(Chinese Version)

Editor’s Note:

China’s online radio industry is on the rise right now. Major companies in this industry have done a great job in the first stage of development with the help of mobile Internet and smart phones.

Introduction

China’s radio industry registered a total sales volume of 20 billion RMB in 2014, among which 75% came from in-car radio sector. Thanks to the increasing demand for cars and the ignoring traffic jams during rush hour, radio industry, among all traditional forms of media, is the only survivor in the Internet era.

To some extent, I’d like to compare radio industry to “The Last Fortress” in traditional media industry. Yet, traditional radio stations are facing increasing challenges from online radio stations. With the help of mobile Internet and smart phones, major companies in online radio industry have done a great job in the first stage of development.

With the rise of online radio industry, expectations for the industry soar, while competitions among online radio companies also get fiercer. To be honest, media seldom reported on this industry in the past but have got to pay larger attention to the news in this industry right now.

Major companies in online radio industry are also well aware of the huge potential of this industry and start to show their true mettle. While Ximalaya FM held the biggest Ximalaya Conference in its history on April 17^th, Qingting FM, another major online radio service provider based inShanghai, also declared that it would cooperate with Xiaomi, the number one smart phone manufacturer inChina. Whereas Qingting FM claimed that more than 150 million users have downloaded its app, Ximalaya FM declared that the number of its registered users has reached 150 million. From these figures, one can easily tell the huge landscape and potential of this industry.

I live inShanghaiand happen to have once worked with these two companies in the past. After some research and interviews, I write down this article, hoping to provide you with a clue about the present and future of online radio industry inChina.

 What kind of online radio programs do users prefer and when do they listen to the radio?

Yang Tinghao, CEO of Qingting FM, told me that audio books, news and programs where users get to call the anchor and share their love stories and feelings are preferred by Qingting’s users. For Qingting FM, the number of active users hit the peak from 7 to 8 am. During this time period, news programs are preferred. Another rush hour comes during 9 pm to 1 am, when users prefer audio books and programs where they get to call the anchor and share their love stories and feelings.

Obviously, users prefer shorter programs in the morning and longer programs in the evening.

When I asked Yang Tinghao about Qingting FM’s figure on full play rate, Yang responded that Qingting FM considered full play rate unimportant and attaches more importance on retention rate, the ratio of the number of retained subscribers to the number at risk. Qingting FM provides podcasters with analysis on the retention rate of their programs to help them better meet the need of their subscribers.

So does Ximalaya FM. Moreover, Ximalaya established a “XimalayaCollege” to help podcasters better run their programs. Looks likeTaobaoCollege, isn’t it? During the interview, Chen Xiaoyu, one of the co-founder of Ximalaya FM, provided me with detailed information on their users’ preference.

The above chart measures the average time length of different kinds of programs based on 1000 most popular programs on Ximalaya FM. We can conclude that the preferred time length for different kinds of programs differs a lot.

Programs that last less than 5 minutes, such as music, English learning program and Children’s programs, and 20-30 minutes, including audio books, cross talks, news, history and finance programs are preferred by Ximalaya FM’s users, whereas programs that last 5-10 minutes and 10-20 minutes have no much audience.

The above chart measures the full play rate for different kinds of programs on Ximalaya FM. Unlike Qingting FM, Ximalaya FM thinks highly of full play rate and will take into consideration a program’s full play rate before recommending the program.

Users get impatient more easily towards online radio programs than texts and videos. The full play rate for English learning programs ranks the first, but since such programs last typically less than 5 minutes, high full play rate is not surprising at all. The full play rate for audio books ranks the second, which suggests that such programs are very popular among online radio users. Similarly, statistics from Qingting FM also suggests that audio books are well-received by its users.

From this figure, we can conclude that users prefer to listen to online radio programs in bed.

The above chart measures the peak time period for different kinds of programs. It can be seen that the ratings for most kinds of programs peak at 22:00 (except for news programs, 10:00 and children’s program, 21:00). Few people listen to radios around 23:00 since they will have to take the shower and wash up, but by 24:00, many people will turn on the radio again.

In general, both the user habits of Qingting FM and Ximalaya FM and contents they provide are similar to each other, for example, both of them will put programs such as Logic Show and Morning Call on the front page of their app.

Yet, their operation model differs a lot.

Comparing Ximalaya FM and Qingting FM

Both Ximalaya FM and Lizhi FM encourage users to “generate” their own “content” (UGC) and upload their own programs to the platforms, whereas Qingting FM still hasn’t opened such channels yet.

That’s why Ximalaya establishes a “XimalayaCollege” to train podcasters and help them better meet the need of their audiences, while Qingting FM has no such plans.

The difference between these two companies can also be seen from their founders. After interviewing Yang Tinghao, founder of Qingting FM, Yu Jianjun and Chen Xiaoyu, co-founders of Ximalaya FM, I find out that they have completely different way of thinking.

Last year, Qingting finally merged with China National Radio Voice, a typical traditional radio station inChina. Qingting FM adopts an easy business model and simply put programs from over 3,000 traditional radio stations acrossChinaonline. Qingting FM’s preference towards contents from traditional radio stations can be seen in Yang Tinghao’s own work experience in Huli, a typical video website that is based on professionally-generated content model.

Ximalaya FM adopts a user generated content (UGC) model, since both Yu Jianjun and Chen Xiaoyu focus more on user experience than content. Chen Xiaoyu described to me how he, the spokesman of Yu Jianjun’s startup, was convinced into establishing Ximalaya FM together with Yu Jianjun, and how they designed the functions together.

At the same time, however, Qingting FM focuses more on content and adopts a professional user generated content (PUGC) model. Moreover, Qingting FM will invite DJs from traditional radio stations to have a personal podcast on its platform. In this sense, Qingting FM is similar to Top News since it also collects the latest radio programs for users.

