WEBVTT - How to Earn Millions in China's App Economy 0:00:00.600 --> 0:00:03.160 Decrypted is brought to you by red Hat, whose broad 0:00:03.160 --> 0:00:06.520 portfolio of open source technologies for the enterprise helps you 0:00:06.559 --> 0:00:08.760 get from where you are to where you want to be. 0:00:09.560 --> 0:00:12.879 Red Hat the open technology to help you realize your vision. 0:00:13.320 --> 0:00:16.079 Learn more at red hat dot com slash open tech. 0:00:17.360 --> 0:00:22.000 Back in early Lei Shan was just another overworked magazine 0:00:22.079 --> 0:00:25.480 editor in Beijing. He was working for a Chinese financial magazine, 0:00:25.640 --> 0:00:34.959 his latest job of many type the magazine process, as 0:00:35.000 --> 0:00:38.960 you know, the production process is very long, from interview 0:00:39.040 --> 0:00:42.040 to writing and printing. It takes a long time. As 0:00:42.080 --> 0:00:45.640 you can imagine, there's always delays involved. I always felt 0:00:45.680 --> 0:00:47.920 like I wasn't in control of that. I'd have to 0:00:47.920 --> 0:00:51.080 stay up late into the night to finish the magazine. 0:00:53.760 --> 0:00:57.200 Just a few months later, Lee's life would change. He 0:00:57.280 --> 0:01:00.360 decided to start producing a business newsletter on a brand 0:01:00.400 --> 0:01:05.640 new app that was sweeping the country. In just a 0:01:05.680 --> 0:01:08.839 few months, that app, The Adult, went from being brand 0:01:08.920 --> 0:01:12.360 new to attracting millions of users. That name translates to 0:01:12.440 --> 0:01:15.440 mean I get in English. People go there to get 0:01:15.520 --> 0:01:19.160 daily advice and learn everything from music to economics. Yeah, 0:01:19.200 --> 0:01:22.759 it's a bit like Corsera and other online education services 0:01:22.760 --> 0:01:25.880 in the US. But the big difference is that under now, 0:01:26.240 --> 0:01:28.960 everybody is paying for what they read and listen to, 0:01:29.040 --> 0:01:31.600 bringing in money not just for the apps founders, but 0:01:31.800 --> 0:01:35.119 contributors to the magazine. Editor Lee Shang and his team 0:01:35.120 --> 0:01:39.160 are already generating the equivalent of millions of US dollars. 0:01:43.560 --> 0:01:47.319 Close to one hundred thousand fee paying subscribers. Each of 0:01:47.360 --> 0:01:50.920 them are paying an annual fee of one remnant B 0:01:51.520 --> 0:01:59.640 that's close to that's right for ten minutes of content 0:01:59.680 --> 0:02:04.360 per Lee's one hundred thousand customers pay around thirty dollars each. 0:02:04.640 --> 0:02:07.600 That's almost three million dollars in annual revenue. And it's 0:02:07.640 --> 0:02:10.119 made Lei Sian richer than he could have imagined back 0:02:10.120 --> 0:02:12.520 when he was still struggling with long hours and a 0:02:12.600 --> 0:02:15.639 salary job at the magazine. And he's not the only one. 0:02:15.960 --> 0:02:19.080 In China. Dao was just one of a vast economy 0:02:19.120 --> 0:02:21.960 of mobile apps where people like Lee Shung can make 0:02:22.080 --> 0:02:35.280 real money. Hi, I'm Brad Stone and I'm Selina Wang. 0:02:35.520 --> 0:02:37.800 And this week on Decrypted, we'll take a look at 0:02:37.840 --> 0:02:41.000 how China has been able to monetize their smartphone apps 0:02:41.040 --> 0:02:44.600 like no other country. China has dethroned the US as 0:02:44.639 --> 0:02:47.640 the largest spender on Apple's app store. People, they're spent 0:02:47.720 --> 0:02:50.600 more than two billion dollars in the fourth quarter alone. 0:02:50.960 --> 0:02:53.400 Now that's just a fraction of the total money China's 0:02:53.400 --> 0:02:57.000 consumers spend on apps, since most people there have Android devices. 