In China, Content is Still King

When people talk about the coming death of traditional media in the age of the Internet, Chinese content-providers feel even more pained than others because their audience is so accustomed to free stuff. Free music, free movies, free TV shows, and of course, free news.

Not only is this spirit of freedom deeply rooted in the minds of nearly 300 million Chinese Internet users, it also creeps into the heads of those online distributors, especially those of Chinese news portals.

Chinese news portals are nothing like their American counterparts. When news breaks, Americans may swarm to news organizations’ website for updates, such as CNN.com or the Times online. However on this side of the Pacific Ocean, people head for the news portals. Why? Because they don’t know of other alternatives, despite the fact that they do exist.

Unlike Yahoo news and other U.S. news portals which have only a handful of news sources due to their high cost, Chinese media is comprised of hundreds of news sources. And the cost? Little to none.

How can that be possible? To know the answer, we have to think back to the previous decade when the Internet was still in its infancy, and having an online presence seemed foreign and extravagant to China’s traditional media sources. The owners of early news portals worked out an agreement with traditional media outlets that allowed them to host their own webpages in exchange for free content. To those Grand Old Publications, this didn’t sound like a bad deal considering the little they knew about online news.

Time passed and those news organizations noticed something wasn’t right. Though, as promised, they had their independent webpages in the news portals, they were buried so deeply inside the portals that no sane person would bother clicking that far to reach them. On the contrary, the news the portals gave out for free appeared on the front pages of the portals and helped drive loads of traffic and ads revenue to them. These content providers began to realize that they had been given the dirty end of the stick.

Tired of being slaves, they decided to pull their content and break with the news portals. They wanted to build their own websites. However, it was too little, too late. First, the portals ewre not severely hurt by the break as China had about 9,500 publications and they could easily find other partners at a marginal cost. Second, building an online brand was not easy and required a lot of patience. That was something Chinese Internet users didn’t have. So this time, instead of burying their webpages inside portals, their news was buried de facto in the middle of nowhere, and few internet users were driven to it.

Determined to not completely lose out, the Chinese media outlets, now tamed rebels, returned to their initial agreement with the portals. At the mercy of their portal masters, they returned to the negotiation table and once again offered their content for little pay.

Despite their efforts, a new danger has surfaced. Their return may have been in vain if Telecom companies are not in their 3G mire. For average mobile phone users, 3G’s promises don’t seem that appealing as their current 2G or 2.5G networks contain 90% of the repackaged new plan networks. The dissemination of this new technology looks bleak. However, those dying content providers enter the 3G picture as the Messiah. The logic is that customers will sign up for the 3G service if it provides enough appealing content and applications on the go, and news updates delivered directly to one’s phone may just qualify as such.

In order to not make the same mistake twice, these content providers have entered their alliances with telecom operators as stakeholders, not merely as low-end content providers. They want to be seen as independent brands, just like in offline world, and not just name-tags beneath the flashier, more important headlines.

Content is their leverage and content is still king. The question is whether it is a destitute king or a flourishing one.

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