At TechCrunch Beijing this week, Zhang Yiming, founder and CEO of Chinese personalized news app Toutiao, sat down with TechCrunch China editor Shuhang Lee for a brief discussion about the much-buzzed-about startup.
In less than two years, the news feed app has registered more than 120 million users, becoming one of the most popular apps in its kind and raised a massive round of US$100 million of Series C funding at a valuation of US$500 million earlier this year.
Popularity aside, Toutiao is troubled by controversial reputations when traditional media, portal websites and even some individuals jointly participated the criticism against it for copyright infringement issues. Chinese mainstream media Souhu has filed a lawsuit against the company, claiming huge economical indemnities.
As a content distributor, Toutiao does not generate contents itself, but crawl content and reformat it onto its own application. The complaints emerged mainly because Toutiao reformats the information for transmission from its own servers, usually removing original ads and replacing them with Toutiao’s own, as well as its deep linking and transcoding.
When talking about content source, Zhang said it is very common for Chinese media to reprint contents generated by other sources, in some cases, it is very hard for Toutiao to determine which is original source of a certain article. This problem is significant because it concerned with the issue that to whom the advertising revenues should be shared with.
To address this question, Toutiao is launching a program to register mainstream medias known for their original contents to protect their rights. Registered medias can receive revenues from contents after they claimed to be the original source, even though they publish the contents latter than other sources.
The company’s revenue mainly comes from enterprise advertisers. Although there are more monetization options like charging for premium contents etc., Zhang still considered advertising or smart ads as their the main source of revenue. He added Toutiao is also trying to integrate the services of its ad clients into the app, since redirecting users to other apps or payment methods after they tapping the ads may harm user experiences, he said.