0:02:57.480 --> 0:02:59.480 Much of this has to do with how China has 0:02:59.520 --> 0:03:02.600 figured out how to make money from news, entertainment and 0:03:02.680 --> 0:03:05.400 social media in a way that the U S still hasn't, 0:03:05.639 --> 0:03:08.680 by making people actually pay for it instead of relying 0:03:08.720 --> 0:03:12.360 on advertisers. China still has a reputation as a copycat 0:03:12.400 --> 0:03:15.399 of the West, but really it's Silicon Valley that's now 0:03:15.440 --> 0:03:18.960 scrambling to learn from the successives we've seen here across 0:03:19.000 --> 0:03:27.280 the Pacific. Selena, the Diao app now has seven million 0:03:27.400 --> 0:03:29.480 users and the service is only about a year old. 0:03:29.840 --> 0:03:32.080 Tell us what it looks like. It's a pretty clean 0:03:32.080 --> 0:03:35.200 looking app. You can easily subscribe to channels with content 0:03:35.280 --> 0:03:38.000 on topics like investing tips, or how to listen to 0:03:38.040 --> 0:03:41.000 classical music, or even books and magazines. And this is 0:03:41.040 --> 0:03:43.920 gonna make me really jealous, but people actually pay to 0:03:43.960 --> 0:03:46.960 subscribe to these channels. Yes, you heard that correctly. None 0:03:46.960 --> 0:03:50.120 of it is free. Each channel costs the equivalent of 0:03:50.160 --> 0:03:53.120 about thirty U S dollars per year. It can curate 0:03:53.160 --> 0:03:55.560 content for you as well. There's even a portal to 0:03:55.600 --> 0:03:58.200 an e commerce section that sells products like books and 0:03:58.320 --> 0:04:01.240 high end jewelry, and part of the subscription fee goes 0:04:01.280 --> 0:04:04.000 directly to people likely who create the content. Some of 0:04:04.000 --> 0:04:09.440 the columnists have even become millionaires, reasoning that they opened 0:04:09.480 --> 0:04:13.680 up column by an economics professor from Picking universident. Guess what, 0:04:14.200 --> 0:04:17.080 in just that month there are hundreds of thousands of 0:04:17.120 --> 0:04:21.000 subscriptions with a two hundred of buck ish so, which 0:04:21.080 --> 0:04:25.080 means this problems are generated therein a million. Okay, I 0:04:25.120 --> 0:04:30.920 am in just a month, he become the richest economists. Okay, 0:04:31.040 --> 0:04:36.960 economics reaches you know. That's Bob Shuhao Ping, who is 0:04:37.000 --> 0:04:39.799 one of the early investors into a doll and also 0:04:39.839 --> 0:04:42.839 happens to be the most successful angel investor in China. 0:04:43.240 --> 0:04:46.520 I spoke to him at a conference. Bob's venture capital firm, 0:04:46.600 --> 0:04:49.560 called Zen Fund, has made bets on hundreds of startups, 0:04:49.560 --> 0:04:51.320 some of which are now worth more than a billion 0:04:51.360 --> 0:04:55.279 dollars or publicly traded companies. So presumably Bob has a 0:04:55.279 --> 0:04:58.080 good idea for startups with potential. Yes, And I asked 0:04:58.080 --> 0:05:01.040 Bob why he decided to back Lord's He's the man 0:05:01.080 --> 0:05:05.080 who founded the dud app. We used to to look 0:05:05.080 --> 0:05:10.400 at the founder's profile for education side, for experience side, 0:05:10.600 --> 0:05:15.000 but the most important point to see is there as 0:05:15.279 --> 0:05:18.720 do they have whatever it takes to do? What do 0:05:18.800 --> 0:05:22.920 they want to do? So here's a bit on Lord 0:05:23.000 --> 0:05:25.640 zung you story. He was a TV producer before he 0:05:25.680 --> 0:05:29.040 started Logic Knowledge Group in twelve and that's the parent 0:05:29.120 --> 0:05:33.000 company of the Dodo app. Logic has a very big following, 0:05:33.160 --> 0:05:36.640 partly because Lord Zung is the celebrity in his own right. 0:05:37.160 --> 0:05:40.640 The company's public wheach Had account has nine million subscribers 0:05:40.720 --> 0:05:43.200 in Lord Zungi has an online talk show that gets 0:05:43.240 --> 0:05:46.680 two point four million views per episode. Okay, so with 0:05:46.720 --> 0:05:49.600 all this firepower did that was? Growth is skyrocketing. But 0:05:49.680 --> 0:05:52.520 Dido is facing a ton of competitions as well, from 0:05:52.520 --> 0:05:56.640 companies like do Ban who in Shi Malaya right, and 0:05:56.680 --> 0:05:59.400 not to mention ten Cent, the Chinese internet giant, right, 0:05:59.560 --> 0:06:03.040 and they all allow official channels to charge users for content. 0:06:03.560 --> 0:06:07.599 But Bob, the legendary angel investor, says Dondo isn't simply 0:06:07.640 --> 0:06:11.200 a promising company that's growing fast. He thinks this company 0:06:11.240 --> 0:06:15.960 is going to be truly transformative. This is I thought, 0:06:16.800 --> 0:06:23.240 you know, largest this company actually created uh this revolution. 