hollywood billionaire

Chapter 325 Douyin Effect (Part )

“Musical.ly…”

Joshua Kushner frowned and whispered the word several times.

It wasn't that he hadn't heard of the company.

But he really couldn't imagine why Han Yi would favor it.

What is Musical.ly?

A short video application owned by Shanghai Wenxue Network Technology Co., Ltd. was officially launched in August 2014. Its core strategy is to provide users with a new application experience that comprehensively surpasses Vine.

At that time, Vine was still the undisputed absolute leader in the short video field. It was founded in June 2012 and was acquired by Twitter for US$6 million in October 2012. On January 10, 3000, the first version was officially launched. Its unique six-second short video loop gameplay quickly captured a large number of European and American teenagers.

In the six months from the first quarter to the third quarter of 2013, Vine became the application with the fastest user growth in the world, with a growth rate of 403%, far exceeding the 146% of the second-placed flickr and the third-placed Instagram’s 130%, and fourth place WhatsApp’s 123%. By the end of 2015, Vine had developed into a huge community with million registered users. It was hailed as the next locomotive to drive the development of the Twitter ecosystem, and was as important as Facebook's Instagram.

But Twitter has never successfully solved several fatal problems with Vine. This short video application, which has survived for less than four years, has already embarked on a path of decline while rising. First of all, Twitter does not have a unified and coherent operating philosophy for its applications. When Vine was at its peak, Twitter itself was still developing their 30-second video function.

Secondly, Twitter didn’t know how to use this app to make money. Later generations were used by Douyin for paid promotion, and Vine was not launched until it ceased operations. This resulted in the parent company losing hundreds of millions in monetization revenue and causing advertisers to switch to Facebook and Snapchat.

More importantly, when Twitter acquired Vine, most of its executives stayed on. These executives were very confident in the short video miracle they created, and guarded their "six-second rule" in an almost fundamentalist manner, that is, short videos. Can only be limited to a six second time frame. This severely limited users' creativity and expression. Therefore, when Instagram launched the 2013-second short video function in June 6, Vine, which was rapidly rising in popularity at the time, was actually losing users.

Affected by multiple negative factors, on October 2016, 10, the unsustainable Vine announced that it would prohibit users from uploading new video content, announcing the official demise of the application. All of a sudden, various so-called in-depth reports came one after another, degrading Vine, and the short video platform it represented, to nothing.

“Millennials do like to watch videos of about ten seconds, but they do not deliberately search for these videos on the Internet. They are supplements to fragmented entertainment and leftovers of social media platforms. Leave Facebook, Instagram or Snapchat and provide short videos separately. Video entertainment platforms will have a very difficult time surviving.”

This is the final conclusion given to Vine by CNBC columnist Michelle Castillo, and it is also the consensus of many venture capital practitioners on the short video platform.

Including Joshua Kushner.

"You seem to be satisfied with Musical.ly..." Han Yi leaned forward, "You don't look very satisfied?"

"There is nothing to complain about the product itself. I tried it and it was fun. In fact, the investment case for Musical.ly was brought to my desk by the team two years ago." Joshua Kushner used He wiped his lips with his fingertips and responded.

"But you refused?"

"Most venture capital companies in Silicon Valley rejected it," Joshua explained carefully. "You may not know much about the situation of this team at that time... They raised US$25 and originally wanted to build an online education platform. Invite professionals from all walks of life to come to the platform to hold classes, each class lasts three to five minutes. However, many subjects are too complex and it is impossible to cover a knowledge point in just a few minutes, and the most fatal thing is that the knowledge itself does not It wasn’t interesting, or they didn’t package the knowledge in an interesting way, so that app basically failed as soon as it was released.”

"I still remember that I communicated with this team on the phone for about half an hour. I was in New York and they were in Shanghai. I was only available at three in the afternoon, and they really waited until three in the morning. Our conversation was very pleasant, and the team itself They were also very efficient and honest, and they didn’t play any tricks on me... But their situation at the time was really worrying. Only 25% of the 8 yuan was left. In order not to return the money to the investors, they stayed there. After disbanding, they hastily launched the short video platform plan, because it is more compatible with the project they were originally working on, many things can be used directly, and the product will be formed faster."

