INSIGHTS | The state of China’s ‘ear economy’ in 2019

I’ve been a fan of podcasts for a long time. Starting in 2009 (around the time I started at China Radio International’s English service), I listened to shows such as No Agenda, Hardcore History, and This Week in Tech. Back then, I thought the podcast market was pretty mature. At least the production values on these shows were quite high and they all seemed to be making money through a combination of donations and ads. At the time, podcasts were almost unheard of in China.

Fast forward to 2014. Apple’s China operations begin to take podcasting in China seriously. In need of content, they convinced our radio station to upload episodes to their platform. Around that time, we also started uploading our content to local audio platforms like Ximalaya and Lizhi.fm. By the time I left in 2015, we still hadn’t gotten much traction online: podcasts weren’t mainstream and, to tell the truth, we weren’t putting in any extra effort for online listeners.

In 2019, the market for audio content looks quite different. Popular “traditional” podcasts (like the podcasts on our network) are monetizing enough to support full-time teams while audio content platforms are leveraging mobile payments to tap into China’s aspirations for self-improvement.

Bottom line: As with the rest of the world, spoken word content is quickly finding its way into China’s ears. However, like everything else, there are some very unique Chinese characteristics:

• Most of the growth has been in walled gardens.
• The walled gardens monetize through ads, fees for one-off downloads and subscriptions, and e-commerce integrations.
• Most of the content in walled gardens tap into aspirational drives with the highest-grossing content focusing on education and self-improvement.
• “Traditional” podcasting is one of the only bastions of the open web remaining in China. But don’t expect it to stay this way for long.

With its growing popularity, there’s a big opportunity for audio influencers (KOLs) to define their niche and monetize their audience. The audio market may never become as large as the video market (some estimate that up to 30% of the population process information best through listening and speech), but there’s still room for savvy players to make a decent living.

China Tech Talk 83: Podcasting and why the open web is dead in China with Rio Zhan

State of the market: In general, there are two types of podcasts in China: RSS-powered and knowledge products.

RSS-powered

• Using the mechanisms created in the early days of mobile devices, creators distribute their content on a variety of platforms, including Apple Podcasts, Spotify, and Chinese audio platforms.
• There is no way to directly monetize and content is not restricted to a single platform.
• Monetization happens through ads and e-commerce.
• Users listen to topics they are interested in, mostly for entertainment.

Knowledge products

• Creators publish exclusively to a single platform.
• The platform takes care of promotion, subscription management, and payments processing.
• The platform is also responsible for making sure the content isn’t “sensitive.”

The ear economy landscape

• Ximalaya, Lizhi, and QingtingFM are the three largest platforms (in that order). All three host RSS-powered and knowledge podcasts.
• The audio content market grew 22.1% from 2017 to 2018, faster than mobile video (13.6%) and mobile reading (6.2%).
• The video and reading markets, however, were still about twice the size of the audio market.
• As of Q1 2019, 51.5% of audio content users were male. 48.5% were female. 33.5% were 24 or younger.
• The use of audio content apps increases dramatically as the day goes on with usage peaking between 10 pm and midnight, according to data from January 2018.
• Audio content apps were the second most-used app category during that time frame, after music apps.

The opportunity for audio KOLs: In April, Ruhnn Holding, a KOL incubator and MCN, went public in the US. At the opening, they raised $125 million. The IPO of a KOL company opened eyes in the marketing and influencer industry: investments into KOL brands might actually see some return. While not yet public, sources I’ve spoken to predict an uptick in investments into such brands and companies, signaling that the KOL economy is still in its infancy.

For audio content creators, this is nothing but good news: not only is growth in audio consumption showing strong growth, but the entire KOL industry still has lots of room.

BB Park (日谈公园) is much like your typical radio talk show. Through first-mover advantage, great content, and good relationships with audio platforms, they’ve been able to go from a few friends podcasting as a hobby to a ten-person full-time team. While the format may be different, the monetization model is almost the same as other (usually live-streaming or short video) KOLs: sponsored ads and show segments as well as e-commerce. At one point, the show sold over RMB 100,000 worth of coffee packets in one day.

The last bastion of the open web: Started under Hu Jintao and intensifying under Xi Jinping, content and the platforms that host it are in a precarious position. Once surprising, content platforms are being taken off app stores and ordered to “rectify” their content policies often enough that it’s no longer a shock when it happens. As I’ve written previously, content watchdogs regularly use “vulgar” content as a tool to guarantee compliance with content standards.

Apple, hands down, owns the podcast market globally. While Spotify is definitely making in-roads (doubled market share from 2017-2018), Apple had 63% market share as of February 2019. Most hosting services automatically distribute to the largest listening platforms, including Apple Podcasts, Spotify, Stitcher, and others. That means if you’re a podcaster and want to be on Podcasts, you’re also distributing to all the other platforms as well. Many of these don’t have operations in China nor do they have plans to. To put it plainly, audio content creators can easily distribute to platforms that China has no jurisdiction over, effectively bypassing content regulations and controls.

For Apple, however, that is just not the case. A quick search on the Chinese Podcasts app (iOS services differ depending on the country associated with the account), reveals that not only are TechNode podcasts not available, but also podcasts like the Joe Rogan Experience and Hardcore History are nowhere to be found! Surprisingly, WTF with Mark Maron, The Jordan B. Peterson Podcast, and Making Sense (all controversial in their own way) are still available. Also, I’ve heard many stories of people who cannot use the Podcasts app with scaling the Great Firewall first.

The logic behind what is and is not available needs more digging: I’ve submitted a support query about our podcasts, but I’m not optimistic that I’ll receive an understandable or actionable response. At the end of the day, however, it’s clear that the podcasts market is still yet to mature. While it may never be as powerful as video, it is still a powerful medium and I’m glad to see it developing.

With contributions from Coco Gao