Ximalaya FM has just launched a project called “Ximalaya Inside” and started to provide its service on other gadgets through the cooperation with other smart product manufacturers. Qingting FM has done the same thing but compared to Ximalaya FM, its effort is limited.

However, both Ximalaya FM and Qingting FM are aware that China’s online radio industry is dominated by online radio platform giants like them and no independent podcaster (except for Luo Zhenyu and Gao Xiaosong) can become popular and well-known to the public without the recommendation of these platforms. At present, most people will listen to programs recommended by these online radio platforms and few will bother to look up for programs they like on their own. The long tail theory seems not to work in this industry, at least for the moment. Also, the founders of these two platforms mentioned that traditional radio programs, such as audio books, news and chatting programs where users get to call the anchor and share their love stories and feelings are more preferred by Chinese online radio audiences.

While half of Qingting FM’s users listen to programs they prefer and the other half listen live to radio programs, “live” here means these programs are broadcasted on traditional radios and Qingting FM at the same time, Ximalaya hasn’t provided live programs yet but will soon carry out such service.

Qingting FM and Ximalaya FM’s revenue model also differs a lot. While Ximalaya FM’s revenue comes solely from advertisement, Qingting FM benefits a lot from the cooperation between China National Radio Voice and reading platforms of China Telecom, China Mobile and China Unicom. China National Radio Voice is one of the most crucial partners of the three mobile service providers and owns the copyrights of 70% of the audio books on these reading platforms. In 2014, CNR Voice earned 50 million RMB and it is expected that CNR Voice will earn 100 million RMB in 2015. No online radio platform has achieved similar profitability.

That’s why podcasters on Qingting FM are free to make profits by advertising other products in their programs, while they are supposed to give a large share of the profit back to Ximalaya FM.

The future of China’s online radio industry

Although online radio industry has a long history, the history of Qingting FM and Ximalaya FM is rather short: Qingting FM was founded in September 2011 and Ximalaya FM was founded in August 2012.

Podcasts first emerged when everybody was crazy about blogs. At that time, only a minority of people used podcasts since smart phones were still not widespread and it would seem weird to listen to the radio on a PC.

With the spread of smart phones and mobile Internet these years, online radio industry boomed and hundreds of millions of users inChinaare listening to online radio nowadays.

Yet, as the development of smart phone industry has slowed down, online radio companies haven’t figured out ways to make profit out of their large user base. It can be said that despite such huge amount of users, they simply don’t use the products as frequently as expected, nor will this generate huge profits.

That’s why these two companies have got to seek for more opportunities in the hardware sector other than smart phone industry.

First of all, they turn to the car industry. On the Ximalaya Conference held in April 17^th, Ximalaya FM released a BMW car pre-installed with Ximalaya FM app.

However, there is one problem: car drivers have to focus most of their attention on driving and thus prefer to have fewer choices when choosing radio programs. In this sense, the huge amount of programs is not necessarily beneficial, while what really matters is how to make the right prediction of what the users like or dislike.

Secondly, they choose to cooperate with companies manufacturing smart home devices. While Ximalaya FM collaborated with well-known loudspeaker manufacturers, Qingting FM’s founder Yang Tinghao expressed his preference for smart watches. Mr. Yang was wearing a smart watch during the interview with me and told me that he had collected all the three versions of it.

Yang Tinghao acknowledged that Apple iWatch was a cornerstone for smart watch industry, but looked forward to a really mature design from Apple in the latter half of 2015.

Radio is the only kind of media that doesn’t exist in visual form and there remain huge possibilities in this industry. The Chinese version of Apple Siri has already amazed many ordinary smart product users. So we may expect that online radio will even be controlled by one’s voice in the future.

The great controversy

No content-based industry can avoid a copyright war.

Previously, both the major video portals and text content portals inChinahave all fought such wars. Now, it’s online radio’s turn.

Last Monday, huge controversy was ensued when Ximalaya FM filed a complaint to Apple and charged Duoting FM and Lizhi FM of infringing its copyright. Judging from the appearance, Qingting FM wasn’t involved in the case but everybody knew that Qingting FM should have been involved.

I have always argued that the war for copyright is not a matter of ethics, but a matter of commercial interests. The ultimate goal of copyright war is to drive ill-funded and smaller platforms out of the online radio market. To start a copyright war, the market should be comprehensive enough first.

After years of development, online radio industry inChinahas expanded to a degree when a copyright war is inevitable and major companies are seeking for dominance, though for the public, this industry seems to be just beginning to develop.

The copyright issue in online radio industry is a little bit trickier than video industry, since no traditional radio program bothers to get the copyright before playing the piece of music in the program. In the past, audiences can only get access to radio programs live and can’t download the program. Copyright owners regard radio station’s promotion often as publicity instead of infringement. However, when radio programs are put online and can be downloaded one day, copyright owners will no longer remain silent to such behavior.

Up till now, no party has defined the boundary yet. Moreover, copyright owners are facing potential infringement from digital music service providers, who are funded by Tencent, Netease or Alibaba. Will copyright owners remain silent to their infringement? While Yang Tinghao don’t think BAT will play a large role in the online radio market, I strongly believe that there is always a possibility.

At present, online radio companies inChinaare only fighting for the copyright of audio books, such as Guo Degang’s cross talks. The market value of this industry is only several million RMB and is of no big deal compared to other industries. More innovations are expected in the future, though I myself can’t tell what exactly kind of innovation they might be. One thing I am certain, however, is that the online radio industry is already on the eve of prosperity.

[The article is published and edited with authorization from the author @Wei Wuhui, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.