I am, naturally, interested in China. Partly because I’m always going to be curious about what folks who look like me are up to, but mostly because when it comes to China, by some measures the largest economy in the world, you’re never quite unaffected by its machinations.
Podcasting, and on-demand audio more broadly, is no exception. You might have noticed by now, but the past few months have seen an increased interest among some corners of the podcast industry (and the venture capital world) about what lessons podcasting in China can bring to the American market, specifically as it pertains to the question of business models.
Much of this, it seems, was catalyzed by a Marketplace story last September about the country’s robust “FOMO” industry (think self-improvement economy), estimated to be worth around $7.3 billion last year. Crucial to this industry is a layer of paid subscription audio businesses that are mostly facilitated over massive audio platforms, the biggest of which is Ximalaya FM. (The name might be familiar to some readers for its position as the main investor in Himalaya Media, the podcast startup that drove some press earlier this year for raising $100 million without much of a preexisting presence to speak of.) Anyway, the aforementioned Marketplace story used the word “podcast” to describe that healthy paid subscription audio layer, and the nomenclature appears to have stuck. One prominent expression of this: Ximalaya FM now factors heavily as a case study in a recent blog post by Andreessen Horowitz, the powerful VC firm, that lays out its investment thesis on the podcast industry.
I’ve mentioned this intermittently in the past, but more attention should be given to the fact that the word “podcast” as used in that Marketplace piece is, at its essence, a misnomer. Any effort to compare the US podcast industry with a Ximalaya FM-centric view of the Chinese audio market should be wary about a categorical mismatch: to appropriately make that comparison, you would have to group US podcasting together with the wider universe of audiobooks, meditation apps, and, at some future point, Spotify. This isn’t to dismiss any effort to draw lessons from the Chinese audio market for the American podcasting or audio industry; there are definitely things to learn. I’m just saying that we should be crystal clear on what is being invoked… and what is being asked for.
Anyway, that’s just been my view on the matter, and I’m just some schmuck blogging out in Connecticut. So I figured I’d reach out to someone who’s on the ground, which brings me to Yi Yang (杨一). Based in Shanghai, Yi Yang is the senior editor at a CNBC-esque Chinese TV business network, and on the side, he runs a few podcast-related projects in the country. They include a podcast called “Left and Right“(忽左忽右), an emerging industry event called “PodFest China,” and a Hot Pod-esque newsletter about Chinese podcasting called “JustPod” (播客一下). We’ve known each other for a bit, and I thought I’d send over some questions. He was kind of enough to respond with long, in-depth answers.
A few things to note before we shift the format over to a Q&A:
(1) A quick data point to clock: Ximalaya FM self-reports that its app has been downloaded over 540 million times. I was also referred to this 2018 article on Wall Street CN, in which a Ximalaya insider claims that the platform has nearly 40 million daily users. Take from that what you will.
(2) As you’ll see from the Q&A, while there are major differences between the two markets, there are many, many similarities in the underlying dynamics. Indeed, one almost gets the sense that those core differences stem from a historical divergence: one market has had a fully active dominant platform for quite some time, while the other still does not.
(3) Another thing you’ll also notice: the core tension revolves around what is being designated by the word “podcast.” It’s tempting to consider this some expression of a loss in translation, but I mean, you see this very conceptual squishiness quite often here in the States, too. (See Luminary.)
(4) An editing note: I’ve condensed, edited, and streamlined Yi Yang’s responses for flow, and I also had to leave some stuff out for space, too. Also keep in mind that this Q&A represents the views of one person interpreting a complex system, and there is a lot of load being placed on this single viewpoint. I imagine, and am confident, that there are many other facets of Chinese podcasting that aren’t expressed here, and hopefully we’ll have the opportunity to highlight those in the future.
(5) Quick shout-out to my dad, who has always insisted that China would find its way to my work some day.
Okay, let’s jump in.
ON CHINA: Q&A WITH YI YANG, EDITOR OF THE SHANGHAI-BASED JUSTPOD
Hot Pod: How do you think podcasting in China is viewed here in North America, and what do you think of those perceptions?