0:06:23.600 --> 0:06:30.520 So now there is a heat in China, golden rush 0:06:30.680 --> 0:06:36.279 in knowledge paying services. Iob has seen a lot in 0:06:36.279 --> 0:06:39.599 the sixty years. He lived through China's cultural revolution and 0:06:39.640 --> 0:06:42.880 delivered pizzas before going on to found China's leading private 0:06:43.000 --> 0:06:45.800 education company. So it's high praise for him to say, 0:06:45.880 --> 0:06:49.599 Dadao has started a gold rush in China. Actually, this 0:06:49.720 --> 0:06:53.440 company actually created a revolution in China. We call it 0:06:53.560 --> 0:07:00.560 a tru translated, the literary is a knowledge payment. You 0:07:00.960 --> 0:07:08.520 pay a fee to knowledge. Le Shang, the magazine editor 0:07:08.560 --> 0:07:11.120 we heard from earlier, couldn't have known how all of 0:07:11.160 --> 0:07:13.440 this would play out when Lords and the founder of 0:07:13.680 --> 0:07:17.720 a first approached him about brainstorming different ways that journalists 0:07:17.760 --> 0:07:20.640 could get paid for their work. Before the adult Le 0:07:20.760 --> 0:07:23.560 Shang had worked out a string of different magazines, including 0:07:23.600 --> 0:07:32.680 the Chinese language version of Bloomberg Business Weeks Now school, Yes, 0:07:34.680 --> 0:07:37.400 this is my full time job. Now. When I started, 0:07:37.520 --> 0:07:40.320 I didn't expect as much attention. I didn't tell my 0:07:40.400 --> 0:07:44.160 friends or Luo gen you. When I started, I treated 0:07:44.200 --> 0:07:55.880 as an experiments through the process. I discussed with Luo 0:07:56.160 --> 0:08:00.560 gen You about different ways of providing content without advertise months. 0:08:00.760 --> 0:08:03.400 He mentioned the idea of an app that asks user 0:08:03.480 --> 0:08:08.000 to pay a fee to subscribe for content. The story 0:08:08.120 --> 0:08:11.400 seems incredible, but it isn't as rare as you might think. 0:08:11.880 --> 0:08:14.320 Lee told me he knows other journalists who have left 0:08:14.320 --> 0:08:18.000 traditional news organizations to work for themselves and making content 0:08:18.080 --> 0:08:20.920 for apps like Dell Adult or the messaging platform we Chat. 0:08:21.680 --> 0:08:26.520 Just as you know, many of the journalists in China 0:08:26.840 --> 0:08:29.880 and many of the content producers moved their careers to 0:08:29.960 --> 0:08:35.160 new media. On we Chat, it has a free subscription chat. 0:08:36.440 --> 0:08:39.760 What Lee means they're by free subscription channel is that 0:08:39.800 --> 0:08:42.640 anyone can set one up. And this trend of paying 0:08:42.640 --> 0:08:46.560 for online content goes way beyond just education. Video live 0:08:46.640 --> 0:08:49.600 streaming is another huge area. This is where people watch 0:08:49.679 --> 0:08:53.200 anything from people singing, telling jokes, are just going about 0:08:53.200 --> 0:08:56.000 their daily lives. Think of those random videos you can 0:08:56.040 --> 0:08:59.640 find on YouTube but happening live and Credit Suite estimates 0:08:59.760 --> 0:09:03.040 video a live streaming alone could generate about five billion 0:09:03.080 --> 0:09:05.800 dollars this year in China. The fact live streaming has 0:09:05.840 --> 0:09:09.360 become so popular means thousands, maybe millions of people are 0:09:09.360 --> 0:09:12.400 able to earn a living this way. Here's Bob, it's 0:09:12.440 --> 0:09:16.480 a national past of time. There's this guy for the 0:09:16.640 --> 0:09:23.280 year for some man. He spent that literally okay a 0:09:23.280 --> 0:09:30.880 million dollar on live screaming service, paying too many many minute. 0:09:31.760 --> 0:09:35.880 We quired a whole hostessess and he appeared that until 0:09:37.679 --> 0:09:43.920 he said, yeah, it's my way of appreciating them, supporting them. 0:09:43.960 --> 0:09:49.559 But you know, that's a very unusual story. But a 0:09:49.600 --> 0:09:53.040 many people would have spending lots of money, spend a fortune. 