EMW Shorts #1
Bytedance adds payments and sues Tencent, follow-ups on Tencent Music, and Clubhouse looks East in more ways than one
I’m writing to you today from Taiwan 🇹🇼 I am one of the many folks who escaped the Bay Area and (after a long and warm stay in Arizona) received Taiwan’s Gold Card Visa. Shoot me a message if you are (a) interested in applying for the Gold Card and want tips (b) are in Taiwan and want to meet-up (c) have recommendations for things to do in Taiwan
Today’s issue is a more quick-to-read format that highlights articles that touch on general themes of the newsletter (Super Apps, Asian consumer trends bleeding into the west, payments, and more!). The deep dives are fun for me to do, but they are also very time-consuming so I think these ‘shorts’ are a nice addition to the schedule.
Let me know what you think about this format. If you hate, tell me before you unsubscribe 😉 (but also, definitely don’t unsubscribe!)
ByteDance adds Payments —> Super App
“The set-up of Douyin Pay ... is to supplement the existing major payment options, and to ultimately enhance user experience on Douyin,” ByteDance said in a statement. ByteDance owns both Douyin and TikTok.”
This is not a surprise as it builds on the back of Bytedance’s recent acquisition of UIPay (a third-party platform in China). WeChat and Alipay have a stronghold on the Chinese payments market, but given Bytedance’s wide reach and many products (Douyin, Toutiao), there’s no company better set to disrupt the duopoly.
Bytedance is reportedly seeking a valuation between $140-180 billion. How long until the “B” in “BAT” is no longer Baidu?
If you come for the king, you best not miss
Tencent restricts users from sharing Douyin content on its instant messaging apps WeChat and QQ, which should be prohibited by anti-monopoly law, ByteDance said, adding that it has asked the court to order Tencent to stop such behaviour.
Few companies have become monsters in China without the support of Tencent (or Alibaba). Meituan, Pinduoduo, Kuaishou, DiDi, BiliBili — all large public companies focused on the Chinese market and all backed by Tencent.
That Bytedance has become as big as it is without support (in fact, with the active antagonism) from Tencent is impressive.
This is not the first time Bytedance and Tencent have come at each other in court. Prior examples:
Kuaishou (Tencent-backed) sued Bytedance for ‘unfair competition’
Tencent sued Toutiao (Bytedance’s news app) for alleged defamation. They demanded 1 yuan and an apology
Worth watching as the CCP appears to be putting more pressure on monopolistic companies in the country
Tencent Music as an index on China’s Audio
“Founded in 2012, Lazy Audio is a comprehensive audio platform providing entertainment in the forms of audiobooks, Chinese comedy, podcasts and other radio shows to customers. It monetizes via different channels, including pay per title, subscription payment for content, and advertising.”
Something that I probably didn't stress enough in my article is that “Tencent Music Entertainment Group” is really a collection of all the biggest audio apps in China (with a few exceptions). TME runs QQ Music, Kugou Music, Kuwo Music, and WeSing separately. Lazy Audio will also continue to function independently. This acquisition helped solidify to me that owning $TME is like owning an index of 'audio content' in China. Funny enough, around the time this acquisition was announced, Alibaba also announced they'd be shutting down their music-streaming service.
(author owns $TME)
In 2014, PAG invested $100mm (now worth $2bn) in China Music Corporate (TME predecessor). PAG is a private equity firm and in the interview, Shan says CMC was an earlier stage investment than they’d usually consider, but back even in 2014, he saw that the company could quickly become a monopoly because of all the copyrights they’d accumulated (70%+ of the music rights in China). TME has a high barrier to entry that seems to be growing.
The King of Commerce
[In 2020, WeChat] facilitated 1.6 trillion yuan (close to $250 billion) in annual transactions through its “mini programs,”
I saw a lot of people citing this # on Twitter as impressive and by any global measure, it is. But as just a gut check, it’s lower than I thought it would be.
Also noteworthy is that the WeChat Mini-Games platform is at 500mm MAU, about 1/2 of WeChat’s total MAU of 1bn.
Mini Games were added to WeChat at the end of 2017, allowing users of the app to play games without downloading them. Popular titles such as Jump Jump reached 100’s of millions of people in its first year. Data from Tencent shows that there is a roughly 50/50 split between male and female players of mini games. Around 66% are over 30 while 60% are from outside tier 1 & 2 cities. Play time increased 50% YoY in 2020 and the number of games played increased by 20%. Most mini games monetise through [advertising], but there is an ongoing shift to more core experiences with [purchases] as gamer demands change. In 2021, Tencent plans to focus on live streaming integration, PC integration, playable ad integration and better sharing tools.
(h/t Niko Partners)
Clubhouse and Commerce
In Clubhouse’s blog post on the fundraise, they say:
Over the next few months, we plan to launch our first tests to allow creators to get paid directly—through features like tipping, tickets or subscriptions
Reminds me of some of the monetization strategies used by Chinese companies, including Tencent Music, which I wrote about at length. It’s exciting to see some of these Chinese social monetization models beginning to take hold in western apps. With the exception of Twitch and Onlyfans that already use tipping, the trend hasn’t caught on in the west (Instagram is running a pilot around this w/ ‘badges’).
In my Tencent Music post, I also talk about how comedians have been having a lot of success with ticketing and subscriptions during COVID. From my write up:
For example, again in the comedy podcaster realm (which seems to be very innovative), ‘Your Mom’s House’ (a podcast by a comedian husband and wife) has been hosting live video events that cost $10/person. They also built a site (https://livestream.ymhstudios.com/) where upcoming and past event links live. Doing some napkin math, it seems like the average YouTube video for their flagship podcast gets about 500,000 views so if even 1% of that converts to a $10 live stream, that’s $50,000. That number is likely much higher as the 500,000 views undersell their whole reach since it’s not inclusive of people who listen to only the podcast and don’t watch the video.
Clubhouse and the Firewall
Speaking of Clubhouse, I noticed that (1) there are lots of Mandarin Chinese rooms on Clubhouse (2) Many of my friends are posting about Clubhouse on their WeChat Moments (whether screenshots from conversations they’re in or their user names to get people to follow them).
How long until Clubhouse is blocked by the Great Firewall?
Apparently, Clubhouse invite codes are becoming hot merchandise in China, going for upwards of 400 yuan (US$61) on secondhand marketplaces and Taobao. Wonder if anything cleared at those prices. My friend Alyssa points out that invites are going for $100 in Taiwan. I’m a seller at those prices ;)
(p.s., I’m @ryanrodenbaugh on clubhouse)
Thanks for reading!