When content communities ask users for money

The commercialization of content communities has always attracted much attention in the industry. Players such as Zhihu and Bilibili have also been exploring the road to commercialization. So what kind of obstacles do content communities generally encounter on the road to commercialization? Are there other community products with similar attributes that can provide experience that can be learned from? Let's take a look at the author's interpretation.

Content platforms can no longer generate electricity with love. The most powerful example is that Zhihu and Bilibili, the "highly educated" in the fields of pictures, texts and videos , are no longer pretentious and are openly "asking for money" from the public:

Chen Rui, chairman and CEO of Bilibili, stated in the latest earnings call that in 2023, Bilibili will no longer simply pursue DAU (daily active users) numbers, but will pay more attention to quality DAU growth, that is, higher user activity, higher user stickiness, and greater commercial value provided by users.

In early April, this layout was confirmed: According to 21 Finance, a UP host with tens of thousands of fans said that Bilibili has made major adjustments to its reward mechanism this year. Compared with last year, the revenue of videos with the same performance data may be only 1/3 to 1/2 of last year. Bilibili is constantly reducing the incentives for UP hosts, which has triggered a wave of UP hosts stopping updates on Bilibili in recent days.

The same is true for Zhihu. After seeing that ChatGPT has a clear business path on the C-end, it also caught up with the big model craze and tried to fully tap the value of its own data: On the afternoon of April 13, Zhihu (ZH.US) founder, chairman and CEO Zhou Yuan and Zhihu partner and CTO Li Dahai jointly announced the launch of their latest cooperation and application on AI big models, and officially released the "Zhihaitu AI" Chinese big model.

From initially serving a niche group to successfully breaking through the circle and becoming a national or even world-class product, Bilibili and Zhihu, a pair of brothers born in the tide of China's Internet, are so anxious to realize their value, but behind this is the cruel fact that they are being abandoned by investors:

(Comparison of the Shanghai Composite Index's rise and fall from September 2021 to date Source: TradingView)

The essence of investment is to exchange time for growth space.

After years of development, Bilibili and Zhihu have gradually formed a business model based on content platforms and monetization through multiple channels: Bilibili has the "Four Heavenly Kings" of games, value-added services, advertising and e-commerce; although Zhihu has not yet been able to get rid of the status of having only advertising business, it has also made some arrangements in the direction of membership services and vocational education.

At present, the revenue is still acceptable: in Q4 2022, Bilibili's revenue was RMB 6.142 billion, and Zhihu's revenue was RMB 1.114 billion, an increase of 6.26% and 9.03% respectively compared with the fourth quarter of last year.

The profitability is horrible: Bilibili lost 1.497 billion yuan in Q4 of 2022, and 7.404 billion yuan for the whole year, while Zhihu lost 179.5 million yuan in Q4 and 1.578 billion yuan for the whole year. What’s worse is that neither of them has achieved profitability since their listing.

The problem is that neither of them is short of people who spend money: in the fourth quarter of 2022, Bilibili's MAU (monthly active users) was 326 million, and Zhihu's MAU was 100.7 million.

As the top players in their respective fields, both of them have a lot of traffic but are unable to monetize it. This article attempts to explore why this situation of "holding a golden bowl and begging for food" occurs? What is the way out for Bilibili and Zhihu?

1. Traffic, the key to success for Bilibili and Zhihu

Bilibili and Zhihu are so similar.

At the beginning, both wanted to be a niche circle:

Bilibili is one of the imitators of Niconico, the originator of the Japanese two-dimensional bullet-screen video website. At the end of 2006, Niconico won a large number of two-dimensional users through bullet-screen and secondary creation to enhance the audience's sense of community and interaction: Niconico had more than 5 million bullet-screens just two months after its launch, and its videos had been viewed more than 100 million times.

Therefore, in June 2009, Bilibili was officially established, targeting ACG users and learning from Niconico: in addition to barrage, Bilibili imitated Niconico's live broadcast and launched the live broadcast function; it also imitated Niconico's offline event super conference and launched its own offline event BML...

After all these operations, in 2016, Bilibili had more than 100 million active users and more than 1 million active UP hosts.