"So, Musical.ly is actually a remedy?"

"Yes, it only took thirty days from the establishment of the project to the launch of the first version."

"No wonder you rejected their financing proposal at that time." Joshua Kushner's answer solved Han Yi's inner doubts. In his opinion, for such a high-quality project, Joshua should have no reason to refuse it. , "But looking back now, do you feel a little regretful? They just released user data last month, and the number of registered people has exceeded 1.3 million."

"For me, it's okay. I don't have any special regrets or regrets." Joshua shook his head gently. "The development process of Musical.ly is actually full of uncertainties. Because I have been in contact with them. Because of the team, I have been paying close attention to it in the past two years. The initial data indicators looked good - 500 people downloaded every day, and more importantly, most users were retained, but it was still too slow. .In the next ten months, their user growth rate remained unchanged.”

"No venture capital firm will be satisfied with this flat growth curve." Han Yiwei Joshua added.

"Yes. Fortunately, at the critical moment, Musical.ly found the crux of the problem."

"What's the crux?"

"When users download videos and share them to Instagram, Twitter, or Facebook, they cannot see the Musical.ly logo."

"Ah." Han Yi suddenly realized, "Then they put a watermark on every video produced with Musical.ly, as well as the user's name, to ensure that they will not be overly disgusted by the appearance of the logo."

"At this time, Musical.ly has truly entered its explosive period." Joshua Kushner nodded. "In July 2015, it topped the download ranking of free software in the Apple App Store, and in August it won the SIG Led by US$7 million in Series A financing. Therefore, if it were not for the change in video watermarks, Musical.ly would have closed down long ago. And this situation can be said to be consistent with the investment logic of Xingsheng Capital... …Totally the opposite, as you just heard, Yi, in our client list, there are many institutional clients who put security first. What they want to find in Silicon Valley is a stable, sustainable and mature business model. , rather than a forced gamble.”

"But their big gamble succeeded, didn't they?" Han Yi asked, "1.3 million registered users, 4000 million active users, and more than 1200 million new videos added every day."

"Maybe in a sense, Musical.ly is successful, yes." Joshua thought for a while and gave a rather tactful answer. He didn't want the man in front of him to invest nine people in Xingsheng Capital's fund. Potential partners counting funds were unhappy, "But if we learned anything from Vine, it's that it's not enough to just have users. If you can't monetize it, sooner or later it will fail."

“The most important thing is that, in my opinion, Musical.ly has an extremely fatal natural flaw.”

"What flaw?"

"Its name is Musical.ly." Joshua slowed down and said, "You are running a record company and a copyright distribution company. You should be very clear that Yi, this model of Musical.ly platform will not last long. All 15-second videos on the Internet, whether they are singing, dancing, or doing various funny actions, are all completed around hot songs. In other words, Musical.ly is a music streaming media Outside of platforms and video streaming platforms, it’s another way that internet companies are exploiting music rights. It’s a completely new way, an interactive way, but certainly also an exploitative way.”

"The three major music groups, including Han Music, just haven't set their sights on Musical.ly now, because it's not big enough, stable enough, and rich enough. When it grows to YouTube... about one-third, or five At a fraction of a percent, a series of copyright lawsuits will come to our door. By then, the royalties that Musical.ly needs to pay alone will probably scare away all investors.”

"Don't you think Musical.ly can use the safe harbor principle to protect itself?" Han Yi already had the answer in his mind. The reason why he chose to ask this question was more of a test for Joshua Kushner. Let’s see if this golden boy of capital has the qualifications to discuss Musical.ly and the business logic behind it with him.

"Unlikely." Joshua said categorically. "The reason why YouTube can escape the hunting of the three major music groups is that it really only provides a video sharing platform. It does not provide users with specific information." The gameplay does not even provide music selection. But Musical.ly is different. All promotional ads have only one main concept: choose your favorite single from the popular music library it provides, and then shoot a video and lip-sync along with it.”

"If I were a federal judge, as the guide for user behavior, it would definitely lose, hands down."

