Can Baidu Literature Beat Tencent When Fighting For The Market of Cyber Literature?

Cyber literature, the next battle field?

November 6, it is reported that Cloudary has been purchased by Tencent, which means another giant in the area of cyber literature has been merged into the Tencent’s business empire. So far, Tencent has had chuangshi.qq mainly for male users, and yunqi.qq mainly for female users, and now vast amount of high-quality content resources form Cloudary can also be accessed within any cyber literature platform of Tencent.

Some believe that Tencent will soon dominate the cyber literature market. But really? Probably not.

On November 27, the inaugural meeting of Baidu literature was held in Beijing, claiming that three sub-brands including zongheng.com, shucheng.com and panda reader will be integrated into Baidu literature. Though failed in the purchase competition of Cloudary, Baidu fought into the battle field of cyber literature anyway.

Some people claim that, considering the relatively small consumer base of Baidu literature (more than 40% of active users were occupied by Tencent and Cloudary, while only 8.4% were occupied by Baidu’s Zongheng.com) (enfodesk, 2013), and the low brand awareness (as for the brand first reference rate, qidian.com of Cloudary and readnoval.com of Tencent ranked 1^st and 3^rd with 32.8% and 8.3% respectively, while zongheng.com of Baidu came in only after 6^th with the first reference rate of less than 5%) (enfordesk, 2013), the future of Baidu literature is pessimistic, because Baidu is lack of core competitiveness in this field.

The market share of cyber literature in mainland China, Q3 of 2014.

However, in my view, that’s not the truth, and the 3C’s triangle model may help us better understand the situation of Baidu.

According to the report of enfordesk (2013), as the growth of the user amount, it is becoming more and more difficult to enlarge the user base depending on the advantage of channels. Instead, high quality content is becoming the most important resource to attract users. Therefore, in the cyber literature market, the one who gets the best and most popular authors with the largest quantity will win.

Table 1: Evaluation of the core content resources of main cyber literature websites.

Core Resources	Number of active authors	Number of editors	Number of novals	Total
Weight	30%	25%	45%
Cloudary	8	7	9	8.2
Tencent literature	5	4	4	4.3
zongheng.com	5	4	6	5.2

(All data comes from the report of enfordesk (2013).

As shown in table 1, though performs not as well as Cloudary, zongheng.com of Baidu is much better in terms of core content resources and Tencent literature. What’s more important, the fees paid by zongheng.com for authors are always at a higher level than the average of the industry. As for profit sharing, zongheng.com was used to reserve only 30% of the profits while render 70% to the authors. And Baidu goes even further in this aspect, insisting to render 80% of the profits to the authors. Considering all these “author friendly” policies, Baidu literature is quite potential to attract more high-quality authors to further develop its advantages on core content resources.

Moreover, in terms of discovering and cultivating new authors, Baidu also has advantages. Baidu Post (百度贴吧) has always been one of the most popular gathering place for millions of active authors of fan fictions. With the data collected about these existing users, Baidu can easily find out vast amount of potential authors.

Now we have seen Baidu’s great potential to gather core resources and move further to become a market leader. But the question is: with only 20% of profits reserved, how can Baidu make enough money to survive and thrive?

The simple answer is: fans economy.

Actually, Baidu has long been a master of running the fans economy. Everyday, Baidu gains large amount of traffic from Baidu post. Similarly, the accumulated fans will be new resources of profits for Baidu. On one hand, with the help of the big data, Baidu may earn more by providing precision marketing services; on the other hand, since Baidu has the ambition to further integrate Baidu literature with other products under its brand, such as Baidu game, Baidu music and Baidu video, and it has already signed with several partners in the area of game development and film and television production, the fans will also be a strong support for its strategy to create a complete industrial chain.

Reference:

互联网巨头介入网络文学 http://211.71.215.185/ChuanMeiJingJi/content/2014-03/17/content_30914_2.htm

易观分析：2014年第3季度中国网络文学市场竞争格局盛大文学一家独大 腾讯文学步步紧逼 http://www.enfodesk.com/SMinisite/newinfo/articledetail-id-418537.html

中国网络文学产业年度报告www.enfodesk.com/SMinisite/newinfo/meetingdown-id-120.htm

Zhihu: Next Step, How To Make Money?