Zhihu, too, started from a small circle and built a content community based on knowledge questions and answers. To improve the "quality" of the community, Zhihu, which just launched, has a large number of "highly educated people" sitting in, such as many Internet celebrities including Kai-Fu Lee and Xu Xiaoping, and elite figures in the Internet circle such as Lei Jun and Ma Huateng. At the same time, it adopts an invitation system to ensure that the community is "small and beautiful".

But soon, both Bilibili and Zhihu were no longer satisfied with relying solely on the love of users in the two-dimensional and Internet elite circles to generate power, and both chose to expand their circles at the same time.

To expand the circle and scale, Bilibili's strategy is to absorb more niche groups and at the same time attract more official media to bring them to the public.

As it said in its short film "The Next Wave": "You are turning the traditional into the modern, the classic into the popular, the academic into the popular, and the national into the global."

Bilibili is quietly changing its main user group positioning from the earliest two-dimensional users to the "Z generation" users in the prospectus, and then evolving into pan-entertainment users. Specifically, the things that have become popular on Bilibili have gone from anime series for two-dimensional users to New Year's Eve parties, to the Z generation's "Hou Lang" trilogy, to the graduation season-themed "Into the Sea", and then to "Happy Encounter" and "Rap New Generation" with a wider audience.

In order to attract more official media, in 2020, under the background of the epidemic, Bilibili, together with CCTV News and Figure, jointly filmed the anti-epidemic documentary "In Wuhan", which achieved over one million views within a few days of its release. In the period that followed, a large number of official media and self-media began to settle in Bilibili and find their own niche.

Since then, Bilibili has completely gone from being a two-dimensional video website to being popular among ordinary people.

Zhihu is equally determined to expand its circle. In 2013, it abandoned the path of private domain fission and changed its membership from invitation system to registration system. The number of users surged from 400,000 at the end of 2012 to 4 million at the end of 2013, and reached 17 million at the end of 2014, a year later.

In addition, Zhihu also uses content as a magnet to attract more users: Currently, Zhihu's content sections have extended from the original business, philosophy, literature, and the Internet to education, technology, health, fashion and other aspects.

The circle expansion effect is also very significant: in 2020, according to the company's prospectus, Zhihu users are mostly male, mainly from first-tier and new first-tier cities.

(Zhihu 2020 user portrait source: Southwest Securities)

Since Zhihu launched a targeted attraction plan for college students and women in third- and fourth-tier cities in 2020, the goal has been achieved within two years: as of June 2022, its female users accounted for 58.7%, and users in second-tier and below cities accounted for 58%.

(As of June 2022, Zhihu user portrait source: Analysys Qianfan)

At this point, Zhihu’s “de-elitism” has been completely successful.

Bilibili and Zhihu are both experts in managing traffic. Backed by high-quality creators on the platform, both can anchor a group of people and attract them.

2. Making money, a big problem for Bilibili and Zhihu

There is a joke in the industry that goes like this: "The end of the universe is games, advertising, and live streaming sales."

Normally, once a platform has a large user base, it is reasonable for it to make a lot of money using these three methods. However, Bilibili and Zhihu, which have successfully become popular and have a large number of users, are facing the same problem: they are not making money.

Before discussing the issue of not making money, let us first introduce two concepts: community attributes and media attributes.

The so-called community attribute refers to cultural identity with content as the core and interaction as the carrier. Its strength is reflected in whether users have developed behavioral habits and whether they have a strong sense of participation. The core indicator is DAU. Baidu Tieba, Douban, etc. are typical products with strong community attributes.

Media attributes are attempts and tendencies to influence other people's consumption habits based on commercial monetization as the underlying logic. The strength of media attributes is reflected in the strength of monetization capabilities and the diversity of monetization channels. The core indicator is the value behind DAU. For example, TikTok and Youtube are products with strong media attributes.

In fact, community attributes do not generate value in themselves, and need to be attached to a platform with strong media attributes in order to buff the platform.