Yi Yang: When I talk to friends from the West about podcasts in China, my sense is that the first concept that comes to their mind is the “Pay for Knowledge” model. I suspect this mostly comes from last year’s Marketplace story, which introduced Westerners to a certain interpretation of the Chinese audio market, its market scale, and its social environment.
But I have to say that it would be a mistake to equate “Pay for Knowledge” with “podcasts,” or to treat it as “popular podcasting” in China. In my opinion, “Pay for Knowledge” and “podcasts” are two very different things. I personally see the “Pay for Knowledge” model as part of online education — more similar to Massive Open Online Courses (MOOCs) than anything resembling “paid podcasting” or the “Netflix for Podcasts” idea.
Of course, there are independent podcasts in China outside of the “Pay for Knowledge” ecosystem. I’ve seen some Western sources try to describe this, talking about how they are able to cover some “topics often revolving around those not covered by mainstream outlets” as “a result of the medium’s open nature.” To some extent, this phenomenon does exist, but it is not the mainstream. It is true that there Chinese podcasts exhibit some “independent” nature, but I think it is different from the “independence” understood in Western values. It is not a “rebellion” in values, but of natural vitality due to the diversity of content and the amateur level of production.
I must also emphasize that language is often an obstacle to understanding the podcast world of other countries. So, if you try to define “Chinese podcasting” after reading some English-language coverage — even it may reflect a panoramic view of the Chinese podcasting — it would be obviously biased through the perspective of the English language speaker. When the English media writes stories about Chinese podcasts, the people behind the story usually select the most special and interesting stories. These cases may be interesting, but they do not tell the whole story of entire Chinese podcasting.
HP: Could you briefly walk me through the history of podcasts, or on-demand audio more generally, in China?
Yi Yang: If we see the “Podcast” article written by the Guardian’s Ben Hammersley in 2004 as some kind of starting point for “podcasts,” then its appearance in the Chinese world is quite early. The earliest batch of Chinese podcasts appeared around that time, and one of them, called “Antiwave” (反波), won the award for Best Podcasting Site of the 2005 “Deutsche Welle International Weblog Awards”. But there were very few people who listened to podcasts back then. Nevertheless, it’s still interesting to note that Chinese podcasts started out at the same time as the English podcasts, and that Chinese podcasters faced the same problems as English podcasters. They needed to find the server host themselves. They needed to make their own RSS feeds. Later, they also need to submit to Apple in order to make their programmes accessible on iTunes.
And then, around 2012, some big audio platforms, like Ximalaya FM, were established. In China, the role that “audio platforms” play is something that I don’t think is yet present in the Western world. In the US, hosting service, programme distributors, and RSS subscriber applications for users are completely separated. But in China, audio platforms like Ximalaya FM have combined all the services together, which makes it more similar to an audio YouTube.
Of course, even in the presence of such a service, you can still choose to find your own server, make your own RSS feeds, and let your podcast appear online. But in practice, this still requires a certain technical knowledge. Not every podcaster can successfully complete this series of operations. More importantly, in China, one has to go through a cumbersome approval process in order to legally build websites and servers. It needs to be approved by the local public security organs and the Internet administration. If not, you have to use overseas servers, which always comes with the risk of being blocked by Great Fire Wall, meaning that your audience can’t play any of your programs. So choosing an audio platform that is easy to use and provides a “one-stop” service is a good choice for most podcasters.
But a “one-stop” service still has unpleasantness. For example, these audio platforms will insert commercials in the programs you upload but may not share the profits with podcasters, like what YouTube does to their uploader. And, of course, your program may be deleted by the audio platforms due to “censorship.” Some podcasters endure all this for the sake of convenience, while some who are not able to compromise re-select their own server to host their own programs.