0:09:56.120 --> 0:09:58.880 The hostess is Bob's talking about, are just regular people 0:09:58.960 --> 0:10:01.000 finding they can make a live been talking to or 0:10:01.080 --> 0:10:04.240 performing for live viewers. People can watch for free, but 0:10:04.320 --> 0:10:07.680 hostesses make money because people show their adoration by sending 0:10:07.679 --> 0:10:10.599 them virtual gifts. It's just so different from how the 0:10:10.640 --> 0:10:13.640 big internet services operate in the US. It's really hard 0:10:13.679 --> 0:10:16.679 to imagine Twitter, for example, asking users to pay before 0:10:16.679 --> 0:10:19.160 they could follow someone. It's even harder to imagine that 0:10:19.240 --> 0:10:23.120 Twitter users would accept that. In China. Uh, you know, 0:10:23.160 --> 0:10:27.040 we don't really talk about advertising supported model UM. You know, 0:10:27.080 --> 0:10:29.720 whether it's on PC or a mobile UM. There are 0:10:29.840 --> 0:10:33.480 very few start ups that actually UM growing very big. 0:10:33.600 --> 0:10:35.920 You know, on the back of just advertising and obviously 0:10:35.960 --> 0:10:38.640 by dool with such. You know, it's a very classical model. 0:10:39.000 --> 0:10:42.319 But beyond the search based advertising model, you'll find that 0:10:42.440 --> 0:10:46.720 most of the large internet companies in China actually grugle 0:10:46.920 --> 0:10:52.199 or monetized by charging the consumer directly. That's Jenny Lee, 0:10:52.240 --> 0:10:55.440 a venture capitalist at g g V. I think that 0:10:55.559 --> 0:10:59.920 the the whole idea of having to you know, look 0:11:00.080 --> 0:11:05.959 that d before you can access the video. Um, it's 0:11:06.000 --> 0:11:09.600 just not a very direct way of enjoying the features. 0:11:10.080 --> 0:11:14.559 Chinese entrepreneurs, I have to say, they're very practical if 0:11:14.559 --> 0:11:17.840 they can get, you know, the consumer to pay them directly, 0:11:17.880 --> 0:11:20.640 I think that's what they're gonna do. You know, in 0:11:20.679 --> 0:11:23.440 the US, both the companies that make these apps and 0:11:23.480 --> 0:11:26.920 the content creators would absolutely love it if consumers paid 0:11:26.960 --> 0:11:30.520 them directly. Right, But as yet, there aren't many examples 0:11:30.520 --> 0:11:33.280 of big successful companies that have been able to escape 0:11:33.280 --> 0:11:36.160 their dependence on advertising. Well, they can know why the 0:11:36.240 --> 0:11:38.480 Chinese apps have been so much more successful at this 0:11:38.559 --> 0:11:42.359 than their ad dependent U S counterparts. Right after ironically 0:11:42.800 --> 0:11:49.480 this word from our sponsor, you know where you want 0:11:49.520 --> 0:11:52.800 to be? Red Hat has the broad portfolio of open 0:11:52.840 --> 0:11:56.480 source technologies to get you there. Meet your evolving business 0:11:56.559 --> 0:12:00.400 challenges head on with secure solutions for the enterprise including 0:12:00.800 --> 0:12:06.719 Linux platforms and containers, hybrid cloud infrastructure, application integration and development, 0:12:07.160 --> 0:12:11.480 operations management, and beyond. Visit red hat dot com slash 0:12:11.520 --> 0:12:15.319 open tech to learn more. Red hat the open technology 0:12:15.440 --> 0:12:24.960 to help you realize your vision. Before the break, we 0:12:25.040 --> 0:12:27.840 learned the Chinese consumers somehow seem to be so much 0:12:27.880 --> 0:12:29.840 more willing to pay for what they read or watch 0:12:29.880 --> 0:12:32.680 on their phones. Now, Bob has one theory as to 0:12:32.720 --> 0:12:37.680 why that might be the case. Chinese people, relatively compared 0:12:37.679 --> 0:12:42.800 to the US, they are lack awful uh more ways 0:12:42.800 --> 0:12:47.000 of the entertainment. Okay, many things in the available here 0:12:47.040 --> 0:12:51.640 in the US maybe not available in China. Bob is 0:12:51.679 --> 0:12:55.360 talking about the Chinese government strict regulation of media. That 0:12:55.480 --> 0:12:58.720 means the type of information and entertainment that Chinese consumers 0:12:58.720 --> 0:13:00.880 can read or watch as much more limited than in 0:13:00.920 --> 0:13:04.120 the West. And you also have cultural and demographic forces 0:13:04.120 --> 0:13:06.959 at work here in China. Tens of millions of young 