In 2005, Sina and Microsoft created excitement in the relatively new area of blogging, with each company attracting different types of bloggers and readers. Sina wooed a large group of celebrities to set up their own blogging sites, a strategy that proved effective in getting the public’s attention. The most successful blog of all belongs to actress and director Xu Jinglei, whose site, within the first 112 days, became the first Chinese blog to attract thousands of visitors. In contrast to celebrity-minded Sina, Microsoft’s MSN Space relied on MSN Messenger, which enjoys a huge number of users, to extend its blogging services.
According to a December report by Baidu, the Chinese search engine, there were 36.8 million Chinese blogs in China by the end of November 2005, with the number of blog writers reaching 16 million. A February report by the China Internet Association shows that in China, 9% of blog users write every day, 29% write once to three times a week, and 35% write four to six times a week.
Blogging, Podcasting and Video Blogging
The word “blog” originates from the English word “webblog,” or blog for short. It means online journal. Traditionally, it takes the form of words and pictures. Over the past couple of years, new types of blogging have included podcasting and video blogging, although they account for less than 10% of blogging activity.
Zhang Xiaorong, chief strategist for Bokee, formerly BlogChina and the first blogging site in China, reports that the company had 11 million registered users in February 2006, of whom 20% are active users. “Meanwhile, the number of users is growing at a faster clip,” he says. “There can be more than 100,000 new users on a day.” Zhang estimates that there are thousands of companies in China that now provide services to more than 20 million bloggers, and he predicts that the number of bloggers will reach 60 million this year, representing half of all the Internet users in China.
Podcasting and video blogging are more technically challenging than blogging. As a result, many users of podcasting and video blogging sites do not actually know how to produce them, or have tried several times to produce them and have given up, choosing to remain just listeners or viewers. Meanwhile, because the majority of podcasting-hosting sites originate from web radio stations that already have a following, podcasting sites outnumber video blogging sites.
According to Zhang Yang and Zhang Fan, creators of video blogging site SeeHaHa, there are between five to 10 well-known video blogging sites domestically. Any substantial increase in the number of users depends on technological innovation, but for now, the technologies for recording, broadcasting and browsing still lag behind. Since offering video blogging services in August 2005, SeeHaHa.com has signed up 7,500 users. The key users are those who already own their own web sites, bloggers and those who specialize in certain areas such as food, coffee and travel.
Wang Xiaobo, founder of podcasting site Lifepop, says that “China now has between 20 and 30 podcasting sites, with three or four leading the way. And there are about 1 million of users of podcasting.” In Lifepop’s case, about 200,000 people have signed up since its start in June 2005. The majority of the users are between 15 to 30 years old. Only one third of the users are authors, with the rest listeners.
Blogging sites differ in their content, style, targeted audience and the way they promote themselves. As one of the three biggest blogging sites in China, Bokee has always positioned itself as an elite blogger, while the other two – Blogcn and Blogbus – target the mass market. In addition, there are bloggers who bill themselves as journalists, or bloggers who are geared toward gaming and information technology.
As a public forum and a draw for the capital markets, the blogging industry still has to overcome many obstacles to further development. SeeHaha’s Zhang Fan says the key challenge facing video bloggers is technology. “Legal issues also represent a big problem. But there is no shortage of funding because of interest from venture capitalists.” Lifepop’s Wang Xiaobo, meanwhile, lists policies and intellectual property as key constraints on podcasting.
Way to Success
As blog services continue to sprout all over china and compete for users, operators of those services are trying hard to find a business model.
Despite all their differences, bloggers have so far focused their efforts on content, services and advertisement. When it comes to charging individual users for a fee, commercialization depends on value-added services and content-based subscriptions. Other income will mainly be from advertising and feeding content to traditional media.
In May 2004, Blogbus, one of the three biggest blogging sites in China, became the first to charge VIP users. According to its web site, free users get only 2MB space and have to see certain pages earmarked for ads. VIP users, by comparison, have Blogbus’s promise that there will be no space for ads, and that they will have access to a variety of value-added services for space in the range of 10MB to 500MB. Depending on the space, prices range from 60 yuan to 400 yuan a year.
In June 2005, Blogcn launched two new services – involving software RABO and MRABO – for more than 2.25 million of its registered users. The services brought it a step closer to commercialization. RABO enables users to cut and paste blogs, and add links to their journals, among other new functions. MRABO enables users to moblog, which means sending text and photos directly from cell phones to their blogs. At present, both types of services are still provided free, but in the future, according to Blogcn’s founder Hu Zhiguang, users of those services may be charged 10 yuan a month or less.