For example, Douyin has a clear media attribute: by showing the lifestyles of different bloggers and inserting advertisements in between, it "entices" the audience to use such products, thereby subtly stimulating user demand. At the same time, in addition to strengthening the construction of sales channels, Douyin continues to strengthen its "community attributes", constantly motivating creators in various tracks, and using higher-quality content to resonate with users and bloggers, so that consumers continue to place orders.

On the contrary, if the community attribute is strong but the media attribute is weak, the community attribute will become a debuff. Bilibili and Zhihu before breaking out of the circle are the most typical examples of this.

In the early days, bloggers who used their love to generate power on Bilibili and Zhihu were more likely to show off their skills and talents. Their primary goal was to gain a sense of recognition and honor rather than pursuing monetization. For example, they made funny ghost videos, popularized knowledge in their own professional fields, etc., attracting a large number of users who highly recognized the content.

The strong community attribute means that everyone gathers together because of a certain kind of emotion or spiritual identity. They are friends, not merchants and consumers. The monetization itself has "emotional ties". At the same time, to make matters worse, in the early days, the user profiles accumulated by Bilibili and Zhihu were: highly educated, mainly male, and from first- and second-tier cities.

(Zhihu 2020 user portrait source: Southwest Securities)

This group is naturally more resistant to the commercialization of creators and platforms, including but not limited to: in many videos on Bilibili that contain "eating" clips, you can often see similar comments such as "Airborne at x minutes and x seconds" and "Run fast" to avoid advertisements.

Bloggers gradually improved the aesthetic taste of this group of users and also increased the workload of their side jobs. At this time, making money became their first goal to continue to generate power with love. Users who were fed with "pure, high-quality" content, holding up the "shield" of Bilibili's "never adding video patch ads", were unwilling to pay for the blogger's "want to make a living". Based on this, the advertising business of Bilibili and Zhihu has a low ceiling.

At the same time, the fulfillment system and payment system have not been established, resulting in a large number of users bypassing the platform's business order system and directly connecting with MCN or Party A, and even guiding potential customers to add WeChat through private messages and the like, directing traffic to the private domain. The upper limit of the platform's e-commerce has been lowered step by step.

At the same time, such incidents also occurred in value-added services. At the beginning of 2023, the animated short film "Chinese Fantasy" launched by Bilibili and Shanghai Animation Film Studio became a hit at the beginning of the year, with a Douban score of 9.0. The well-received "Chinese Fantasy" naturally gave rise to fans' demand for peripheral products.

However, Bilibili failed to make sufficient preparations in this regard. Consumers can only buy seven types of peripherals including refrigerator magnets and sticky notes from the Shanghai Animation Film Studio's official flagship store on Taobao, which is completely unable to meet the needs of fans, and Bilibili has lost a wave of opportunities to make money.

Therefore, the community atmosphere of not wanting to pay has spread to the platform with weak media attributes (fuzzy monetization logic and weak monetization channels), and its commercial exploration has been difficult. From the current situation, although new users are introduced like a floodgate, the community atmosphere of "refusing to eat" has not been eased, but has become more and more intense.

The e-commerce and advertising businesses of Bilibili and Zhihu are deeply affected by the community attribute debuff, and the upper limit is not high. In addition, Bilibili's game business and Zhihu's vocational education business have their own problems.

The frequent obstructions in B's gaming business are due to its lack of self-development capabilities. B, which only acts as an agent, cannot make much money:

With the rise of free gaming communities, game developers can bypass Bilibili, which shares a 50-50 profit share with them, and directly promote their own works without Bilibili getting a penny. At the same time, as its circle continues to expand, Bilibili's atmosphere is becoming increasingly unfriendly to 2D users. The reduction of its 2D attributes has caused game developers to no longer consider Bilibili as their first choice, and Bilibili may even lose its status as an agent.

In addition to e-commerce and advertising businesses, Zhihu's latest commercialization attempt is vocational education, but this path is extremely difficult: vocational education can be roughly divided into professional education and improvement education. The difference between the two is that the former has extremely strong purposes, such as passing specific exams, while the latter is mostly for self-improvement.

Professional education has to fight closely with old giants such as New Oriental; the latter can be regarded as old wine in a new bottle of knowledge payment. However, the original knowledge payment has not made sense: a series of products such as Zhihu, Zhihu Live, e-books, Zhihu University, and Roundtable were launched, but they all stagnated within a few months because of their weak media attributes.

