Integrating IT Technology into MCN Management (1)
This article was originally published in Platum.
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Platum article URL: https://platum.kr/archives/207050
Content created by Koreans is mainly consumed by Koreans. So, YouTube in Korea is limited to a small market of 50 million. Even though YouTube creates the creators, they are trapped on YouTube. They need an exit strategy. Since there are no other alternatives in Korea, they have no other choice but to look for opportunities abroad.
adoba, a cross-border platform for creators, aims to overcome these limitations through technology. It wants to create a “creator ecosystem” where global creators and brands can freely operate and collaborate in the global marketplace. Through adoba, global creators can set up channels on Chinese platforms, publish content and settle revenue. This is possible because adoba has content distribution agreements with 12 major Chinese online platforms.
adoba has been helping local and global creators enter the Chinese market, bringing more than 550 local creators to China and operating more than 2,000 channels. In recognition of its business performance and potential, the company received KRW 1 billion in pre-A round funding in 2020 and KRW 4 billion ($3 million) in series A funding in 2021.
adoba is led by CEO Junhan J. Ahn and Chengdu President Dae-il Park. Ahn is considered a China expert. After working in large companies, he went into startups and co-founded Encored Technologies, an energy big data company. In 2016, he sold his VR platform company to 87870, China’s largest VR platform, and then founded adoba in 2019. Dae-il Park has entrepreneurial experience in Korea and worked for local companies in Shanghai, China. What makes him unique is that he is a Wang Hong (网红): Whang Hong is the Chinese term for internet celebrities) in China. Platum met them in Beijing.
– I see a lot of changes compared to the 2020 interview. The focus of the business has shifted from the MCN business to the technology platform.
Junhan J. Ahn (hereinafter referred to as “Ahn”): The direction of the company hasn’t changed. There is still a huge opportunity in China, and the essence of our business is to bring more creators to this market. We started this business because we believed that there was a business opportunity in the Chinese online platform market and that there were enough opportunities for foreign content creators. Initially, we found a win-win situation with Baidu’s Haokan Video. Baidu was a latecomer to the video platform and needed content, and we needed a platform to solve the challenges of foreign creators. The interests of both parties were aligned, and it worked well. Based on the know-how we gained, we expanded to other platforms.
But on the business side, we needed an efficient mechanism. Over the course of four years, we saw that 20% of the creators were getting a good ROI on their resources, but 80% of the creators were not, so we had to find a new methodology. As the number of creators and local platforms grew, the company’s workload grew exponentially, so we moved from MCN-style management, which requires human involvement to IT solutions. We interpreted the industry and redefined the problem.
We first looked at what we had. adoba has the authority to allow foreign creators to appear on various platforms in China and be certified for originality and monetization. It can also authorize individuals to settle the revenue earned by creators after their activities. These two permissions are unique to adoba in the world. We decided to make these permissions more accessible to creators. The result is adobaro, which was launched in beta in October last year. At the end of June, we will launch the global version at VidCon (an annual convention for YouTubers, creators, fans, media companies and MCNs from around the world).
The big difference between four years ago and now is that we now approach the Chinese market through IT technology rather than management. Based on that, we can send creators from different countries in the global market to the Chinese market. The way of solving problems has changed. It doesn’t mean that we are giving up the MCN business. As I said, 20% of the creators can grow bigger with management. It’s a business that’s already doing well and can do even better with our help.
-In the early days of adoba, you were referred to as a “China-specific MCN”.
Ahn: It’s true that China is the market we are focusing on We chose the continental market first to ensure that we have a favorable business position. But ultimately our direction is cross-border and cross-platform. If you can take a piece of content and put it on more platforms than just YouTube, there’s more opportunity for creators, and if you can repurpose content that’s already on YouTube, you can monetize it further. Even content that didn’t work on YouTube can find a home on other platforms.
In fact, even when you cross borders, it’s usually YouTube. This is even more true if you’re not in a market where YouTube is the only platform, but in a country where there are countless other platforms of YouTube’s size. For example, YouTube’s largest market is India, with 260 million users. In China, where YouTube is blocked, many platforms have between 300 and 500 million users. The combined MAU of the Chinese platforms adoba works with is 5 billion, which is much larger than the Indian market. For these practical reasons, we targeted the Chinese market first.
We’ve already proven the South Korea to China part, and there’s an extension that goes from global to China. Creators in China will be able to go global through us. Eventually we will be able to go from global to global.
