The Chinese Digital Revenue Model Is Going To Be The Next Alternative
The Chinese Digital Revenue Model: WeChat by far is known as one of the most widely used apps among the Chinese people all over the world. It is true when they say, ‘You can take the Chinese out of WeChat but you can’t take WeChat out of the Chinese’. This summarizes how deeply this app is ingrained into their systems! Weibo, IQIYI, Tik Tok etc.soon followed suite.
Have you once stopped and thought about why the Chinese are inseparable from these apps?
China got introduced to the internet world back in 1989, 5 years after it got introduced to the U.S. In 2008, bam! It became a country with the largest population on the internet and still continues to remain in the space till the present day with more advances than the U.S.
The Chinese forayed into the cyberspace through their mobile phones. Unlike the west, they were already habituated towards using the small screen which makes them the Country with the highest mobile phone usage.
The Subscription and Advertisement Division
The bombarding of Social media (Facebook, LinkedIn, Instagram etc) , Apps and online media streaming (Netflix, Amazon Prime etc) in the west is widely segregated into advertisements and subscriptions. The internet consumers are soon going to reach a saturation point where they begin questioning why they see multiple ads in a day or why they should keep paying for an entire buffet of streaming when all they consume is one dish everyday.
This brings us to the Alternative Business Model – The Chinese Advertisement System
The Chinese Digital Revenue System Is Just Smarter!
What Tencent has successfully manifested is the fusion of habits into revenue that doesn’t only get classified into ads. Its basically Advertisements x Transactions.
Advertisements amount to less than 20% of the total revenue model as opposed to Facebook’s that totals up to 98.5%.
The system is split into 4 distinct sectors of content consumption (All based on habit consumption)
Books in the western world are consumed very differently than in China. What a reader in the west typically does is visit Amazon, purchase an entire book and pay for the entire price.
In China, the reader can buy books by the chapter. Some readers can pay according to words and can also tip the author in cents. Some digital books allow the reader to read the first 100 chapters for free and then charge them for the last chapter.
This is just a crossword habit (In India, crossword the bookstore allows the reader to physically read bits of the book, get acquainted with it and eventually its up to him/her to buy it or not) that transformed into an assured digital revenue model on China’s screens.
Tencent gives the user a plethora of information before the user makes a decision purchased. This information is partitioned minutely so that the user gets habituated gradually. This model has worked massively and that reflects readership in figures below:
The entire podcast revenue from U.S. amounted to $314 million from advertising as opposed to China’s $3 billion profit from paid subscriptions.
Podcasts follow the habituated business model as well. Each listener can tip the podcaster anywhere between 1 cent to $2 and this revenue is then split between the platform and creator.
Source: Wall Street Journal
YouTube ads amount to the highest revenue in the digital space in the western world. However, product placement still has a long way to go as compared to China. With artificial intelligence and machine learning, China has successfully managed to insert smart product placements with video content.
China of course doesn’t just let you watch the video, it lets the user interact with the video, buy coupons, enter giveaway, buy skins for the app etc. It gives a user 6 minutes worth of free content before moving onto consuming the entire movie which Is much more than just what a trailer offers. It lets you customize your sound, speed and also gives you an option to top up your mobile data. It uses ads, but also thrives on membership, premium content, gamification etc.
The basic model in the western world is subscription to spotify for a month or free music supported by ads.
In China its obviously different:
In China, the artist can get onto a platform, get ranked for his music, allows fans to interact with the music, gift it to their friends and get rewarded. Tencent turns a regular fan into a superfan with customized artist interaction. All kinds of artists be it small, medium or big can display their talent on the platform, interact with fans and get paid for their content in return.
This is how China has leveraged user interaction, gamification and habits to their advantage thereby creating a community for all kinds of individuals that can avail these seamless services that are highly customized as per usage.