Paying for knowledge is not a new concept: tuition fees are a perfect example. In China, it is now a RMB 40 billion (USD 6.06 billion) industry with 50 million users, and has shifted to a payment-based market-oriented industry that includes education, transferable skills, interest cultivation, and entertainment. Beyond traditional methods, the industry also provides multi-media online and offline products and tailored consulting. The rising need to quickly acquire the most useful information in a busy and imperfect world has exploded the market and fuels competition.
Currently, the major business categories within the industry are online education and non-education knowledge platforms.
This segment directly provides education and training for study and qualification purposes. Its products mainly include consulting, language, and exam coaching. As an extension of traditional teaching, the market grew to RMB 156 billion in 2016. With players offering similar products and profit margins declining, retainer stagnation and ARPU (Average Revenue Per User) improvement difficulty will persist in the near future.
AI integration has been a breakthrough in strengthening this sector. AI exam marking, AI interactive study, and AI problem solving are competing in this highly standardized yet intelligent field where users look for the ultimate quantifiable personal development results and suppliers strive to balance efficiency and revenue. Results-oriented interactive offline services are also being utilized to support competition online.
Non-education knowledge platforms
Non-education knowledge platforms offer transferable skills, interest cultivation, and other knowledge. Most providers establish multi-function web platforms that allow selected knowledge owners to share their insights with paid users.
You can pay RMB 4.9 to access a 39min. voice recording titled, “Rights Protection Guide for Married Women,” in Fenda. The Chinese Quora, Zhihu, initiated real time talk and Q&A in Zhihu Live. You can also spend RMB 500 to schedule a 60min. offline casual talk with an Investment Manager for startup fundraising tips on Zaihang. While subscription-based Dragonfly FM received a new round of RMB1 billion in investment for its boutique products not long ago, smaller platforms are retreating as competition grows.
There also exist payment encouragement or payment willingness experiments, with articles being free and payment being completely voluntary. WeChat users have the option to praise authors of articles by transferring money to subscription accounts.
Meanwhile, some individual knowledge sharers are using web media for PR and to serve offline projects.
Trends, obstacles, and solutions
A trend is clear: the market is getting more rational. As capitalization and competition intensify, an industry map is being revealed that highlights key players who offer products and content with unique value, and who are pushing out participants who lack competitiveness. Online or offline, or both, content is king. As China tightens media governance and censorship, providing similar content that can be alternatively acquired via Youtube or other China-banned platforms may find momentary success, but it won’t last long.
Also, the Chinese market is not completely comfortable with paying. User habit cultivation is still in progress and users’ payment willingness threshold is high. As Confucian legacies prevail, profit generation demonstrates an affinity to practical content paving roads for material success: education, hard insight information, and direct personal development coaching.
Apart from the cost and pressure of frequent content updates troubling the industry, KOL (Key Opinion Leader) payment, regulatory changes, and moral issues are thorny. KOLs may adjust their session prices or service quality to balance revenue and effort. Chinese moral code can find high charges a concern, which can trigger regulatory changes.
Therefore, in the short run, content in the industry will be as clear, direct and practical as possible, to feed users’ pursuit of material success, and to be convenient enough to be judged based on its value. Less material content with substance will thrive, gradually, demanding huge opportunity cost, and great patience.
(Top photo from sohu.com)