Is It Possible to Create A Social Media Platform Without Ads?
I was reading an interesting article by Lillian Li about the Chinese video platform called Bilibili. I recommend checking out her newsletter if you’re interested in the Chinese tech scene.
Bilibili has been dubbed as Gen Z’s version of YouTube in China. Because of its younger cohort. But from reading the article. Bilibili is not just a place you watch videos. But a strong community, a place to get premium content, A website to pick videogames, A livestreaming content hub and more.
So how can one company do so much stuff? And still be in good health.
Why don’t they spam ads?
When you get to YouTube, the first thing you notice is the number of ads bombarded at you. Once you escape the home screen. And decide to watch a YouTube video. You need to watch more ads before you start. After that, you can start enjoying your YouTube video.
But wait.
You need to watch more ads that interrupt your watching time.
If this sequence of events happens to you, then you know how annoying this is. If you’re on a desktop, you may have resorted to using an ad blocker.
From reading the article from earlier. Bilibili does not do this. Yes, they have some ads. But they won’t be spamming you as the western tech companies do.
The reason why is because they know this will frustrate the community. Which is something they value dearly. The author makes it clear that community is a massive differentiator for the platform. A feature that they have is bullet commentary which comments scroll along with the video while watching. (This is also available on other Chinese video platforms.) But there is extra value in bullet commentary on this platform. As the community is of high quality. Meaning the comments are more likely to be meaningful.
How to make money outside of adverts?
So if you don’t spam adverts on your website. How do you make money?
This is where the vast options come along. First, we start using the closest equivalents to western companies. In many video and livestreams, you donate to the streamer. Twitch were the one the popularised this model. Were the company takes a cut of the donation. The more popular the streamer the more money the company makes. Donations do help companies produce revenue. But most of the time it tends to be icing on the cake. And not enough to cover most of the company operations.
This is where premium content comes along. With a large userbase, you can make a lot of money selling content. Just ask Netflix. Many users pay a monthly subscription to the company to view exclusive content. With their inventory increasing more and more as they invest more money.
Value-added services is the fastest growing revenue segment for Bilibili, at a whopping 171.9% increase yoy, the bulk of which is coming from membership fees that allow users to access premium content. This revenue stream has led to increased investments into proprietary content (such as purchasing rights to LoL livestreams as well as commissioning exclusive anime for their platform), and it will be interesting to see whether this moves Bilibili more towards an Netflix model in the future. https://lillianli.substack.com/p/an-introduction-to-bilibili-
Video game distribution is another way that the company prints out money. This is not something you think about when it comes to a video platform. But videogames are a popular genre on the website. They can make use of user’s data to help promote or develop games that their audience will want.
Can A Western Company Do the Same?
After a mini rundown of this company. I started to wonder can a western company do something similar. Do they have a chance of creating a social media service that does not bombard you with ads?
Honestly, I don’t know.
But I will brainstorm on how other companies can do something similar to Bilibili.
First, I will go to Twitch. It is always known for its videogame community. Even after the Let’s Chat section was introduced videogames still dominate the platform. Twitch Prime allows you to get in-game loot and free games. A bit like the Bilibili example from earlier. But most of the money still comes from advertising. A lot of the benefit of getting Twitch prime is getting cosmetic benefits. Like better emojis and colour options. This can be improved even more.
For example, E-sports content is highly popular on the platform. Imagine if prime users get exclusive content on their favourite events. Like behind the scenes videos or bonus interviews. This is a simple paywall that raises a bit more revenue for the company.
As we can see they allow you to get extra in-game loot and some free games. What happens if they double down on it? Using data that twitch already has. They can design exclusive games that will be well received by the users.
YouTube could do this as well. As Google has the play store. They can design mobile games that can be popular within lots of niches on YouTube. And advertise their mobile games on people’s streams or YouTube videos. But due to the failure of Google Stadia. Google may not have the ability to execute this.
This idea is mainly for the Videogame/Gen Z base. So if you want to expand outside that cohort. Then more ideas will need to be implemented.
The best one I can think of is the integration of e-commerce with video. So you can watch a YouTube video and you can buy what’s in the video without leaving the page. And the company can get a cut of that. While that can generate a lot of money. There is lots of work getting the backend ready to allow for payments and delivery.
Imagine watching a YouTube video on your phone of a person reviewing some type of widget. Where you can simply click a link in the video. Then asks you for payment information and address. All in the app. This allows creators on the platform to monetise their audience in a whole different way.
If this gets more successful, then YouTube can slowly move away from just making money from ads. And increasing the product experience in the process.
Hopefully, your wheels in your head are turning about how you could create a social media product without relying on ads. I think it will be better for all of us if tech companies find other ways to monetise their product.
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