For the past two days, the focal point of Chinese technocrats has been on the war for talent between two rising content-focused startupsโToutiao and Zhihu. On August 29, a celebrity microblogger on the Quora-like platform Zhihu posted on WeChat moments about the news aggregator app Toutiao poaching authors (our translation):
Toutiao has signed more than 300 big Vs this year so far, and it has just signed me, at a compensation higher than that of an average white-collar worker. After signing with Toutiao, an authorโs content cannot be reposted to Zhihu. The quality of Zhihuโs articles are going down as all the good content creators have been poached.
Toutiao, the four-year-old Chinese startup whose valuation surged to over $22 billion, launched its own Q&A platform in 2016 eyeing the monetization promises: users can pay for an industry expert, or an internet celebrity, to answer questions. Established and new internet companies in China are betting big on content as user acquisition costs in the country become higher. In a world of information overload, netizens increasingly long for quality, targeted digital content.
Started in 2011, Zhihu has evolved into a haven for well-educated users from top tier cities to share and consume knowledge. By the time the company was crowned a unicorn after its $100 million series D in January, it had accumulated 65 million registered users with 18.5 million active daily. Toutiaoโs daily active users are at a meteoric 120 millionโalmost one tenth of the nationโs populationโaccording to a leaked investor deck (in Chinese). The news appโs ad revenues are also growing at an alarming pace: from RMB 300 million ($45.58 million) in 2014 to RMB 8 billion ($1.22 billion) in 2016. The amount is still a fraction of the countryโs digital advertising giant Baiduโs RMB 64.5 billion ($9.8 billion), but Baidu started 17 years ago.
This is not the first time Toutiao has waged a war over content. Not long ago it announced an RMB 1 billion ($150 million) subsidy plan (in Chinese) for its new short video arm Huoshan and has reportedly won over MC Tianyou, a top influencer from Kuaishou, currently Chinaโs biggest short video app by monthly active users. Some commentators point to Toutiaoโs surreptitious poaching tactic; others, including writer Zhang Jiawei, say that itโs normal for a writer to jump from platform to platform (in Chinese).
โIt doesnโt hurt to have another source of revenue,โ Zhang replies to a Zhihu post debating the talent grab. โContent monetization, as they call it.โ