0:13:07.000 --> 0:13:10.400 people have migrated to the large industrial cities. They live 0:13:10.480 --> 0:13:14.079 far away from their families, so video livestream in particular 0:13:14.120 --> 0:13:17.520 has become a form of digital companionship. In the US, 0:13:17.720 --> 0:13:20.640 we think of Facebook Live and Periscope as live streaming 0:13:20.640 --> 0:13:24.160 tools to broadcast or watch events, right. But in China, 0:13:24.320 --> 0:13:27.280 many of these streams are people doing very ordinary things 0:13:27.440 --> 0:13:31.120 like putting on makeup, giving advice, or eating food, and 0:13:31.200 --> 0:13:34.640 it's enormously popular. Some estimates say that more than three 0:13:35.040 --> 0:13:38.319 twelve million Chinese users consume live stream video in one 0:13:38.360 --> 0:13:41.320 way or another. Okay, so that helps us understand why 0:13:41.360 --> 0:13:44.000 people are consuming so much of this content, but does 0:13:44.040 --> 0:13:47.040 it explain why they are paying for it? I think 0:13:47.120 --> 0:13:51.760 China is su pine the whole um free to play model. 0:13:52.120 --> 0:13:55.320 In the West, it was always playing um, you know, 0:13:55.360 --> 0:13:58.520 it was always paying for a time um. And it's 0:13:58.600 --> 0:14:02.800 it's critical because the whole ecosystem shift one where the 0:14:02.880 --> 0:14:06.280 product has to be better designed to cater to the consumer, 0:14:06.559 --> 0:14:08.760 because if they're not well done, if the features are 0:14:08.760 --> 0:14:12.280 not appropriate, the consumers are gonna pay directly. Um. And 0:14:12.320 --> 0:14:15.480 that's key. That was the venture capitalist Jenny And this 0:14:15.679 --> 0:14:17.800 free to play model that she mentioned is a term 0:14:17.880 --> 0:14:20.840 that emerged from the world of video games. It refers 0:14:20.880 --> 0:14:22.840 to the games that won't charge you for playing, but 0:14:23.000 --> 0:14:25.080 you do get the option of paying for all kinds 0:14:25.080 --> 0:14:27.200 of things that make the game more enjoyable for you. 0:14:27.720 --> 0:14:30.240 So they hook you in with the zero dollar price tag, 0:14:30.480 --> 0:14:32.320 and then before you know it, even the paying for 0:14:32.400 --> 0:14:35.840 this and that upgrade. And these games are everywhere in China, 0:14:36.160 --> 0:14:38.480 and Jenny thinks those games made this act of paying 0:14:38.520 --> 0:14:41.320 for content seem normal. So now for most people it's 0:14:41.440 --> 0:14:49.280 just a habit. The rapid rise of knowledge sharing apps 0:14:49.320 --> 0:14:52.400 like the Adult might satisfy another source of anxiety in 0:14:52.520 --> 0:14:57.320 Chinese society. There's a hunger of ledge, there's a hunger 0:14:57.400 --> 0:15:01.840 of quality contents trying. This is Bob, the early investor 0:15:01.840 --> 0:15:04.360 in Doda, who we met earlier in the show. So 0:15:04.600 --> 0:15:08.400 Chinese people in general, okay, they are eager to study. 0:15:08.800 --> 0:15:12.880 They're eager to enrich themselves not only in money, okay, 0:15:12.960 --> 0:15:17.280 but also in thoughts, in ideas. I think that there 0:15:17.400 --> 0:15:23.040 is a true, you know, hunger and my Chinese people 0:15:23.640 --> 0:15:32.400 to have quality knowledge, quality ideas, satisfying the intellectual curiosity 0:15:32.440 --> 0:15:35.720 of China's new middle class. Yeah, and in particular, the 0:15:35.800 --> 0:15:38.920 venture investor Jenny V said, you know, if you think 0:15:38.960 --> 0:15:42.880 about the millenniums today, China is over three million millenniums 0:15:43.000 --> 0:15:45.960 h below thirty five, they're no longer that young, right. 0:15:46.160 --> 0:15:49.520 This is a this is a population that have graduated. 