Although Bilibili and Zhihu have many ways to monetize, their e-commerce and advertising ceilings are restricted by the community attributes, making monetization even more difficult. In addition, Bilibili’s lack of self-developed game capabilities has resulted in a small space for its game business, and Zhihu’s lack of an offline fulfillment system has prevented it from competing head-on with giants such as New Oriental.

Making money has become the ultimate challenge for Bilibili and Zhihu.

3. Learning from Others

"The end of the universe is games, advertising and live streaming sales", but because the community attributes are too strong, monetization is particularly difficult, and Bilibili and Zhihu are in urgent need of finding the existence of a "parallel universe".

Zhang Xiaolong wrote the following answer to the question “What is the most important thing Steve Jobs taught us?” in the early days of Zhihu: “Purity can also lead to success.”

TED is a pure spokesperson. TED is the abbreviation of Technology, Entertainment, Design. TED was first established in 1984 with the original intention of "discovering and spreading ideas that spark imagination, embrace possibility and catalyze impact." When it was first established, TED was a small offline, low-cost, high-end information dissemination platform.

To ensure quality, TED has set up a series of thresholds:

First of all, the content provider must be good enough. The qualifications of speakers will be strictly reviewed by TED, and the condition is that the speaker is either a pioneer in an emerging field or has done something that can change the world. For example, Craig Venter, a leading scientist in the field of human genome research, and Nicholas Negroponte, the founder of the "Give Every Child a 100-Dollar Laptop" project, a philanthropist.

Secondly, TED also has some requirements for presentation methods: TED strictly limits each speaker to complete the speech within 18 minutes, because this length is the average human attention span.

In 2006, TED began to publish videos on Youtube, with a total of 2.3 million video views that year. In 2016, TED video views exceeded 2.3 billion. TED's revenue that year was US$65 million. TED's revenue mainly comes from conference tickets, sponsorship, book sales, and video platform advertising revenue. In 2009, TEDx, which serves the local economy, was launched.

(TED speech video source: TED)

TED is an example of the perfect combination of media attributes and community attributes.

The key to its success lies in its high quality and strong desire to pay: in addition to high-quality content, the TED conference also gives everyone the opportunity to get close to business people. Users only need to spend more money on tickets to be able to exchange ideas with super celebrities up close.

Therefore, although TED has also experienced a similar breakthrough as Bilibili and Zhihu: the content has changed from being limited to technology, entertainment and design to all walks of life today, and the speakers have gone from industry elites to local business and even start-up leaders. However, based on its distinctive media attributes and strict control of content, TED has always maintained a good community atmosphere. In April 2022, the cheapest ticket for the Vancouver "TED" conference was as high as 5,000 Canadian dollars each, but it was sold out in an instant, which is enough to show the monetization strength of its content.

Compared with TED, Bilibili and Zhihu’s desire for traffic can be described as “taking every penny and using it like mud and sand”. They are eager to cash in when the content does not become the trump card and no further measures are taken to make users absolutely dependent on them.

Bilibili and Zhihu, which do not want to abandon their original intentions but want to survive, are abandoned by investors because they cannot tell a good story about monetization. At the same time, because they are eager to monetize, they are abandoned by content creators. It is no surprise that they are stuck in the quagmire of burning money.

Julia Glass, a famous American journalist and writer, once said: "When it comes to life, we are all weaving our own stories." In the first half of the Internet market, a big net called "traffic is king" was woven, but in the second half, Bilibili, Zhihu and other peers in the industry had to be deeply trapped in it and continue to roll in.

The way out for Bilibili and Zhihu is to strengthen their own media attributes. The first thing to do is to raise the barriers of the contract fulfillment system, and in the future, they still need to increase the content section and create the ultimate content to make users "invest" in them attentively.

Author: Dasein; Editor: Sun Yue

Original title: Bilibili and Zhihu, lost in the billions of DAU

Source: Siruidongcha (ID: siruidongcha), accompanying China's industrial upgrading and iteration