Editor's introduction: There are many giants in the online audio industry, but how do players who enter this track find profit points and find the best iteration direction for online audio products? This requires the online audio industry to solve the problem of monetization, deepen the emphasis on content, and enhance the stickiness of users to products. The author of this article has made an interpretation of the current development of the online audio industry, let's take a look.
The frequent use of electronic devices has aggravated people's eye fatigue, but in the Internet information age, the acquisition of information content is extremely important.
Based on this, audio content that can enable people to obtain content information without increasing the burden on the eyes has gradually won the favor of many users. In addition, the "companion" characteristics of audio also make it cover a wider range of scenes, and it also establishes a high degree of connection with the user's life.
Affected by many factors, the user scale of the online audio industry has shown a steady upward trend, and the "ear economy" has become increasingly popular, and many well-known online audio platforms such as Himalaya, Lychee, Dragonfly FM and so on have been born in the industry. Recently, with the head enterprise Himalaya once again handing over the watch to the Hong Kong Stock Exchange, the attention of all parties has once again been pulled back to the field of online audio.
First, the commercial shackles that cannot be shaken off
The data shows that compared with short videos, long videos and online music, online audio occupies the longest average daily time of active users on mobile terminals, reaching 117.4 minutes. According to the China Business Industry Research Institute, the revenue of China's online audio market increased from 1.6 billion yuan in 2016 to 13.1 billion yuan in 2020, with a compound annual growth rate of 69.4%. Whether it is the length of user use or the size of the market, online audio shows great potential for development, but the dark tide surges under the highlights, and the "sound" meaning of online audio is not so easy to do.
First, the problem of realization has not yet found the optimal solution, and loss is still a common phenomenon.
As far as the current situation is concerned, the inherent monetization problems of the audio industry still exist, and even the leading enterprises in the industry are trapped in the quagmire of losses and difficult to get out. According to the prospectus, from 2019 to 2021, Himalaya's annual losses were 1.925 billion yuan, 2.882 billion yuan and 5.106 billion yuan, respectively, and the losses in 2021 widened by 77% year-on-year; the adjusted annual losses were 749 million yuan, 539 million yuan and 759 million yuan, respectively.
Although Lychee, which was listed before Himalaya, has seen the dawn of profitability and achieved single-quarter profitability, in terms of annual dimension, lychee is still in a state of loss, and whether it can continue the profitability of the fourth quarter is also unknown. According to the data, from 2017 to 2021, the net loss of Lychee was 150 million yuan, 9.342 million yuan, 130 million yuan, 82.18 million yuan and 127 million yuan, respectively.
Second, the willingness of users to pay has gradually increased, but their base is still small.
Membership payment is one of the important sources of revenue of online audio platforms, although the willingness of users of online audio platforms to pay has increased compared with before, but users who are unwilling to pay still account for the majority, and membership payment income cannot cover the increasingly high cost of content, which also exacerbates the difficulty of online audio platform profit landing.
According to the prospectus, the number of paid members of Himalaya in 2021 was 14.4 million, an increase of 52% year-on-year, and the payment rate of mobile users was 12.9%. It is worth noting that in 2021, the average monthly active users of Himalaya's mobile terminal reached 116 million. According to the financial report data, the average monthly paid users of Lychee in 2021 were 488,000, and its payment rate was only 0.8%.
Third, the problem of service homogenization makes the platform face the risk of user loss.
Although many online audio platforms such as Himalaya, Lychee and Dragonfly FM are actively seeking differentiation, there is a homogenization problem in both business and service, which also means that it is difficult for users to continue to stick to an audio platform. If there is a lack of high-quality content, it is difficult to increase the conversion rate of subscribers, and users who are acquired at high prices on the platform may also switch to other audio platforms.
Second, the Himalayan multi-line attack
According to Ai Media Consulting data, in the first half of 2021, Himalaya became the online audio platform with the most choice of users with a high market share of 65.5%, followed by Lychee and Dragonfly FM accounted for 39.5% and 35.8% respectively. Although Himalaya is firmly at the top of the industry, it still faces many challenges such as losses. In the face of these challenges, Himalayas have also started from many aspects to lay out and seek ways to break the game.
First, build a diversified business and increase monetization channels.
Specifically, Himalaya's business can be divided into four major segments: subscription, advertising, live broadcasting and other innovative products and services, and the revenue sources are already diverse enough. According to the prospectus, The total revenue of Himalaya in 2021 was 5.86 billion yuan, an increase of 43.7% year-on-year.
Among them, subscription revenue was 2.99 billion yuan, an increase of 49.0% year-on-year, and revenue accounted for 51.1%; advertising revenue was 1.49 billion yuan, an increase of 38.8% year-on-year, accounting for 25.4%; live broadcast revenue was 1 billion yuan, an increase of 39.6% year-on-year, and revenue accounted for 17.1%. Although subscription revenue still accounts for a large proportion of the total revenue structure, other businesses have also shown a rapid growth trend.
Secondly, Himalaya adopts a three-pronged model of PGC +PUGC+UGC to continuously deepen the content moat.
The reason why Himalaya can win the favor of the majority of users is not unrelated to its massive content, and the richness of content is related to the strategy adopted by Himalaya. Among them, PGC refers to professionally produced content, PUGC refers to professional/professional user-generated content, and UGC refers to user-generated content, and the three-mode parallel strategy greatly enriches the content library of Himalaya.
