The revenue models of Chinese SNS websites-Part 2

Fri 19 August 2011 15:38, Qin Hu

Let's continue to talk about the revenue models of Chinese SNS websites, there are 3 models left.

1. Membership fee

Almost all SNS websites are registration-free. However, some SNS websites which target high-end business people charge membership fees, such as Tianji. It was bought by Viadeo in March 2009, and conducts the same “three-pronged” revenue model as LinkedIn, which are upgraded accounts, hiring services, and advertising. So if you want to contact anyone showing in your search results, you need to upgrade your account and pay monthly fees. Companies will be charged for getting recruitment services as well.

Unfortunately, unlike American internet users, people in China are more sensitive to these kinds of service charges. I'm not sure whether this revenue model can be conducted successfully in China or not. However, Tianji's CEO, Tinghan Li, is very positive about it.

2. virtual value-added services

Many young people in China would like to spend money on decorating their own SNS accounts. For instance, they will pay for different background scenes, all kinds of game tools, or to be VIPs in order to enjoy other unique functions.

51.com, a Chinese SNS website, has gained 70% revenues from those value-added services. The average age of its users is around 21 and one third of them are university students, who have a little bit of money and want to be unique. RenRen that targets students, also charges for virtual services. Users pay RenRen for virtual money, named “Do”, in order to buy other functions or virtual gifts for friends. QQ-Zone, one of the earliest SNS websites in China, has used the revenue model, and gained 1 billion RMB (around 14,400,000) in 2008.

(RenRen charged value-added services, and payment methods are marked in red)

The picture above presents how QQ-Zone looks like. The background scene, the App (left bottom side) and decoration (right bottom side) are all additional charged services.

3. E-commerce

People often pay attention to some products, which their friends discuss about on SNS websites, like camera models, car brands, etc. Many SNS websites have gradually realized that fact. They have started to involve different e-businesses according to their target groups' needs. For example, if a SNS website targets white collar, then it will probably add some living information about renting, jobs, fashion, etc. By doing this, many relevant entrepreneurs would like to invest in opening virtual shops on this SNS website in order to approach those people more easily.

So far, there are many online stores cooperating with Sina Weibo. If you are interested in products people are tweeting, you can click through and directly go to its Sina Weibo pages or online stores. Another big online shop, Macoxlane (www.m18.com/ ), has started to cooperate with Sina Weibo as well. Users can use their Sina Weibo account directly to login on the Macoxlane website.

For example, in my Sina Weibo stream, I saw the tweet as below. The name of the store is in the red square. After I clicked on it, I automatically went to its Sina Weibo entrepreneur page.

Of course, there are many other models. Normally, some revenue models are even used together on one SNS website. However, it is important to remember that many revenue models have to be slightly adjusted according to different cultures. This is a often discussed topic, standardization and adaptation. In this case, almost every revenue model is more or less relevant with games in China, because Chinese netizens (combination internet and citizen) prefer entertainment services on SNS websites, which is different from western users. This fact also brings some development problems for the future. Again, I will talk about this later. See you!

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