WeChat’s New Paywall Function Is the Future of Online Content, Even if It Makes You Angry
WeChat has woven itself so deeply into every fabric of the Chinese society, that any change to it is pretty much a change on a national level. However, the app’s recent revamp has been particularly notable, with Tencent adding a feature that would have China abuzz and polarized.
Now any public account that has been around for at least three months, has published at least three original pieces of content, and has not violated WeChat’s content publishing rules, can add a paywall of 1 to 208 yuan to their articles. While the feature is still in trial mode, it is a clear signal of WeChat eyeing a spot in China’s online paid knowledge (OPK) pantheon that has dramatically expanded in recent years. The size of the OPK market in China equaled roughly $720 million in 2017 and grew 300% by 2018, according to iResearch.
OPK, in essence, is a service that allows knowledge contributors and platforms to charge knowledge seekers fees for content, thus creating a tripartite model benefiting platforms, knowledge contributors, and consumers. WeChat currently does not take a cut out of content creators’ earnings – unlike Apple, for instance, who takes 30% out of every iOS in-app purchase – but there is a chance that it might start doing so in the future.
China is a relatively young market for paid knowledge. It has been less than a decade since local consumers started regarding content as any other tangible product that needs to be paid for. This includes audio, video, and written content, too. While numerous big western publications have switched to the subscription model to gain a certain degree of independence from advertisers, few Chinese media do the same. The prevailing mentality is still that content should not be a burden to one’s wallet.
WeChat’s introduction of the paywall feature is a particularly interesting case. The app’s users are getting older, accumulating more disposable income and spending increasingly more time on the app. Having arguably a better understanding of Chinese consumers than any other company in the world, WeChat came up with a witty solution to cracking the local mentality. Instead of introducing subscriptions, WeChat will let users pay per article read.
With the ubiquity and accessibility of WeChat’s mobile payment platform in China and WeChat’s Swiss Army Knife-like functionality users don’t really ever need to leave the app. Thus, it is very likely that paying a couple of yuan for a high-quality article inside the app could seamlessly become the new norm, regardless of the current confusion.
Over 61% of Chinese internet users above 60 years old use more than half of their total mobile data on WeChat. For those within the 36-60 bracket the proportion is around 50%, while the younger demographics generally spend a significantly smaller portion of their mobile data on the app.
Nevertheless, in 2017, WeChat’s key users were 26-35 years of age, and they are growing. The app’s key demographic shifted from the 18-25 group to the 26-35 one between 2015 and 2017, according to the China Academy for Information and Communications, mirroring the general trend in a country with a steadily aging population.
Tencent statistics show that users born in the 1980s are among those reading the most on the app. They are especially fond of anything related to national affairs. Coincidentally, it is the same generation born between 1981 and 1996 that accounts for 65% of China’s total consumption growth. Put simply, they are the biggest spenders in the country.
WeChat is not only the dominant messaging platform in China but also by far the biggest content sharing platform. Official accounts are the main means of reaching readers for most bloggers, publications and brands on WeChat. However, these accounts have multiplied with such velocity that it has led to a noticeable decline in the proportion of posts read. For the largest 500 accounts the decline was just 9% from 2016 to 2017, while the overall decline across all accounts was 24%.
Saturation is an important antecedent. However, the decline could also be attributed to the advent of other platforms doing a better job at serving readers the right content, namely ByteDance’s Toutiao. For WeChat to compete with Toutiao, it would need to completely rebuild its content section, which is hardly realistic. However, one strategy that is more feasible is increasing the quality of the content on the platform.
The paywall was not WeChat’s first move in that direction. In 2018, the company announced a crackdown on plagiarism, a major problem on the platform, while even earlier the WeChat Rumour Rebuttal Centre stepped up to punish official accounts for spreading false information and malicious rumors. In 2017 the committee penalized 180,000 official accounts.
This time Tencent is trying its hand at a measure that is not punitive but rather motivating. By allowing users to charge money for knowledge, WeChat is incentivizing content creators to put more effort into producing better quality products.
While many criticize Tencent for being late to the OPK table, the truth is that the Chinese market for paid content is still growing. The market for paid music has surged almost eightfold from 2012 to 2018, while the paid video sector has seen an even steeper tenfold rise over the same period. In 2018 iResearch predicted that the market for paid knowledge would see an almost five-time increase between 2017 and 2020, growing from 4.91 billion yuan to 23.5 billion yuan.
In 2017, 74% percent of people questioned by iResearch responded that they pay for knowledge to get targeted professional insights, while 50% pay to simply save time and effort. With our growing dependence on technology and the internet’s increasing saturation with all sorts of content, Tencent is hardly late anywhere.