0:15:49.720 --> 0:15:52.560 You know, they are in the workforce, some of them, uh, 0:15:52.560 --> 0:15:56.480 they're married. The cause of leaving in China means that 0:15:56.520 --> 0:15:58.960 most of them don't have their own home. Part of 0:15:59.000 --> 0:16:03.400 that translate into uh, the should continue to invest back 0:16:03.440 --> 0:16:11.720 into their own learning and education. We'd be remiss if 0:16:11.720 --> 0:16:14.360 we didn't mention how much the shift to mobile computing 0:16:14.400 --> 0:16:16.280 has played a role in the way people use the 0:16:16.280 --> 0:16:19.000 Internet in China. For millions of people in China, a 0:16:19.040 --> 0:16:22.560 smartphone was their first Internet connected device. They may not 0:16:22.680 --> 0:16:25.200 have money for a computer or laptop, but companies like 0:16:25.200 --> 0:16:28.840 show me we're selling phones at very affordable prices. So 0:16:29.160 --> 0:16:31.640 you know, when when the mobile phone becomes your only 0:16:31.720 --> 0:16:35.000 access to the Internet, you actually do everything there, right, 0:16:35.000 --> 0:16:38.360 because it's it's your point of sale to a certain extend, 0:16:38.360 --> 0:16:42.840 your point of access to information, uh, to commerce, and 0:16:43.040 --> 0:16:46.080 you know, to consumption. Now I want to focus on 0:16:46.200 --> 0:16:49.560 commerce for a moment. China never had an established credit 0:16:49.600 --> 0:16:52.120 card system like in the US, so with your arrival 0:16:52.160 --> 0:16:56.040 of smartphones, China leap frog to mobile payments. That explains 0:16:56.040 --> 0:16:58.280 the rise of we chat and Alley Pay, which connect 0:16:58.320 --> 0:17:01.840 your phone to your bank account. Now, some Western listeners 0:17:01.840 --> 0:17:04.880 are probably thinking, sure they have Venmo or Apple Pay 0:17:05.000 --> 0:17:07.840 or Google Wallet. But just to put things in perspective, 0:17:08.200 --> 0:17:12.040 China's mobile payment market is nearly fifty times bigger than 0:17:12.080 --> 0:17:16.320 in the US. Ali Pay started out as the online 0:17:16.359 --> 0:17:19.480 payments processor for Ali Baba's e commerce sites, and we 0:17:19.720 --> 0:17:22.160 Chat pay is the payment service linked to ten cents 0:17:22.240 --> 0:17:25.879 ubiquitous social messaging app. These two services operate in a 0:17:25.920 --> 0:17:30.000 market that's already worth five point five trillion dollars geez. 0:17:30.280 --> 0:17:32.600 Just to put this in perspective, for those of us 0:17:32.600 --> 0:17:34.919 in the US who are used to using messaging apps 0:17:34.920 --> 0:17:38.240 only for messaging all, this might sound strange, but Chinese 0:17:38.240 --> 0:17:41.880 consumers use we chat for everything from paying for groceries 0:17:41.920 --> 0:17:47.919 to taxis to booking manicures. The mobile payment in China proper, 0:17:48.000 --> 0:17:53.040 it is that most convenient in the whole. That's Bob again, 0:17:53.080 --> 0:17:59.200 the Angel Investor. You can people even one buck, We 0:17:59.320 --> 0:18:04.000 got that paying the feet. So people are extremely covetable 0:18:04.840 --> 0:18:09.159 using mobile phone to make a payment. So, in other words, 0:18:09.280 --> 0:18:12.040 China already had the systems and habits in place to 0:18:12.040 --> 0:18:14.359 make it really easy for people to spend money on 0:18:14.400 --> 0:18:17.560 these various apps. After all, you wouldn't pay for something 0:18:17.600 --> 0:18:24.240 if it wasn't easy to do. The latest twist on 0:18:24.280 --> 0:18:26.880 all of this is that in China, online shopping has 0:18:26.880 --> 0:18:29.520 started to converge with what we normally think of as 0:18:29.560 --> 0:18:34.560 social media. So, Selena, what's the difference here? Why haven't Facebook, Instagram, Pinterest, 0:18:34.640 --> 0:18:38.200 etcetera been able to get users buying things on their apps. 0:18:38.240 --> 0:18:40.920 I spoke to Richardly recently. He's the CEO of JD 0:18:41.040 --> 0:18:44.760 dot Com, the second largest online retailer in China. He 0:18:44.920 --> 0:18:47.920 thinks that even huge companies like Facebook need to get 0:18:47.960 --> 0:18:52.280 even bigger to turn users into customers. Only in China, 0:18:52.520 --> 0:18:56.000 tess and full owned of the social media that they have, 0:18:56.680 --> 0:19:06.640 they are almost chefs. So I mean Facebook on Amazon 0:19:08.080 --> 0:19:12.359 is what he's saying is. Richard thinks that the China 0:19:12.440 --> 0:19:14.920 model would only work in the U s if Facebook 0:19:14.960 --> 0:19:17.320 or Google acquired a part of Amazon, so that our 0:19:17.359 --> 0:19:20.000 incentives would be aligned