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Clubhouse success reverberates across China 'ear economy'
Pandemic raises market volume for Chinese online audio platforms
4 Mar 2021 | Janette Chen

Clubhouse, the brash new kid on the social networking block, has raised a lot of buzz among tech players in China, who are caught in clamorous discussions about the whys and wherefores of its resounding global success, and the possibility of echoing its popularity across the country.

To be sure, China has long had an audio tech sector, more commonly known as the “ear economy” (耳朵经济). There are three major players in this sector, namely Ximalaya FM, QingTing FM, and Lizhi FM, which have been trying mightily hard to get a share of the social networking app market, but their efforts so far have been drowned out by the runaway popularity of short-video platforms like TikTok and newly listed Kuaishou.

Clubhouse, which was launched only in April 2020 and is right now an invite-only app, owes much of its success to the timing of its entry into the market. Covid-19, along with social distancing and other related restrictions, has broadened the popularity of online apps for business, entertainment, education, etc. Clubhouse is a social networking platform where the means of communication is audio alone. This offers users the extra advantage of not having to care about how they look or where they are. They can listen and participate in the discussions even if they’re in bed, while commuting, or doing something else. That’s very convenient, indeed.

The Clubhouse phenomenon, naturally enough, has caught the ear of China’s audio tech sector. Xiaomi, for example, has launched its own Clubhouse-style app called Mi Talk.

The industry experienced a boom in 2017 and 2018 when users of Chinese online audio platforms increased by 122.4% and 62.2% year-on-year respectively, according to GF Securities research. Growth slowed down to 30.4% in 2019.

But things started to change last year as the pandemic prompted people to spend more time online to entertain themselves. According to iiMedia Research, a think tank focusing on new economy sectors, online audio users in China reached 542 million in 2020, and the market is expected to grow by a compound annual growth rate of 44.8% until 2023.

 

Source: Guangfa Securities Research Division

Although the audio tech sector includes various types of content, ranging from music to live audio, one subsector, audiobooks, is the one that major players are eyeing.

“The short-video sector has reached its bottleneck in terms of further developing,” says a senior manager from an online reading platform. “We have seen strong demand since the pandemic regarding online audio content, particularly audiobooks. On one hand, users have a higher demand for quality products, for example, audio novels for entertainment or knowledge-sharing courses. On the other hand, according to our market research, with the impact from the Covid-19, people want to make some money in their spare time – audiobook dubbing is one easy way to gain income,” he adds.

In the meantime, the audio-only format is proving highly efficient in grabbing user time. “For us who do content-sharing platforms, whether it is UGC (user-generated content) based or PGC (professionally generated content) based, the time that users spend on the platform is one of the key measures to evaluate a product,” says the senior manager, noting that this metric is even more important in assessing PGC-based products such as audiobooks and knowledge-sharing courses.

“People only use the sense of hearing on audio platforms. Therefore, unlike on video platforms, content and messages conveyed by audio are more efficient given that people are not easily distracted,” says the manager, noting that the average time users spend on audio novels has already surpassed that of short-video platforms.

That is why this online reading platform is developing its audiobook business and is in discussion with major tech players for funding and collaboration opportunities. Several Chinese tech giants, such as Tencent, ByteDance, and Bilibili, have already launched their online audio products.

“But it is hard for these players to take market shares from the more established brands like Ximalaya and Lizhi,” says the manager, noting that existing players are not only dominant in terms of market share, but also holding the majority of resources, like writers, voice actors, and content copyright. Investing in existing products might be a faster way for the tech giants to have a finger in the pie. 

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