Online audio rivers and lakes: content wars, scene battles, AI games

Image source: @VisualChina

Text | Liu Kuang

The popularity of smart terminals has given the "ear economy" more room to play, and even online audio platforms have achieved new growth. Recently, the online audio track has been full of good news, first Himalaya announced its first quarterly profit, and Litchi also announced its first full-year profit.

Yu Jianjun, founder and CEO of Himalaya, revealed at the company's annual meeting: "Himalaya achieved a single-quarter profit of tens of millions for the first time in the fourth quarter of 2022. "From 2019 to 2021, Himalaya has lost more than 2 billion yuan in several rounds of financing, and its first profit ten years later is historic.

Coincidentally, the 2022 full-year financial report of Lizhi, a social and entertainment platform with audio as the core, showed that in 2022, Litchi achieved revenue of 2.185 billion yuan, a year-on-year increase of 3%; The net profit was 86.5 million yuan, compared with a net loss of 127.3 million yuan in the same period last year, which was the first full-year profit.

The online audio platform Jiuqian Peng Manna is very gratifying, making people wonder: the two major online audio platforms have announced profits one after another, does it mean that the online audio industry has begun to enter a profit cycle, and good days are coming?

Turnaround was hard-won

All along, online audio wasn't a good business, at least nowhere near as good as video, reading, gaming, etc. in terms of making money. Not making money is the original sin of the online audio industry, which has survived many entrepreneurs and investors, and Himalaya, which has the highest market share, has not yet been pityed by capital, and the road to listing has not been successful.

The reasons why online audio platforms continue to lose money and make profits are already clichéd: first, the commercialization path is not clear, and the monetization space has not been opened; Second, the competition in the online audio market is intensifying, making it more difficult to make profits.

In terms of commercialization, advertising, content payment, and live streaming monetization models are diversified but difficult to expand, and the profit model of online audio is still being explored. Over the years, online audio platforms have tried monetization models such as advertising, content payment, and hardware sales, but the advertising industry is weak, content payment has passed, hardware sales are small, and the platform's sustained profitability is difficult to guarantee.

Taking Himalaya as an example, the number of paying users is increasing, the monetization ability of paying users is declining, and the cost of paying for content is huge and the revenue is very small. It is understood that the monthly payment amount of Himalaya has decreased from 11.6 yuan in 2019 to 11.2 yuan in 2021, which is far lower than the average monetization level of the industry. According to China Insights Consulting, the average revenue per paying user of subscriptions in the online audio industry in 2021 was 22.50 yuan.

In terms of industry competition, the Internet giants coveting the "ear economy" have accelerated the layout of the audio track and vowed to compete with vertical players. ByteDance launched "Tomato Listening", Tencent synthesized "Lazy Listening", NetEase Cloud Music developed audio business... These Internet companies have advantages in copyright, capital and traffic, and online audio platforms have to be prevented.

Short videos such as Douyin and Kuaishou are also very deadly to the competition for user time. According to QuestMobile's 2022 China Mobile Internet Annual Report, short videos are already the app with the highest proportion of user time, accounting for 28.5% of total user time (15.2% in 2019).

The commercialization model of online audio platforms is not yet fully mature, and it has been squeezed by Internet giants and short video platforms, and the profit space has become narrower. In this context, Litchi's annual profit and Himalaya's single-quarter turnaround are valuable, but profit is not the end, and the platform has a long way to go to explore the road to sustained profitability.

"Content + Technology" two-wheel drive

In the audio track, content is the key factor to attract and retain users, and "content is king" is the consensus of platform development and the "must-fight place" for players.

Relying on strong copyright resources, "Tomato Listening" and "Lazy Listening" actively reserve IP copyrights, presenting works such as film and television dramas and literary novels in the form of audio output, and the user scale has maintained high growth. Similarly, Himalaya Plus code film and television, reading, games and other industries present well-known IP through audiobooks and audio dramas to attract users in other fields.

According to the Himalaya prospectus, from 2019 to 2021, Himalaya's monthly active users increased from 140 million and 215 million to 267 million, and in 2021, the monthly active users increased by 24% year-on-year compared to 2020. In the third quarter of 2022, Himalaya averaged 282 million monthly active users across all scenarios.

Regarding content production, Litchi chose to take the UGC route, which has strong social attributes but is inferior to other platforms in terms of scarcity, richness and quality of content, and the content appeal is slightly weaker. In the fourth quarter of 2022, the overall number of monthly active users of Litchi was 50.8 million, a year-on-year decrease of 6.1%. The total number of monthly average paying users was 491,800, down 5,500 from the same period in 2021.

In addition, the rapid changes in the production and presentation of Internet content, online audio platforms have to increase investment in the research and development of new technologies to meet the diversified and personalized needs of users, in order to survive in the fierce market competition.

On the one hand, the research and development of online audio platform technology mainly focuses on tools and management systems to improve operational efficiency, which is conducive to improving the efficiency of product R&D landing, marketing, and operation management. For example, in 2022, Lizhi launched its self-developed technology comprehensive platform "Sound Cloud", which aims to strengthen the middle and back office support for its business, including the launch of automated test platform, business intelligence analysis platform, intelligent delivery platform, etc.

According to the financial report, Litchi's R&D expenses for the whole year of 2022 were 283.3 million yuan, an increase of 7% from 264.7 million yuan in 2021, and the proportion of self-developed technologies was increased, and the expenses related to R&D services provided by third parties decreased.

On the other hand, the online audio platform develops new technologies to iterate new products to provide customers with better services and continuously improve user experience, in order to improve business performance.

