuan for notarization expenses, and the litigation costs were to be borne by the defendant, while the plaintiff's other claims were dismissed.
The first-instance court found that the "advance on-demand" model itself is not improper, but it should not harm the existing rights and interests of members.The presiding judge in the case stated, "This operating model of iQIYI should be encouraged, so we did not render the anytime modification of terms absolutely invalid."But it must be on the premise of not harming the other party's rights.In other words, it constituted a regulatory judgment. Such a judgment was made after the judge took into account both the realization of users’ rights and interests and the healthy development of iQIYI as a network service operator and service provider.”
Author's viewpoint:
The recent ruling that iQIYI's "premium on-demand" practice is illegal serves as a landmark reference for handling similar cases in the future. In its judgment, the Beijing Internet Court protected consumers' rights while also taking into account the development models and space of internet enterprises, striking an excellent balance between the two. The formation, modification, and performance of electronic contracts have their own particularities, requiring consideration not only of practical feasibility but also of whether such arrangements are economically efficient. "Members' rights and interests must not be diminished" is the central tenet of this ruling, with the ultimate goal of enabling the entire video industry to continue developing healthily, providing users with more quality programs, and allowing platforms to earn profits while gaining users, thereby forming a virtuous cycle.
The author believes that modern society is developing rapidly in all aspects. The internet era has arrived, and the internet has permeated people's lives. Watching videos has become a part of many people's daily routines. In recent years, the video website industry has seen fierce competition, with major video platforms exploring different business models. The "membership" service model has long been accepted by the public. On this basis, delving deeper into user needs, aligning with users, and fostering differentiated, tailored personalized services, while exploring new video scheduling methods, is not inherently inappropriate. However, there should be limits to everything. Even when seeking new business opportunities, one cannot act recklessly. On the path of exploration, adhering to commercial terms, respecting user experience, and not violating relevant legal regulations are what enable long-term success. If contracts are arbitrarily altered, trust is broken, and laws are violated, it not only appears unseemly but also effectively drives users away and even leads to self-destruction.