Bokee has said it’s not time yet to charge individual users. Still, to keep up with competitors, it teamed up with China Mobile at the beginning of the year to launch a moblogging service called “Mini Blog.” Right now, the services are rolled out only for China Mobile users. Bokee charges six yuan a month, and China Mobile charges Internet usage fees. Zhang Xiaorong says that “our next priority is to develop moblog, which means cooperating with telecom carriers. Bokee has now taken the form of Internet advertising plus value-added services for individuals plus mobile services. As it continues to evolve, more business models are expected to emerge.”
Currently, nearly all blogging sites still provide content at no charge. Web surfers can search, read, listen or watch blogs for free charge, and can also download podcasting and video blogging contents for free. But in the future, bloggers, podcasters and video bloggers will consider charging visitors for access and to download premium content. For instance, they may charge a fee for accessing premium content selected by editors and for personalized services. Some users may want to have all the blogs written by their friends in a week compiled and sent to their mailboxes, and they may want to pay for such a service. And fans of Xu Jinglei’s may want to be alerted every time Xu writes something new.
In addition, selling content to the traditional media may be a good business. Bokee has already had some experience with publishing articles written by some of its well-known bloggers. For podcasting and video blogging sites, they may try to sell content to radio or TV stations and then split profits with the creators.
Compared to those business models based on value-added services and content, advertising can apply to all types of sites. At the same time, the kind of customer base blogging sites tend to have, and their targeted audience, can prove attractive to advertisers. Once there are enough users, advertising should become a major source of income. Consider Blogcn’s Gameblog.cn. Because it has a targeted market, namely game players, the relatively young site has already attracted many advertisers to its site.
“Given the current status in the industry, advertising is the easiest way to make profits. It’s not workable to charge users directly,” says Bokee’s Zhang Xiaorong. “Instead, users should be charged for VIP and value-added services. Basic blogging services should be provided for free. When it comes to feeding content to third parties, that business is still small and far from maturity.”
Compared to blogging sites that have gathered large numbers of users, podcasting and video blogging sites are still in the initial stage of developing the market through educating users. But those sites have also tried to explore ways to make money.
Lifepop’s Wang Xiaobo summed up his experience this way: “There are already many effective models, though scattered, and not one model has yet stood out. We have tried advertising and charging users for a fee, and have received better-than-expected income from that. In addition, we have tried linking podcasting with cell phones, but that doesn’t work out well. I think the main problem is that we can’t create moblogging services ourselves.”
SeeHaHa’s Zhang Yang thinks that advertising is the key for video blogging to make profits. “While in the initial stage of commercialization, we currently focus on targeted advertising. Some experiments we did — including ‘one yuan ad,’ ‘do-it-yourself ad,’ ‘front-page ad’ and ‘captioned ad’ — worked out pretty well. Among them, the ‘one yuan ad’ proved the most popular. For video blogging sites, it’s not yet time to link video blogging with cell phones. It’s still very difficult to download a 10MB video document on a cell phone, and distributing patented video content is not yet commercialized. So in terms of making money through supplying content, the only way is to feed content to TV stations. But by doing that, video blogging sites would be transformed to content providers from service providers, which could lead to many problems, including profit-sharing and intellectual property issues.”
“Conquering the Golden Mountain”
Despite all the efforts aimed at commercialization, the harsh reality is that almost all the blogging sites remain in the red. Only a few claim that they make ends meet, or even are able to turn a little profit. At the same time, given the competition, not one blogging site dares to cut back on new investments.
“We have always had a very strong revenue stream,” says Bokee’s Zhang Xiaorong. “If we stopped investing now, Bokee could turn profitable right away. But we don’t think it’s time to pursue profitability. We have to increase investments, win more customers, develop new products and conquer the golden mountain.”
Adds SeeHaHa’s Zhang Fan: “Video blogging is a new development in these two years. Everybody is focused on investments, not on profits.”
Lifepop’s Wang Xiaobo is even more pessimistic about the profitability of the entire blogging industry. “Currently, the few large blogging sites are competing to burn the money they got from venture capitalists and to define their areas. Even if there are only one or two sites that manage to break even now, that is a miracle. There are few podcasting sites that are big enough, and everybody is in no hurry to turn a profit due to marketing needs and other reasons. So the majority of podcasting sites are not profitable.” But he predicts that “in the next few years, coupled with the development of the 3G technology, there will be an explosive growth in the number of podcasting users. Meanwhile, podcasting will become more integrated with other multi-media applications.”