to boost each other. And that, 0:19:20.160 --> 0:19:23.560 of course, is incredibly unlikely. It's somewhat more probable that 0:19:23.680 --> 0:19:26.760 Amazon might acquire or build its own social media tool. 0:19:27.080 --> 0:19:29.640 But borring that, what's it going to take for American 0:19:29.680 --> 0:19:32.359 Internet users to feel like spending money on the mobile 0:19:32.400 --> 0:19:37.920 amps they have on their phones. It's exciting, Uh innovation 0:19:39.160 --> 0:19:42.040 only in China. So many of people are not trying 0:19:42.080 --> 0:19:46.760 to copy it, uh, you know to America. Many Chinese companies, okay, 0:19:46.920 --> 0:19:49.719 they want to do that scene of things, you know 0:19:50.040 --> 0:19:54.159 to America. Basically, Bob thinks it will be Chinese companies, 0:19:54.240 --> 0:19:58.000 not US companies bringing about this change. In fact, we're 0:19:58.040 --> 0:20:00.880 already starting to see that happen. You know. The one 0:20:00.880 --> 0:20:06.040 time we use is called KFC. It's a call by 0:20:06.080 --> 0:20:10.960 which is the Chinese copy from China. Charles Fan is 0:20:10.960 --> 0:20:14.280 a ct of Cheetah Mobile. It's a publicly traded Beijing 0:20:14.320 --> 0:20:18.040 based company that makes utility apps for smartphones. He noticed 0:20:18.080 --> 0:20:20.560 a few years ago that there was huge opportunity to 0:20:20.600 --> 0:20:23.400 make money by copying Chinese app innovations and bringing them 0:20:23.440 --> 0:20:27.560 to America. I think we'll be moible KFC content where 0:20:28.680 --> 0:20:34.480 something like mobile payment, like live broadcasting kind of the 0:20:34.560 --> 0:20:38.680 first see site success in China and then and then 0:20:38.720 --> 0:20:42.120 go to other countries including US. First of all, they're 0:20:42.119 --> 0:20:44.960 going to need an acronym other than KFC. But it 0:20:45.160 --> 0:20:47.679 is interesting because for a long time there was an 0:20:47.800 --> 0:20:50.679 arrogance in the West around China copying our ideas, not 0:20:50.760 --> 0:20:53.560 the other way around. And today the fast growing part 0:20:53.560 --> 0:20:56.760 of Cheetah Mobile's business is its live streaming service live 0:20:56.840 --> 0:21:00.240 dot Me, which targets the US market. The app only 0:21:00.320 --> 0:21:02.440 launched a year ago and it already has more than 0:21:02.480 --> 0:21:05.840 twenty million users and more than two hundred thousand hours 0:21:05.840 --> 0:21:08.560 of content stream daily. So it seems like there is 0:21:08.560 --> 0:21:11.520 a possibility that US consumers are catching on the trends 0:21:11.560 --> 0:21:14.280 like watching live stream video and paying for at least 0:21:14.359 --> 0:21:18.840 some form of virtual content. We have proven them wrong, uh, 0:21:18.880 --> 0:21:24.960 you know, just by by practice. Uh. The in turned out. 0:21:25.000 --> 0:21:27.520 You know that the scale our population might not be 0:21:27.800 --> 0:21:32.600 quite at a level of China. But the the answer 0:21:32.680 --> 0:21:35.680 to both questions seems to be yes, Yes, there are 0:21:36.520 --> 0:21:41.840 enough people who are interested in broadcasting and while watching broadcasts, uh. 0:21:41.960 --> 0:21:46.080 And there are people who are willing to pay for 0:21:46.400 --> 0:21:49.800 virtual gifts. That said, there are also US based companies 0:21:49.840 --> 0:21:52.080 that are starting to pick up on some elements of 0:21:52.160 --> 0:21:55.919 Chinese apps today. I think that there's so much learning 0:21:55.960 --> 0:21:58.439 between US and China market that a lot of the 0:21:58.560 --> 0:22:02.400 US internet places uh and companies are realizing that they 0:22:02.400 --> 0:22:04.560 need to add that social element. They need to add 0:22:04.600 --> 0:22:09.560 the gamification element and the whole virtual currencies elements. Now. 0:22:09.560 --> 0:22:12.000 A good example of this is Twitch, which is a 0:22:12.040 --> 0:22:15.120 site actually owned by Amazon where you can watch people 0:22:15.119 --> 0:22:17.879 play video games. It's planning to make it easier for 0:22:17.920 --> 0:22:21.560 the gamers that stream themselves, these content creators to make 