Recalling the past ten years, Zou Shenglong, founder and CEO of Xunlei, concluded that premium subscription is the best consumer-facing business model for internet services, citing advantages it brings on cash flows, pricing power and building the overall platform (source in Chinese).

Founded in January 2003 and becoming one of the leading download and video streaming services in China, Xunlei introduced the subscription model in 2009. Till today, it has four million subscribers — 1% of the user base, paying RMB9.8 ($1.5) or RMB15 ($2.4) per month, to contribute approaching half of its total revenues. The company expects to have 10 million subscribers in two to three years.

The revenues generated by subscriptions as a percentage increased from 2.4% in 2009 to 16.9% in 2010 and to 26.4% in the three months ended March 31, 2011, according to its F-1 filing with SEC in July 2011.

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Tracey Xiang

Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com