Alipay is to start over its tarnished social network. What’s next?

The Head of Alibaba’s Ant Financial, Lucy Peng, apologized on Tuesday in an internal letter for the lewd photos that appeared on Alipay’s new socializing feature, “Life Circle”.

To collect a “thumbs-up” and make money, a large number of users in a group called “Journal of Campus Life” repeatedly posted revealing and sexually charged selfies.

“It’s our fault, and we can’t blame anyone else,” wrote Peng in her letter.

She said in the letter that Alipay has decided to remove the group and permanently ban the users who were posting the lewd material. In addition, she called for the entire team to take time and figure out what exactly are the “do”s and “don’ts” that Alipay must abide by.

Alipay’s strengths in running “Life Circle”

According to Peng, Alipay is well-equipped for running online socializing services. With features like real-name registration, big data, and the credit system Sesame Credit, Alipay can efficiently group up people with similar interests and common topics for sharing and learning.

However, aside from groups that cover fields such as financing, pet raising and sports, the likes of “Journal of Campus Life” quickly became a hit, even though the group’s original purpose had been derailed.

Peng emphasized that, with 450 million registered users and over 100 million daily active users, Alipay must not waver in its principles. She also was emphatic that “Life Circle” is, without doubt, a good product, and that the criticism from all sides alerted Alipay to get back on track.

However, questions remain as to whether Alipay’s “track” in running socializing services will lead to a success. Is the recent incident a blemish that it can wipe out for good? Or is it an indication of a defect hiding within the roots of the business model?

Distinguishing itself from WeChat: good or bad?

While Alipay is first and foremost a payment tool, WeChat is originally an app for communication, with added payment services.

The biggest difference between the two, now that Alipay offers socializing services as well, is that networks on WeChat are mostly based on the already existent social relationships, yet Alipay aims to build relationships between strangers based on their hobbies and interests.

In other words, Alipay believes that it can utilize its niche in big data and user profiles to create online communities. Nevertheless, is the model of online communities still working? If yes, can it last long?

The once popular online communities in China such as Baidu Tieba and Tianya Club have lost their former glory to today’s Weibo and WeChat.

If online communities are out of fashion…

Industry insider analyzed that Alipay’s problem does not lie in those revealing photos, but in the fact that it is trying to pick up a model that is already outdated – the model of an online community.

Online communities are based upon shared hobbies and interests. Alipay has an edge in building social networks for strangers by efficiently recommending online social groups to the taste of its different users. These networks could take shape and expand quickly in size, which is also why it is hard for these online communities to last long.

Content is a major factor that binds members to a platform. However, as more members join in, the content quality tends to go down; that is, the larger a group, the more likely and more often it is that a user may bump into posts that he or she might dislike. In addition, junk message senders are also attracted to large groups.

Since members of a hobby-based online community are linked only by shared hobbies, they are not likely to stay at a platform with content that no longer appeals to them: nothing to miss, no one to miss, and no reason to stay.

In addition, the real-name registration system of Alipay has loopholes. For example, since posting revealing photos at “Life Circle” can make money, even a middle-aged man could post photos of pretty young girls that are collected from the web; all he needs is to register as a lady. After all, knowing, or stealing, someone’s name and ID card number is not really a difficult task.

The problems that strangled previous online communities may sooner or later come the way of Alipay. How will the payment tool tackle these issues and develop its socializing services? Its success will largely depend on doing so.

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