0:22:21.560 --> 0:22:23.760 money on the site with a feature called Cheering that 0:22:23.880 --> 0:22:26.680 lets fans buy animated emoticons and send them to their 0:22:26.720 --> 0:22:29.480 favorite video game stars. That sounds kind of similar to 0:22:29.520 --> 0:22:31.840 the virtual gifting that we've seen with the live streaming 0:22:31.880 --> 0:22:34.840 apps in China. Yeah, and Twitch has already had success 0:22:34.880 --> 0:22:37.960 allowing its biggest stars to collect not just ad revenue, 0:22:38.000 --> 0:22:40.639 but also a subscription fee from their viewers, which is 0:22:40.720 --> 0:22:42.960 of course shared between Twitch and the stars. What are 0:22:42.960 --> 0:22:46.720 some other examples, Well, Apple's eye Message has added stickers 0:22:46.760 --> 0:22:49.440 that you can pay for, Facebook allows you to pay 0:22:49.480 --> 0:22:52.840 for things inside its messaging platform, and Snapchat has talked 0:22:52.840 --> 0:22:56.000 about adding premium filters that charge of view. These are 0:22:56.000 --> 0:22:58.080 all interesting, but none of them have achieved the scale 0:22:58.119 --> 0:23:00.480 or success of what's happening in China. I'm mean, Brad, 0:23:00.520 --> 0:23:03.560 do you have a bank account connected to Facebook or Snapchat? 0:23:03.640 --> 0:23:06.320 I certainly don't that would be a negative. Although I 0:23:06.359 --> 0:23:09.360 am more willing these days to use something like PayPal 0:23:09.440 --> 0:23:12.640 to pay for pieces of content online. And that's true. 0:23:12.640 --> 0:23:15.640 I mean I have considered now and then maybe switching 0:23:15.680 --> 0:23:18.360 from Venmo and paying my friend through Facebook. I could. 0:23:18.400 --> 0:23:20.600 I could see it happening potentially in the future. It's 0:23:20.640 --> 0:23:23.440 also probably worth noting here, Selena, that over the last 0:23:23.480 --> 0:23:26.160 couple of months, some major newspapers like The New York 0:23:26.200 --> 0:23:28.960 Times the Wall Street Journal have seen tremendous growth in 0:23:29.000 --> 0:23:32.480 their digital subscriptions. So it does seem like Western are 0:23:32.480 --> 0:23:35.040 becoming a little more comfortable with the idea of paying 0:23:35.119 --> 0:23:38.439 for digital content. Definitely, a lot of these innovations in 0:23:38.520 --> 0:23:41.400 China are coming as a whole news industry is kind 0:23:41.400 --> 0:23:44.040 of being upended as we're all searching for ways to 0:23:44.080 --> 0:23:46.280 make money beyond ads. So I think that a lot 0:23:46.359 --> 0:23:48.560 of the success is over there, give us some hope 0:23:48.600 --> 0:23:50.399 over here. It does seem like the thing that we 0:23:50.480 --> 0:23:52.960 haven't gotten to here in the in the West was 0:23:53.000 --> 0:23:55.560 an idea that was very popular early on in the Internet, 0:23:55.720 --> 0:23:59.640 and that's people paying for micro content for individual articles 0:23:59.760 --> 0:24:01.960 or in vidual as we say earlier in the in 0:24:02.000 --> 0:24:04.919 the show programs like live streams. That's the thing that 0:24:04.960 --> 0:24:08.280 perhaps people aren't quite comfortable with yet. But tell us, Alina, 0:24:08.359 --> 0:24:11.240 what's the magazine and editor Lee Shang up to today. Well, 0:24:11.359 --> 0:24:13.760 I mean he's already pulling in millions of dollars in 0:24:13.840 --> 0:24:17.359 revenue from just one daily column, so he's really thinking 0:24:17.400 --> 0:24:23.320 about what's next. Well, we foresee a big change of 0:24:23.359 --> 0:24:25.840 my team and my company in terms of the content 0:24:26.160 --> 0:24:36.080 and the business model. Well, our current users are only 0:24:36.160 --> 0:24:42.080 coming from this one product. In the future, we're looking 0:24:42.080 --> 0:24:51.760 to launch more products and more programs. Uh, the current 0:24:51.760 --> 0:24:55.040 one is just focused on business and opinion. We're exploring 0:24:55.080 --> 0:25:04.840 other products in the future. And that's it for this 0:25:04.880 --> 0:25:08.240 week's to crypt It. Thanks for listening. Please get in touch. 0:25:08.320 --> 0:25:10.280 You can record a voice message and send it to 0:25:10.359 --> 0:25:14.520