XimalayaFM’s “123” Carnival, Ear Economics’ Spring

Author: Yingwei Fu Dec 07, 2018 06:36 PM (GMT+8)

As a giant-to-be, XimalayaFM is an integrated audio platform providing audio books, individual broadcasting, and alike services.

After Taobao’s double-11 shopping festival, XimalayaFM(喜马拉雅FM) hosted its “123” Carnival and created a revenue of over CNY 435 million. As a giant-to-be, XimalayaFM, an integrated audio platform providing audio books, individual broadcasting, and alike services, has been rumored about going public in its every funding series over past years. The most recent one occurred in summer of 2018 when XimalayaFM just completed its series E funding in amount of USD 460 million from General Atlantic, Goldman Sachs, Huatai Securities, New Horizon Fund, Primavera Capital and Tencent Holdings. Indeed, series E is close to going public, but XimalayaFM has not officially announced any IPO-related information to the mass.

XimalayaFM was born in 2012, a time that the audio content market was undervalued because of the internet KOL Kai-Fu Lee’s comments towards Weibo’s audio twitter function – there would be no future for audio twitter due to its time costs in accessing information and unpredictable contents. It is right about the time costs when comparing listening with reading – vision saves more time in grasping the same information than hearing. However, audio twitter is not what Xilamay FM interested in. XimalayaFM’s current main business includes paid contents such as audio lessons, copyrighted standup comedies and audiobook, and free contents like personal broadcasting – a Chinese upgraded version of Podcast. Its yearly big sale festival “123” Carnival achieved revenue of hundreds of millions. The ear economics spring is fruiting.

Since 2012, audio content market size’s annual compound increasing rate reaches 31.71% with 2018’s expected customer base size of 383 million. The ear economics has sprung and been prosperous.

According to May 2018’s monthly APP activities of the audio category, XimalayaFM and other two competitors took nearly 80% of the market share. Apparently, XimalayaFM takes nearly half of the share.

The thriving of audio content app credits to the 3G-4G network upgrading and utilization of fragment time. From 2012, the audio content market is at an infant level as shown in the above chart. China completed the coverage of 3G network and was transforming to the 4G network. At the same time, short media content like TikTok began to prevail. 3G and 4G enabled the development of TikTok, so the audio content app like XimalayaFM.

Set off from almost the same starting line, QingtingFM (蜻蜓FM) and LizhiFM (荔枝FM) somehow started to fall behind XimalayaFM, even with similar content provided. The fact is, QingtingFM and LizhiFM’s contents are majorly UGC (User-Generated Content), while XimalayaFM is PUGC, a form combined UGC and PGC (Professional-Generated Content). For PGC, copyrights are a large expense for audio companies, for contents like occupational lessons, audiobook, and standup comedies. In recent years, China is speeding the copyright protection’s legislation and for platforms, copyright is the bar to obtain good professional contents so that more users would be attracted to the platform. XimalayaFM headed earlier than the two in copyright campaign, and most authorizations that XimalayaFM has are exclusive.

Worth to mention, copyright campaign is a money-burning game – who has more money, who gets more authorizations. XimalayaFM’s funding is the strongest among the top three apps, and its firm financial backup advances a positive circulation: capital-copyright-content-customer.

However, as a platform including UGCs, XimalayaFM is bothered by the same issue as other platforms – some users upload contents that violate the copyright laws and the victim would sue the platform for spreading unauthorized contents. In November 2018, XimalayaFM was sued for 17 cases by Migu Music for violating copyrights.

XimalayaFM has its inspection system, but it seems that UGCs are generated much faster than the inspecting speed. UGC is an important constitution part for audio contents platforms like XimalayaFM, especially 80% UGCs are original. UGC diversifies platform’s contents and entitles the platform with uniqueness among all platforms. XimalayaFM, QingtingFM, and LizhiFM are competitors, but they all have different tags and deviated customer pools. The problem embedded in UGC and inspection might the biggest PR crisis for platforms.