Chinese consumers are more used to listening to on-demand audio content on these big audio platforms, so if you don’t distribute with these platforms, you will be giving up an easy opportunity to reach a wider audience. Also, because the market is dominated by a few audio platforms, they naturally have a larger say in how the entire audio market is shaped. The most obvious example would be that audio platforms could decide what programs can be recommended. In fact, in China, the audio platforms also produce programs — and “Pay for Knowledge” content is one type of this — just like what Luminary is doing now.
Although there are lots of third-party content on the app, most attention given by the platform will be on the exclusive content that the platform produces itself. The plight of Chinese podcasting is like what you get if you’ve had a successful Luminary since 2012. Which raises an interesting question: if Luminary has appeared and Spotify has started to focus a lot on podcasting before Serial, what will the US podcasting market look like today? In my opinion, many of the concerns from the US podcast community on the power of the platform mentioned in Hot Pod have similarly plagued the Chinese podcast community for a long time. In this regard, US podcasting at this moment may resonate with us.
In my understanding, the Western podcasting world has always inherited the spirit of “Web 2.0” — free, openness, shared cyberspace, etc. — which is often described as the “decentralization” of the Internet. That is to say, there is no powerful platform that takes over the open podcasting environment. China’s audio market has been platform-centric since services like Ximalaya FM formed in 2012, meaning that the platforms’ preference decides what kind of programs can get recommended opportunities and their development strategy determines what kind of business model can get more support. Those development strategies have driven the market. A few years ago, these major audio platforms found that simply providing podcasters with hosting services — and then relying on User Generated Content to draw traffic in exchange for advertising — would not work. (Generally speaking, audio is still far less popular than video here.) So they tried new business models, with the “Pay for Knowledge” model being one of the successes. But what is less well known is that, although Ximalaya FM is known for its “Pay for Knowledge” business that’s built on subscriptions, it is also China’s largest audiobook distributor. It has the authorization of 70% of China’s audiobook copyright holders, and thus is close to a monopoly on audiobook sales. Which means that Ximalaya FM is not only the “YouTube of Audio” here in China, it is also China’s Audible.
In many people’s mind, the difference between “podcast” and “audio” is not clear. This is why when many people say “the Chinese audio market is booming,” they are likely to think of “Pay for Knowledge,” audiobooks, or other audio content, instead of podcasts. In the US, it has become a market consensus to treat “podcasts” alone as a separate medium. This “mix-up” in China, however, will affect the development of podcasts. It will make the market here unable to see the value of podcasting.
HP: How would you describe the production culture in Chinese podcasting?
Yi Yang: If I were to describe using one characteristic, I would probably say “amateur production.”
You may have just heard about “Gushi FM” (Story FM) from a New York Times’ story about Chinese podcasting, but programs like “Gushi FM” are actually produced by professional production teams that are rare among Chinese podcasts. In fact, most Chinese podcasters don’t have any experience in media or audio production before starting their own podcasts, and producers or hosts also regard podcasts as sideline or hobby. Most of them have a full-time job, and they only make podcasts in spare time, such as the weekends, because podcasts can’t bring them stable income. These limitations make many Chinese podcasts still sound like the very early “audio-blogging,” and either regular updates or sustainable operations remains challenging.
I think you can describe most “amateur productions” in China as follows: they are homogeneous in format — most are in the “ChatCast” format, which is the one-man show or talk show — and they are often diversified based on subject matter. Although many podcast producers lack media experience, they are often experts in a field, so their shows will be built around that expertise. Take “Museelogue“(博物志), one of the programs I really like, as an example. The theme of this podcast is “museum”; Wan Ying, its host and producer, graduated from a Canadian college with a degree in museology. She has been running this podcast with her partners since 2016. In the past three years, their consistent production has attracted a group of very loyal fans and formed a community. Currently, the show is relying on donations from listeners to maintain operations. In addition, there are podcasts such as “Anyway.FM”(设计杂谈), which is about the field of User Interface design, and “The Unemployable“(无业游民), which is about the freelance crowd. Both target niche markets, or specific “content verticals”(内容垂直).