Litchi chose to let AI robots "accompany the chat", launched the chatbot TIYA Bot module in the global social product TIYA App and launched the voice chatbot "Xiaoqiao" in its audio products, and plans to build a comprehensive AI interactive robot platform to drive growth with technology.

Himalaya chose to let AI produce content, and based on the self-developed TTS framework, different TTS sounds were produced to meet the diversified needs of users. It is reported that the number of albums produced by using Shan Tianfang's AI synthesized voice on the Himalaya "Shan Tianfang Voice Reproduction" account has exceeded 100 million, with a total of more than 100 million views.

At present, AI technology has been widely used in the sound field, and the production efficiency of platform content and user service level have been qualitatively improved, laying a solid foundation for the commercial application of online audio platforms.

The scene "breaks the circle" and accelerates commercialization

The scale of the online audio market is growing day by day, thanks to the wide application of smart devices such as mobile phones, speakers, and vehicle terminals, and the application scenarios of online audio continue to "break the circle".

According to a research report released by CIC, China's online audio market revenue maintained a compound annual growth rate of 69.4% from 2016 to 2020, from 1.6 billion yuan to 13.1 billion yuan. According to Analysys data, the size of China's online audio entertainment market has reached 22 billion yuan in 2021 and is expected to reach 103.8 billion yuan in 2025.

Smartphones, AI speakers, and Internet of Vehicles are fully popularized, and users' demand for audio content in multiple scenarios is gradually increasing, broadening the commercialization space of online audio platforms. To this end, online audio companies are accelerating the layout of multiple scenarios, among which application scenarios such as smart homes, wearable devices and vehicle intelligent terminals have achieved initial results.

The proportion of Himalayan user sources confirms that the popularity of smart terminals is the driving force for the growth of platform users. According to public data on the Internet, a large proportion of Himalaya's hundreds of millions of monthly active users in all scenarios are accessed through IoT terminals such as smart speakers, in-vehicle audio and other third-party open platforms.

In terms of automotive application scenarios, Himalaya, Lychee, and Dragonfly FM have cooperated with automobile manufacturers to seize the dividends of in-vehicle audio scenarios. It is understood that Himalaya has in-depth cooperation with Tesla, Porsche and other automobile companies; Litchi has reached cooperation with Xiaopeng, Xiaomi, Huawei, etc.; The cloud listening platform has carried out cooperation with BYD, Huawei and other industry leaders...

In terms of smart home, the online audio platform rides on the rise of smart home and embraces more smart home products, greatly enriching application scenarios and expanding the scale of the online audio market.

According to network data, Himalaya has reached cooperation with Ali, Xiaomi, Baidu, Huawei, Midea and other leading enterprises, and more than 93% of smart speakers are connected to Himalaya content. Coincidentally, Dragonfly FM has more than 500 head partners in the entire ecosystem, reaching more than 90 million built-in smart homes, wearables and vehicle-mounted smart terminals, and the content adjustment rate in smart speakers and other terminals is at a high level.

As online audio platforms and Internet companies and automobile manufacturers jointly build Internet of Vehicles and intelligent IoT homes, enterprises in these fields will implement "audio", which will become a considerable growth point in the online audio market in the future.

In short, occupying more scene services one by one is the main theme of the development of online audio platforms, and the scene battle between major players around the "full scene" has intensified, perhaps the fierce game of giants will promote the acceleration of the online audio industry.

Under AI, online audio collective "crazy"?

The pace at which the audio industry evolves with technology seems to herald the rise and fall of online audio platforms.

In the 80s and 90s of the last century, it was a prosperous period for the broadcasting industry, when the economy, life, sports, and music were subdivided more and more frequently, which can be described as the "era of national broadcasting", I don't know when the influence of radio stations declined and the number of users decreased; In the 21st century, with the rapid development of the domestic economy, the strong rise of Internet technology and artificial intelligence technology, online audio has once again ushered in a small peak of listening.

Today, the Internet era is developing into the era of the Internet of Things, the Internet of Everything is the new direction of technological development, and audio has become an important medium for the connection of "people and things" and "things and things", and the value of online audio platforms has been raised. At this moment, the upgrading of technology again, the integration of audio and entertainment industries, and the full coverage of application scenarios will promote the online audio industry to a higher level.

First of all, AI helps online audio to connect everything. Not only AI speakers, in-vehicle applications, smart homes, smart glasses, smart rings and other smart hardware, more and more intelligent terminal products are widely used, injecting new impetus into the online audio industry, while broadening the monetization channels of online audio platforms and improving the possibility of sustainable profitability.

Second, AI accelerates the production of audio content. The essence of the competition of online audio platforms is the competition of content, that is, the dispute between content dissemination and production, not only to ensure content production efficiency but also to ensure content quality, now UGC, PGC, PUGC, and other production methods, the emergence of AIGC brings more creative space for audio content production.

In addition, AI helps online audio platforms reduce costs and increase efficiency. In 2022, the key words in the Internet industry are to reduce costs and increase efficiency, in addition to reducing marketing and administrative expenses, thanks to the use of AI tools or AI systems to improve the efficiency of business operations and management, and the online audio industry is no exception.

To sum up, the new technology upgrade cycle brings new opportunities to online audio platforms, Litchi bet on AI chat, Himalaya focuses on AIGC, Dragonfly FM insists on "AI+ audio", the head online audio platform has taken the lead, the crowd is competing for the top, and the next golden development period of the audio industry is worth looking forward to.