Zhihu, how can it make money?

Zhihu, a Q&A community website in mainland China, was opened in December, 2010, not long after the subject being imitated Quora being opened to general public. So far, Zhihu has got 2.5 million UV on average everyday and 60 million UV on average every month, with 6 million of them as registered users (tech.sina.com, 2014). It is quite a large user base, comparing to the 0.18 million active users of its model Quora (Anita, 2012), even taking into account the difference of population base between China and America.

However, there is one question having not yet been answered: how can Zhihu make money?

Profits come from the core resources. Then what core resources does Zhihu have? The short answer is: high quality content, high quality users, and data collected about these users.

So the question becomes: what can Zhihu make out of these core resources?

Since very similar resources are also owned by Quora, again, we may take Quora as a model. What has Quora done?

According to several interviews of Quora’s Chief Executive Officer Adam D'Angelo, Quora has tried a lot of methods including providing ad services on its sub-productions like blogs, and charging for premium functions, services or content (tech.qq.com, 2013). However, none of them has become mature enough to ensure a promising future.

In addition to Quora, some other Q&A community websites both in America and in China are also exploring their own profit models. Stack Exchange, regarded as the best example in terms of earning profits, offers recruitment services in addition to ad services by collecting and analyzing the professional answers from the users and recommending the wanted ones to the right companies, and therefore can get payment from those recruiters (Huxiu.com, 2013). Another company PeerPong tried to get users to pay for the high quality answers from authorities or experts (TechWeb.com, 2010).

A more interesting example can be found from a science community website, Guokr.com. Depending on the professional users it has cumulated, it on one hand, provides some technology consulting services for business corporations and reserve parts of the service fees; on the other hand, it collects the articles users created on its website and get them published by its own publishing company.

All these, at least provided several solutions to the problem of profit model of the Q&A community websites. But to go a step further, we need to ask: are they really suitable for Zhihu?

Though ad services sound like a good choice considering the large user base, the benefit may not outweigh the cost at least at the current stage, because of its harm to the user experience. Then what about native advertising? Unfortunately, it’s nearly impossible. On Zhihu, the rank of the answers is determined by the votes from every user, which means the site administers have no privilege on choosing the best answers. Therefore, for companies, it’s no use pay for Zhihu to put their native ads into the community, and if they can make their native ads rank high by improving the content, there is no need to pay for Zhihu.

As for charging the users for high quality answers, it is still not clear to what extent Chinese users would like to pay for digital reading. According to the report from Chinese Academy of Press And Publication, in 2013, 38.7% of digital reading users claimed that they may accept paying for the readings, the ratio is even lower than that of 2012, which was 40.1%. However, 41.3% of users reported that whether or not they would like to pay is determined by the quality of the content (China Youth Daily, 2014). Considering that content of Zhihu has long been regarded as highly qualified, charging users for high quality answers can be a possible choice for Zhihu to make profits.

While deeper mining, developing and publishing of the content and offering consulting services by collaborating with users might be the most promising methods for Zhihu. These are also the most relevant methods to its core resources.

In sum, to make money is important, but user experience can never be sacrificed. Considering the high value of the UGC and users themselves, for Zhihu, to build its profits on the high quality content and professional capacities of users may be a wise choice in the near future.

Reference:

知乎完成2200万美元B轮融资：软银赛富领投

http://tech.sina.com.cn/i/2014-06-13/18069435501.shtml

社会化问答网站Quora的四种盈利方式 http://kuailiyu.cyzone.cn/article/39.html

Quora创始人安吉洛：不为眼前利益放弃长远计划

http://tech.qq.com/a/20130108/000012.htm

比Quora活得更好的问答社区：Stack Exchange

http://www.huxiu.com/article/21379/1.html

Quora等问答网站迅速窜红 硅谷热议盈利模式

http://www.techweb.com.cn/world/2010-08-06/656498.shtml

国民数字阅读普及 但付费意愿更弱

http://zqb.cyol.com/html/2014-06/19/nw.D110000zgqnb_20140619_2-07.htm

Why isn’t Chrome popular in mainland China?