I think the dominance of the homogeneous chat format has a lot to do with that lack of experienced audio producers in the Chinese podcasting. And I think that may be related to the historical development of radio in China.
After the Cultural Revolution, China’s radio stations began to undergo reforms since the mid-1980s. Radio stations in South China, which are close to Hong Kong, took the lead on this. They learned live broadcasting from Hong Kong’s radio stations. The hosts no longer need to record the programs in accordance with the pre-approved manuscripts as before. Instead, there is an opportunity to freely combine content in a 2-3-hour slot to play music, news bulletin, traffic information and weather forecasts, and the way to talk more like ordinary people. They also allow listeners to participate in the call-in programs.
Although China’s radio stations are state-owned, they turned to commercial advertising for funding instead of government funds during the mid-1980s to the mid-1990s. China has never built a public broadcasting system like the NPR or the BBC, so radio stations need to bear their own profits and losses. In that structure, commercial success tops the priority, and the talk show format has great commercial value for radio stations. It almost costs nothing on production, except hosts’ salaries. But the income is very impressive. For example, a pop-music radio channel in Shanghai, could earn over 100 million Renminbi yuan (about 14 million dollars) a year during early rush-hours.
In such an environment, radio stations have little incentive to make any program that costs more or require more manpower and time to produce. Of course, from a business perspective, there is nothing wrong with this, but I think it’s let to where we are right now: producers from China’s radio stations have almost no experience in making storytelling programs at all.
HP: Where do you think Chinese podcasting is heading?
Yi Yang: It is hard to do comprehensive podcast market research here in China. As I mentioned earlier, podcasts and other audio content are mostly concentrated on several major audio platforms, and the competition between the major audio platforms is fierce, which makes data in their hands a very valuable asset. Plus, none of them are listed companies, so these platforms are not obligated to disclose the data to the public. If a consulting firm wants to do a survey, it has to work with the audio platforms to get the data they need. This will make the research itself show certain bias that fails to capture the holistic picture of the market.
Podcasts in China are far from becoming mainstream. Most podcasts remain small, and the limited scale of the existing audience has a hard time to catch advertisers’ attention. What caused this situation are the problems I mentioned in the previous answers. For example, most of the existing podcasts are amateur productions, which makes the production of the program unstable, and the quality of the program is not as sophisticated as other media such as video. This makes advertiser hesitate when weighing the medium in which the ad is placed. On the other hand, in the absence of advertising revenue, podcasters can’t treat “podcast” as a profession since it can’t bring stable incomes, which in turn maintain it as sideline. In the end, it is impossible to bring the level of podcast production from amateur to professional. This has also caused the podcast industry to fall into a downward circle.
From the view of audio platforms, they rely on the revenue generated by “Pay for Knowledge” or “subscriber” programs, which they will use to invest in the production of their own content. The audio platform does not seem to have a reason to generously share these revenues with podcasters to improve the quality of podcasts. Objectively, it is harder for “podcasts” to compete against “Pay for Knowledge.”
The current Chinese podcasting market is more like the situation of the US podcasting market before the emergence of “Serial”: Some podcast fans participate in it, but it has failed to either attract widespread public attention or to let the market notice its potential commercial value. The commercialization of Chinese podcasting is still in chaos.
When will Chinese podcasting have its “Serial Moment”? Or, if there is no hit show as a trigger, then what other opportunities will bring money into this market, or even investor interest? There is still no clear clue.
From my point of view, one action that can be taken right now is to prepare podcasts for high-quality production. I believe only production quality improvement will usher in China’s “Serial Moment” as soon as possible.
My outlook is still quite optimistic. On the one hand, the potential comes from China’s huge market, as well as the continuous increase in per capita income and consuming power of residents, which grants great possibilities for consumption for entertainment purposes, and of course more and more of them have started to listen. On the other hand, I could see that more and more people are paying attention to Chinese podcasting, which will encourage various forces to tap into the commercial potential; the podcast industry itself is also taking action to change itself, specialized and industrialized.