"I thought you weren't interested in Musical.ly." Han Yi tilted his head and looked at Joshua with interest, "I didn't expect you to study it so thoroughly."

Joshua is right, Musical.ly, and its successor TikTok, are fundamentally different from YouTube in terms of business logic. YouTube focuses on traditional long videos, while Douyin focuses on short videos emerging in the era of fragmented entertainment. YouTube attracts users of all ages, with its main audience between the ages of 18 and 34, while Douyin specializes in the younger group, Gen Z, and the younger part of the Millennial generation, approximately 16 to 24 years old.

The video content on YouTube is all-encompassing, including Vlogs, tutorials, videos, and MVs, and there are many types. Douyin, at least during the period of its explosive growth, focused on creative short videos as its core selling point.

The "creativity", "fun" and "highlights" of these creative short videos are almost all closely related to music.

Douyin, as its name suggests, is a platform with music as its cultural core.

Especially in the early days of Douyin, in Han Yi's view, it was more like a distribution center that encouraged users to create their own music visual content.

The status of music in Douyin's communication chain is so prominent that Douyin has never thought of raising the tiger-skinned banner of "I only provide a platform, and it is the users who infringe your copyright" like YouTube, but the old Negotiate honestly with the three major music groups one by one, pay on time, and renew the contract year by year.

Even for independent original musicians, Douyin has opened its backend for musicians and settles royalties on a monthly basis. The frequency is much higher than that of NetEase Cloud Music and QQ Music, which are settled quarterly, and the payment process is much simpler. As soon as you click settlement in the background, the money will be transferred directly to your Alipay account in less than ten seconds. For NetEase Cloud and TME, it takes at least a month from submission of payment request, to receipt of invoice, to final payment.

Not only that, in the last life, Douyin also established a separate music copyright distribution company and aggressively entered the core area of ​​​​the music industry. Its ambitions are clear.

In other words, Douyin in the future will not only be a user of music copyrights, but will also try its best to become the owner of music copyrights.

Therefore, any app may not pay royalties generated by the use of music, but Douyin will never frown in this regard.

Music is the lifeblood and foundation of Douyin.

"The projects I invest in need to be studied carefully, because I have to know what I am investing for. The projects I do not invest in must be studied thoroughly, otherwise I will be wasting the opportunity." Joshua Kushner opened his arms with a matter-of-fact expression. .

"very good."

After hearing Joshua Kushner's doubts about Musical.ly, Han Yi thought for a moment before asking another question.

"How big is YouTube now, Josh? Do you have a ballpark figure?"

"The number of monthly active users seems to be... 14 billion, no, 15 billion." Joshua frowned slightly, "I can't remember the other data clearly. After all, YouTube is too big and it is beyond my scope of consideration."

"That's okay. Now, imagine what would happen if Musical.ly had as many monthly active users as YouTube?"

"The record companies will make money with their pants falling down."

"No, think about it again." Han Yi smiled and shook his index finger.

"Musical.ly can... let users pay to use music? Like Spotify and Apple Music do?"

"That's a quick suicide. No one will pay to make a short video."

"Yeah, this is why short video platforms are difficult to commercialize...wait a minute." Suddenly, Joshua opened his eyes wide as if he thought of something, "What do you mean..."

"Finish your thought."

"If there are 15 billion users, Musical.ly has the most powerful music promotion tool in history. If a song can be heard as background music by 15 billion people, even if it is pure and complete shit, it will It can generate tens of millions of dollars in revenue.”

"Exactly, Josh."

Wow.

Han Yi, who looked calm on the surface, let out an exclamation in his heart.

He is worthy of being a new generation of Jewish financial elite who graduated from Harvard Business School and achieved a billion-dollar asset management scale in five years.

You don’t even need to ask, you can see through the clouds and quickly find Musical.ly, and the superpower that later evolved from it, TikTok, which is the most feared in the world.

Promotion speed is faster than virus reproduction.

And the publicity cost is infinitely close to zero.

　I’m quite busy today, so I’ll post half of it first, (Part 2) will be posted tomorrow.

　　

　

(End of this chapter)