It was reported that Chrome has been the most popular desktop browser worldwide. But in mainland China, things seem quite different.

According to StatCounter, Chrome controlled 51.31% of the world desktop usage share in October 2014, ranked as No.1, far beyond that of IE, FireFox and other desktop browsers (StatCounter, 2014). While according to the data from CNZZ (2014), we can find that the ratio of usage of Chrome in mainland China is only 8.45%, ranked after IE (35.95%) and Qihoo 360 (28.04%).

Figure 1. The worldwide usage share of browsers. From statCounter.

The difference between its usage share worldwide and in mainland China is astounding! The question is, why?

Of course Google has shut down its search service in mainland China, which may more or less influence the usage share of the browser under its brand. However, chrome is not blocked in Chinese mainland market anyway, and its fast speed, high stability and simple interface design should still be attractive to Chinese net users. Actually, it’s understandable that the usage share of Chrome is not as high as IE in mainland China, since IE has been bundled with windows operating system, whose market share is still over 90% by October 2014 according to data from tongji.baidu.com (2014). So the most confusing and interesting question is: why does Chrome lag so far behind Qihoo 360 in terms of usage share.

Figure 2. The market share of desktop operating systems in mainland China. From tongji.baidu.com.

Since both of these two browsers are free, it is logical to assume that the choice decisions of consumers are determined mainly by how the browser can satisfy the consumers needs. To answer this question, a survey was conducted among college students in mainland China to see how they evaluate these two browsers’ performance.

After several interviews, 14 attributes relevant to desktop browsers have been found to be important for consumers when they make choices between different browsers including speed, stability, anti-virus capacity, memory usage, CPU usage, simplicity of the interface design, ad blocking feature, online banking and online payment support function, safety for online shopping, account synchronization, smart search bar, plug-ins and additional features, functional integration of the products under the same brand, and large amount of users.

Table 1. Consumers’ evaluation of Qihoo 360 and Chrome.

N = 64

wi = The level of importance of the attributes. 1 = very unimportant, 7 = very important.

ei = How the browser performs on each attribute. 1= very unsatisfactory, 7 = very satisfactory.

Survey results collected from 64 respondents have been shown in Table 1. So what can we see from this table?

It is interesting that though the overall score Chrome got is higher, and it actually performs much better than Qihoo 360 on several attributes including speed, stability, simplicity of the interface design and plug-ins and additional features, however, Chrome lags behind in three very important attributes including safety for online shopping, anti-virus capacity and online banking and online payment support function, which ranked as the first, fourth and fifth respectively in terms of the level of importance.

So, yes, the high speed and stability rendered by Chrome is truly attractive, and Chinese people do realized the advantage of Chrome in these aspect, however, it cannot outweigh its disadvantages in terms of support for online shopping. In fact, it is claimed that many online banking services and online payment services can only be used on IE or browsers with IE’s rendering engine such as Qihoo 360. What’s worse, the lack of support for online banking services may lead to consumers’ distrust of the browser’s capacity of ensuring the safety of online shopping, while the promise of compensation in case of any infringement happening offered by Qihoo 360 (users can get the compensation only when they do online shopping using Qihoo 360's browser) seems really attractive and important for Chinese users. Considering the more and more important role of e-commerce for Chinese people, it is really a big problem that Chrome need to solve urgently if it does not want to lose more consumers.

In sum, for mainland China net users, e-commerce is becoming a big part of their life, and more importantly, is shaping their decisions on choosing relevant productions or applications more and more often. It is time for Chrome to consider more seriously about this issue and pursue more partnership with banks, institutions and companies in the area of online banking and e-commerce.

Reference:

StatCounter. (2014). Top 5 Desktop Browsers on October, 2014.

http://gs.statcounter.com/?PHPSESSID=283706te36nvbeavqq4083og37#desktop-browser-ww-monthly-201410-201410-bar

CNZZ. (2014). 桌面浏览器变化趋势.

http://data.cnzz.com/main.php?s=brow&uv=0&type=2&date=2014%E5%B9%B408%E6%9C%88

百度统计流量研究院. 操作系统市场份额.

http://tongji.baidu.com/data/os