-When asked for numbers or results from the creators adoba brought to China.
Ahn: In total, we’ve brought about 550 teams to the Chinese platform, and these creators have about 260 million subscribers on global platforms like YouTube and TikTok. There are also many creators who have already grown, such as Hey Jini. They have over 30 million subscribers in China and over 2,000 channels across 12 Chinese platforms that we work with.
We’ve done some data analysis internally and we’ve found that a single creator grows about three times faster on Chinese platforms than they do on YouTube. So overall, we expect to be able to grow to a similar size as YouTube in a year to a year and a half. We think it’s important to have multiple platforms, including YouTube. We’ve opened up the Chinese market not by choice, but by extension.
-How does adobaro, which launched in beta in October last year, help creators?
Ahn : adobaro combines all the modules that creators need to enter the Chinese market. In order for international creators to work on Chinese platforms, they need to meet strict verification requirements such as long-term visas and local bank accounts. adobaro supports creators’ activities in China through a variety of services, including channel creation and revenue settlement services, platform guidelines and manuals, China trend newsletters, various materials (music, fonts, images, etc.) that can be used on Chinese platforms, and channel data dashboards. We’ve been beta testing it for over six months to see if it works. In the last three years we have helped over 300 teams enter China, and in the last six months, over 200 teams have entered the Chinese platform.
-Your hypothesis wasn’t right. Some would have worked, and some wouldn’t.
Ahn: The key to what worked is that it’s a significant cost saving compared to going into management. The cost per creator has gone down by a tenth, and the number of operations has gone down a lot because we don’t contract them individually. We have the technical tools to increase the number of creators in China.
But we also have a problem to solve. When we entered the Chinese market with only Korean creators, we could clearly see the limitations, so we knew we needed to expand our scope and go global faster. When we go global, our solution becomes more meaningful. For example, bringing American, Australian and European creators to China as MCN basis has a lot to overcome, including language and time differences. Management costs are bound to rise. But by going through adobaro, we can save a lot of money. We’re convinced that we can achieve economies of scale with the technology solution rather than management, which requires a lot of human attention.
-You are launching the global version of Adobaro in June. What did you focus on during the preparation process — key features or highlights?
Ahn: What we wanted to see in the beta is the efficiency that comes with moving to the solution. In terms of numbers, we’ve had over 200 teams sign up in six months, so we’re doing well. When we launch the full version, we’ll be adding some more useful features.
Basically, we’ll give creators everything they need to access Chinese platforms. We’ll have all the features to run a local channel, including uploading content. They’ll also be able to see platform-specific data in real time. Most importantly, we’ve made it easy to get paid.
On average, it takes 6 months to 1 year to monetize on YouTube, and we think the same is true in China. Adobaro is a great tool, but it’s not perfect, so we need to complement it. So we are working on several different programs. In the three years that Adoba has been in China, 20 % of the creators that we’ve brought into the country have connected with local brand advertising. We’re looking to automate this a bit more by allowing brands to request ads from creators, and creators to pick and choose which ads they want to do. That’s going to be part of the general release.
Adoba wants to be a platform like Shopee, the Amazon of Southeast Asia. Shopee doesn’t have its own commerce, but it has a lot of commerce mall sellers within it. It has grown incredibly fast because it allows sellers to independently drive engagement between brands and customers. We’ve also made it possible for creators to upload videos to any platform, manage their data and get paid, all by connecting to Adobaro. It’s definitely the most tailored and suitable platform for China.
-You said that the number of domestic creators is not large. What is its share in the global market? Is it small?
Ahn: According to various reports, the number of YouTube creators in the world is about 50 million, and the number of Korean creators is about 100,000. That means there are about 100,000 people doing monetization activities. If you want to do a real business, you should target 50 million people, not 100,000. Korean creators’ content is strong enough for the Chinese market. However, from a business perspective, it is imperative to increase the number.
-What will it take for a quality creator economy to materialize?
Ahn: Ultimately, the key will be business relationships that allow creators to make more money. It is a reality that Korean creators don’t make KRW 1 million ($757) in a year. We need to provide more business opportunities for creators to create a quality ecosystem. That’s why we continue to test it. Last year we ran a music project, and earlier this year we collaborated with the creator goods platform ‘Oround’ to help creators monetize. The next thing we are preparing is crowdfunding and commerce. We plan to continue connecting creators with businesses they can do on the side.
