Well, it looks like the anime/otaku/fansubbing crowd doesn’t read Techmeme or Techcrunch, for that matter (this blog too, obviously, but that’s something I’m willing to overlook :), but someone had, and it looks like the word is spreading about Crunchyroll’s success, and it looks like they are not pleased.

So here’s the recap: Crunchyroll (a You-Tube “clone” which is a video-streaming site for folks who love and/or who are obsessed with Japanese animation and /or Japanese/Asian movies / television series) got VC funding from Venrock about two weeks ago to the tune of 4 million dollars, which was a contentious position, I asserted, because the vast majority of its content was, and continues to be, copyrighted — hosting the videos was, and continues to be, a legal landmine for Crunchyroll.

It tries to get around this by saying that it will happily take down videos if the appropriate DMCA paperwork is filed, but will not actively police videos at the point of upload.  Because the copyright owners are unaware or do not care (or have other reasons that I’m not aware of), there continues to be a whole *LOT* of copyrighted material still on Crunchyroll, and this includes both animated shows and television series..

What’s become apparent to me since writing the original is that there’s a human side of this story that I didn’t appreciate.

And that is of the fansubbers, whose contribution, it can be argued, Crunchyroll’s success is based upon, and whose existence it owes itself to.

Fansubbers are folks who, often as a group, subtitle television shows and movies from their native language into other languages.  Fansubbers exist for all kinds of niches, and for all kinds of video media.  To me, fansubbers, are a little bit like the creators of open source software, in that they spend a whole lot of their own personal time and energy making something that can be enjoyed by a whole lot of other people.

However, *unlike* folks who create open-source software, very few can use this hobby as a launchpad to professional activities, and very few of them make any money for their efforts (almost all make none).  Many of them are literally doing it for the love of “the game”, and a desire to want to share it with others.

Furthermore, unlike folks who create open-source software, many of them are *also* the potential targets of legal action, as subtitling itself and the redistribution of the original video is in a legally shady area to begin with.  In fact, many fansubbing groups have asked its fans *NOT* to upload their videos to sites like YouTube so that they won’t be the obvious target of legal action.

So, it adds a greater dimension of irony that not only is Crunchyroll getting funding for streaming videos that are already copyright protected, but the folks who have made those videos possible for watching (subtitling) have gone through hoops to avoid copyright prosecution themselves — with no practical monetary gain in the first place.  In fact, many go out of their way (and add a message directly to the videos that they sub) that their work isn’t meant to be sold or resold at any price.

And right now, it looks like they’re realizing what’s going on, and they’re not happy.

With the fansubbing community coming to grips with how Crunchyroll is making out (like bandits, as it were) off their hard work (and at their own personal risk), it remains to be seen what kind of ramifications this will have on Crunchyroll — if the amount of media taken down changes (i.e. increases), or if fansubbers are going to be adding interesting “messages” to Crunchyroll at the end of their work, in the event that it gets uploaded to Crunchyroll.

Crunchyroll. You might vaguely remember some noise around this video-streaming site (let’s call it a YouTube clone) that hosts largely japanese “cartoons”, or anime, as its also known, as it got some coverage by TechCrunch and Venturebeat a few months ago. The noise was around the fact that it was generating bongo traffic, some unconfirmed revenue ($75k/ mo), and remarked by me somewhat snarkily, almost all on pirated material (more on that in a second).

Fast forward to 2008, and lo and behold, it looks like some VC’s are either gutsy, brainy, or just plain ol’ “I’ve got money burning a hole in my pants, and I’ve got to spend it somewhere” (also known as “stupid”), as Crunchyroll has got its first round of funding, courtesy of Venrock, to the tune of just over $4 million dollars, as reported quietly by the Private Equity Hub.

So, back to where I see the controversy: Crunchyroll’s content — the popular stuff — is almost all totally copyrighted material … *somewhere*. We’re talking popular (and less so) anime, full reel stuff, if its found in separate parts, almost always dubbed subbed (that is, “subtitled”) for English speaking audience. There’s also Asian movies by the bundle, Chinese, Korean, and Japanese (and probably more), all dubbed subbed for your easy perusal. The way that Crunchyroll makes its cash is through a membership fee, as you can pay to watch a higher quality streaming video.

And let’s give credit where its due: they will happily take down material *if* the copyright owners send in all the right DMCA paperwork. Furthermore, there are smaller sections (that’s probably growing) that are focused on user-generated videos (music videos, and videos of people with their riced up cars, for example).

So why was I all agog with this announcement?

Only that it seems like Crunchyroll’s success lies *soley* with its ability to stream copyrighted material that anime-obssessed otaku are overjoyed to watch — for free — without downloading. That a fraction of their this bunch is happy to buy a membership so that they can share in higher quality streaming seems to be an *extremely* dubious model to me, simply because its all hinging on the hope that the original owners of said copyright are *not* going to throw DMCA letters to take down all this material.

The “this is so stupid, I can’t believe how stupidly stupid this is” part of the argument probably carries on by saying that once companies across the Pacific Ocean *do* hear that Crunchyroll has funding, all it creates is a giant sign that says “we’re big enough so that you can now send your lawyers after us!” I guess that there are some VCs who are confident that, just like Google, there are some video-streaming sites that are just worth fighting for (but probably, unlike Google, don’t have the warchest to fund said legal fight).

But that brings me to the gutsy and or brainy part of it. Maybe there’s some part of the plan that we don’t yet know about; perhaps Crunchyroll has made a number of partnerships behind the scenes to stream a ton of copyrighted material. Who knows? Or maybe the minds behind Crunchyroll have some awesome way of maintaining members and viewership up even when the proverbial Golden Goose has been sued into submission (it looks like a classic figure four leg-lock, if you must know).

Hey, anything’s possible, I guess.

But I’m really hoping that their business plan *doesn’t* involve a lot of praying and hoping that the original copyright holders *don’t* DMCA the hell out of Crunchyroll, so that Otaku all over the world can watch their J-drama’s and anime gratis.