In order to meet the needs of more users, Himalaya's content categories are also constantly improving, such as the launch of novels, history, humanities, film and television, Chinese studies and many other categories. According to the prospectus, the number of content creators in the Himalayas in 2021 exceeded 13.51 million; the overall number of audio produced by the platform was 340 million; and the number of audiobook audio was 4.9 million, covering more than 100 types of extensive audio content.
Finally, increase the size of hardware terminals to broaden the application scenarios. While launching smart hardware products, Himalaya is also cooperating with other companies to broaden its content application scenarios.
For example, in terms of smart speakers, the data shows that Himalaya and Ali, Xiaomi, Baidu, Tencent, Huawei, Midea and many other leading enterprises have reached cooperation to provide content resources for them, more than 93% of smart speakers have access to Himalaya's content; in terms of on-board scenes, Himalaya has carried out in-depth cooperation with more than 95% of auto companies such as Tesla, Porsche, jaguar Land Rover, and TOP30 car brands have been connected to Himalaya's audio services.
Third, the lychee turns the direction
Compared with Himalaya's ups and downs of IPO journey, Lychee's listing road is much smoother. Lychee has not only been successfully listed, but also achieved a single-quarter profit in the fourth quarter of 2021, which is undoubtedly a good signal. In the face of the increasingly crowded audio track, all parties are secretly accumulating strength to add weight to the subsequent competition, and Lychee is no exception.
On the one hand, Lychee is based on the original audio community and strengthens its social attributes.
The audio community should be the biggest feature of Lychee that is different from other online audio platforms in China, and coupled with the fact that Lychee takes the UGC route, users are particularly important. Lychee also continuously improves the construction of content ecology by creating exclusive activities and promoting the construction of content categories, and enhances the connection between users and the platform by strengthening social attributes, enhancing users' interaction and participation.
On the other hand, we are steadily pursuing a globalization strategy to find new business growth points.
As early as 2019, Litchi officially proposed its globalization strategy and launched TIYA, a sound social platform aimed at overseas markets. In addition, in the latest financial report, Lychee also made it clear that it will further promote the globalization strategy in 2022.
There are two reasons why Lychee attaches so much importance to the overseas market: First, the domestic online audio field is fiercely competitive, and the growth of user scale is increasingly approaching the ceiling, and Lychee adopts the UGC operation model, which requires a certain volume of users as the support, going to sea will help Lychee find new business growth points; second, the audio industry has a high penetration rate in overseas markets, and Lychee does not need to spend too much effort in cultivating user habits. According to CNNIC data, the network audio penetration rate in mainland China is 28.6%, which is a big gap compared with the 47% penetration rate of the US market.
Lychee's ongoing journey to sea has also brought positive feedback to Lychee. According to Lychee's financial report, in December 2021, TIYA's average daily real-time voice room length per user increased by 68% over the same period last year; the logarithm of users' friend relationship chains also increased to 14 times that of the same period last year.
In addition, Lychee also continues to increase technical codes to improve user retention rates.
In addition to content, the sense of audio experience is also a key element for users to choose a platform, and Lychee is also continuing to innovate in order to bring users a better audio experience and enhance user stickiness. At the same time, Lychee's self-developed technology also helps it to extend the scene. It is reported that Lychee has reached cooperation with many car companies and car networking companies such as Xiaopeng Automobile and Botai Car Networking.
Fourth, new competition and new balance under the new situation
At present, the frequent actions of online music platforms such as Himalayas and Lychees have achieved certain results, but there are still problems in front of Himalayas and lychees.
From the perspective of the industry as a whole, the rise of short video platforms has divided the attention of users to a certain extent, which in turn has affected the development of online audio platforms.
According to the 49th "Statistical Report on the Development of China's Internet Network" released by CNNIC, as of December 2021, the user usage rate of short video users was 90.5%, and the user scale reached 934 million. Users have a limited amount of time, and in the meantime, the user time allocated by online audio platforms will be reduced, and as video platforms are "audio", the competition faced by Himalayas will heat up.
In addition, the entry of many large manufacturers has also intensified the competition in the online audio industry.
There are not many players in the field of online audio, such as Tencent Music launched "Cool My Listening", ByteDance launched "Tomato Listening", and NetEase Cloud Music also launched the content section "Sound Theater". These giants not only have traffic advantages, but also have a lot of advantages in content, IP and other resources, and the entry situation of these players will inevitably have an impact on the original online audio platform.
In addition, the balance between content and commercialization is also a key point of content for online audio platforms.
Content is the most critical element of online audio platforms to attract users and retain users, and platforms need to pay large content costs to continuously expand their content libraries, and these fees need to be covered by the platform through commercialization. If the platform commercialization cannot run through for a long time, it will fall into a situation where it cannot make ends meet.
Taking advertising as an example, although advertising is an important source of revenue for the platform, the frequent delivery of advertisements will also affect the user's sense of experience. This is undoubtedly contradictory, and how to grasp the degree between content and commercialization is also a major test facing online audio platforms.
All in all, the online audio business that "sounds" wonderful is not easy to do, and new battles are still playing out. In this fast-paced life, there is obviously not much time left for audio platforms.
This article was originally published by @Leek Finance in Everyone is a Product Manager. Reproduction without permission is prohibited.
The title image is from Unsplash, based on the CC0 protocol.