Years after its previous copyright-related controversy, Visual China Group (ticker: 000681.SZ) finds itself amidst another. On August 15, astrophotographer Dai Jianfeng, known on social media as "Jeff's Starry Journey," stated that Visual China had accused him of copyright infringement regarding his photos.
Dai expressed his frustration on social media, saying he was informed by Visual China that he had infringed their rights by using 173 of their photos on his public account and demanded compensation of over 80,000 yuan.
Visual China responded by stating they had obtained these images through a sublicense from Getty Images.
Tracing Back the Licensing Chain
Visual China pointed out that initially, Dai had authorized Stocktrek Images to sell his photographs. Stocktrek then sublicensed these images to Getty Images. "As Getty Images' exclusive partner in mainland China, Visual China has the complete sales rights, including for the contested photos. The licensing chain is clear and intact," Visual China stated.
In simpler terms, Dai licensed his images to Stocktrek Images, which then sublicensed them to Getty Images. Eventually, Visual China obtained the images from Getty.
The crux of the matter lies in whether Dai had signed an exclusive licensing agreement with Stocktrek Images, whether there were restrictions on sublicensing, and if Dai still retains the rights to commercially use his licensed images.
Dai stated that he had verified this matter with Stocktrek Images and found that Visual China had no rights to sell his works. "I've checked with Stocktrek. They've clearly informed me that Visual China has no right to sell my work and holds no copyrights for my creations. Similarly, Getty also lacks the authority to sublicense my work," Dai commented.
Public reports suggest that Stocktrek has already asked Visual China to remove the disputed works.
The Visual China-Getty Connection
As another licensor of the contested photos, Getty Images is the world's leading visual content copyright service provider, managing major copyright trading platforms: www.gettyimages.com and www.istock.com.
TradeWind01 (ID:TradeWind01) noted that Visual China and Getty Images have long been closely connected.
In 2016, Visual China, through its wholly-owned subsidiary Visual China Group Holding Limited, jointly held equity with Getty Images International in Getty Images SEA Holdings Co., Limited (referred to as "Getty Hong Kong"), with each party holding a 50% stake.
"Visual China aims to establish a deeper strategic partnership with Getty in mainland China, Hong Kong, and Taiwan," Visual China once elaborated on the advantages of their collaboration.
Impressive Performance Amid Lurking Challenges
For the first half of this year, Visual China's anticipated performance shows a significant growth, with a net profit attributable to its mother company estimated between 89 million yuan to 104 million yuan, a YoY increase of approximately 62.18% to 88.60%.
However, challenges loom behind these numbers.
On one hand, how many images in Visual China's copyright library have situations similar to Dai's case remains to be verified. This might impact Visual China's fundamentals. Similar incidents have occurred in the past.
In April 2019, Visual China faced public outrage for including the first-ever photo of a black hole in its proprietary image bank. Following that, several companies reported that their logos' copyrights were claimed by Visual China. This led to a temporary shutdown of Visual China's website and required corrections. It took Visual China until 2021 to fully recover.
From 2019 to 2020, Visual China's revenues were 722 million yuan and 570 million yuan, respectively, showing YoY declines of 26.90% and 21%. Profits over the same period were 219 million yuan and 142 million yuan, respectively, declining 31.81% and 35.39% YoY.
Four years later, with another copyright lawsuit unfolding, some investors are concerned about the potential impact on Visual China's fundamentals.
On the other hand, the recent rise of AI-generated images could pose a potential threat to Visual China's copyright-centric business model. The sustainability of such a business model remains questionable.
TradeWind01 (ID:TradeWind01) made multiple attempts to contact Visual China to discuss the origins and subsequent impacts of the infringement incident, but there was no response.
As of the close on August 16, Visual China's stock price was 16.43 yuan per share, a drop of 4.86%.
