If VIP is not enough, SVIP can make up for it. How deep is the membership "nesting doll" routine?

In the tide of the Internet economy, membership services have become an important source of income for major platforms, but the ensuing "nesting doll" membership fee model has caused a lot of controversy. From iQiyi's gold VIP member screen projection restrictions to WPS's complex membership structure, users are dissatisfied with this layered charging method. This article will explore the current situation and causes of the membership "nesting doll" routine and its impact on user experience and platform reputation.

If you ask me how deep the "tricks" of Internet membership are, just look at iQiyi and you will know.

On July 3, "iQIYI was sentenced to compensate 41 days of gold VIP membership" became a hot search, dominating the hot search list for 8 hours...

Weibo screenshot

The cause of the incident was that in early 2023, Zhu Yuan, a seven-year "old fan" of iQiyi, discovered that iQiyi limited the screen projection resolution of gold VIP members to 480P during his use of iQiyi. If a higher resolution was required, he had to upgrade to a higher level of membership. Before that, Zhu Yuan had continuously recharged to become a gold VIP member of the iQiyi platform for more than five years. During this process, he could choose any resolution of projection.

Screenshot of iQiyi membership price and benefits comparison

Zhu Yuan believes that "iQiyi's unilateral forced 'cutting leeks' behavior is a bit ugly." Because of the restriction on screen projection, Zhu Yuan decided to sue iQiyi platform in court. After more than a year of trial, the case was finally concluded in the first instance. The court ruled that iQiyi platform should compensate the plaintiff for 41 days of gold membership VIP time.

The matter is not over yet. On July 13, the plaintiff Zhu Yuan decided to appeal.

Zhu Yuan said: "Since the first-instance judgment gave me an additional 41 days of membership, I implore iQiyi to also provide the same length of time to gold members between January 11, 2023 and February 20, 2023." Zhu Yuan called for "Now I am the only one who won the case. The current mechanism makes it impossible for iQiyi to treat the damaged members equally. I personally think that this mechanism should be established as soon as possible."

Zhu Yuan Lawyer Weibo

In recent years, "nesting doll-style" membership fees have continued to emerge on the Internet. Membership fee increases, restrictions on device projection, restrictions on the number and method of device logins, and more member advertisements have caused many users to complain, and Zhu Yuan's continued appeal has also made a group of "victims" netizens shout "happy".

01 Big companies that rely on members

Once upon a time, the Internet business model was proud of the fact that the wool came from the pig. The Internet was still a white moonlight at that time, charging merchants and advertisers but not users.

Today, this white moonlight has long since turned into a "green tea bitch", which not only charges users, but also charges more in various ways.

If we take a look at the memberships of the major platforms, there are Meituan memberships and Ele.me memberships for food delivery; for online shopping, you can open Taobao 88VIP and Pinduoduo monthly cards; if you want to watch TV series and listen to music, there is no platform that does not require membership, such as iQiyi, Youku, Mango, Tencent, NetEase Cloud Music, and QQ Music; even reading novels on Zhihu and using Jianying templates have become paid items...

Screenshots of major platforms

Just when users were lamenting that "everything requires membership", membership income has quietly become the second largest source of income for major platforms. On long video platforms, it has even grown into the largest source of income.

Taking iQiyi as an example, iQiyi's revenue mainly comes from four parts: membership income, online advertising, content distribution, and other income, among which membership income and advertising income are the two core ones.

Before 2019, advertising was the most important source of revenue for iQiyi, followed by membership revenue. Since then, the company's business structure has undergone major changes, with membership revenue growing rapidly and advertising revenue declining. Now the two have completely switched positions. In 2023, iQiyi's advertising revenue dropped to 6.22 billion, accounting for only 19.5% of its revenue, while membership service revenue reached 20.34 billion, accounting for 63.7% of its revenue, almost three times that of advertising revenue.

The second is Mango Super Media. According to the 2023 annual report, in terms of membership scale, at the end of 2023, the effective membership scale of Mango TV reached 66.53 million, and the annual membership revenue reached 4.315 billion yuan, a year-on-year increase of 10.23%. In 2023, the advertising business achieved operating income of 3.532 billion yuan, a year-on-year decrease of 11.57%.

Let’s look at Tencent. Although it is not shown separately in the financial report, the number of paid members of Tencent Video is as high as 117 million, and the number of paid members of Tencent Music has also reached 107 million. Both are in the leading position in the industry, and their revenue cannot be underestimated.

In addition to the long video platform, the financial report shows that Zhihu's revenue in 2023 was 4.198 billion, a year-on-year increase of 16.5%. Among them, paid membership revenue reached 1.826 billion yuan, a year-on-year increase of 48.4%, which has exceeded advertising and is Zhihu's largest source of income.

Overall, membership income has become an important source of income for major platforms, and the wool is once again coming from the sheep.

02 Routine goes up, value goes down

Of course, the platform can rely on members to make a living, but it does not mean that users can accept the endless routines of the membership platform. Many users believe that they can pay, but they cannot accept having to pay again after paying.

"I've bought a membership but there are still ads," "I can't cast the screen after paying for membership and have to pay again," "I have to pay extra to watch movies and advance screenings." Various VIP, SVIP, super memberships; yellow diamond, deluxe yellow diamond; ordinary membership, gold membership, diamond membership, plus restricted playback...

Data source: Weibo Yidu Pro Huizhi

More and more users are beginning to dislike this membership "nesting doll" behavior. "I feel like I'm being ripped off, one crop after another," said Qiao Qiao, who has always loved editing and posting short videos on the platform. "I've been using Jianying for several years, and suddenly they started charging. I thought about getting a membership, but it turns out that membership is not completely free, and some templates have to be purchased separately. It's just insatiable."

Screenshot of Xiaohongshu

Xiao Wen, who shops on Taobao on a daily basis, has a different view: "I think membership bundling is also disgusting. In order to make its membership look worth the price, it bundles various unnecessary APP memberships. I will sell other memberships on Xianyu to make up for the loss."

There are policies from above and countermeasures from below. In order to cope with the countless members, users have been looking for cracked versions. When they open Xianyu, they can even see discounted memberships. Platform users have gone from accepting the membership system in the beginning to complaining and even taking it to court. The core reason behind this is that they can no longer get the same service at the same price.

Xianyu screenshot

"Take the case of iQiyi being sued this time, for example. I am also one of the victims. I have been subscribing to iQiyi membership but was restricted from casting screens. So I am very happy to see lawyer Zhu Yuan continue to appeal and help us get compensation." Xiaoxiao, who loves TV dramas and variety shows and streams them on various platforms, said with emotion.

"In fact, all long video platforms have this problem. Some time ago, I was watching Mo Yu Yun Jian, and when it was almost to the finale, I suddenly had to pay a separate fee. These advance screenings are really disgusting." More and more users like Xiaoxiao feel that their interests have been damaged.

03 Matryoshka membership hurts members’ feelings

Why are users becoming more and more disgusted, but this still fails to stop the membership scams from becoming more and more sophisticated?

Not long ago, WPS was complained about for allegedly arbitrarily modifying membership levels and charging "nesting dolls". Some users reported that WPS's membership structure was complex, with at least six membership levels. Some membership levels also had several "independent packages" that were charged separately. This "big doll inside small doll" membership system can easily make it difficult for members to understand the rules due to information asymmetry.

WPS price and benefits screenshot

The reason why WPS charges "Matryoshka style" despite the risk of being complained by users is probably due to its revenue anxiety. In December last year, WPS announced that it would permanently shut down its advertising service. In the revenue structure of WPS's Q1 2024 financial report, there is no advertising revenue.

The same anxiety is more obvious in long video platforms. Membership fees have surpassed advertising revenue to become the largest source of income, and the platform is inseparable from membership income. Therefore, most of the apps that charge "nesting doll-style" fees are long video software. In order to retain users and make profits, major platforms must work harder on members.

Image source: Some APP screenshots made by Yidu Pro

In addition to platforms that survive on membership income, some, such as e-commerce platforms, use membership benefits to guide consumer spending and manipulate user psychology. For example, Pinduoduo's money-saving monthly card and 1688's discount coupons. Xiao Wen said, "I originally opened a membership to save money, but in order not to waste the coupons, I bought some useless things and spent more."

Whether it is for the purpose of revenue or retaining users, all major platforms are launching various "nesting doll-style" memberships, which has led to serious complaints from users and deeper conflicts with users. For example, according to data from the Black Cat Complaint Platform, the number of complaints about iQiyi has reached more than 40,000, most of which are related to membership fees and forced deductions.

Screenshot of Black Cat Complaint

Nesting doll members have become the culprit that hurts the relationship between members and the platform.

However, this kind of hurtful thing has also seen the light of day. In February this year, the State Administration of Radio and Television, together with relevant departments and units, held a phased summary and deployment promotion meeting on the governance of TV "nesting doll" charges and complicated operations. The meeting reported the progress and results of the first phase of the governance of TV "nesting doll" charges and complicated operations - my country has completely eliminated the startup ads of cable TV and IPTV.

Conclusion

Zhu Wei, deputy director of the Communication Law Research Center of China University of Political Science and Law, believes that there are complex market and economic factors behind the "members being tricked": the "free + value-added service" Internet economic model has emerged. The Internet has developed to the stage where it is free and open to the general public, but the value-added service part has to be charged, which is expressed in the form of membership. The amount of payment determines the membership level, such as diamond, gold, supreme, etc., and the benefits that can be enjoyed are also different.

Zhu Wei believes that users choose to register as members because they are looking for better services. This requires companies to return to the essence of competition and provide better, safer and more efficient services, so that ordinary users and real members are willing to stay for a long time.

In this regard, mature foreign membership systems such as Netflix do a good job. After spending money, users can continue to obtain high-quality content resources, and they are willing to spend the money. Objectively speaking, Netflix is ​​now profitable, and its profit model relies almost entirely on collecting membership fees.

For this reason, major domestic platforms should break out of the "quagmire" of nesting doll-style membership, retain users with content and services, and make users feel that the membership fees are worth the money. This is the right way to go.

(Qiao Qiao, Xiao Wen, and Xiao Xiao in this article are all pseudonyms.)