New Media “Luogic”
Raking in NT$1.3B with Online Talkshow
Even with open curricula and Internet-based direct broadcasts available in China, a paid subscription knowledge platform has attracted 1.5 million users and garnered NT$1.3 billion in annual revenue. How has it done it?
Raking in NT$1.3B with Online TalkshowBy Fuyuan Hsiao
From CommonWealth Magazine (vol. 621 )
His voice is familiar to many Taiwanese listeners, who recognize his appearance and know that he calls himself “Pudgy Luo.” The CommonWealth reporter was a bit taken aback when first seeing him, blurting out “you look fine, not pudgy in person.” He responded with an awkward laugh.
He is Luogic Show founder Luo Zhenyu. The 44-year-old Luo, formerly of China’s highly influential We Media, is now the force behind China’s most popular online knowledge venture. The Luogic Show’s multimedia output has accumulated over a billion plays, prompting one observer to call him China’s most widely-circulated “social currency,” and “a stockpile of conversation topics” among circles of friends.
Luo studied journalism and communications from university through his Ph.D. As a producer at China Central Television (CCTV) he witnessed the tremendous might of institutional media. And in the early 21st century, he perceptively smelled change in the air.
Better to be a talker than a producer
CCTV’s heavy promotion of the educational science lecture program Lecture Room helped make figures like Yi Zhongtian and Yu Dan into megastars. A frequent watcher of Taiwan’s Everybody Speaks Nonsense - Hot Pot, Luo realized that personal value and influence had exceeded that of organizations. “That’s when I made the decision never to exist again in the media in the capacity of a producer; I wanted to engage in direct exchange with users,” he recalls.
Two events, one big and one small, combined to change Luo Zhenyu’s fate. The big event was the merger of Youku and Tudou, two of China’s giant multimedia websites, which combined to provide China’s largest free multimedia platform. The comparatively small event was the introduction of the Canon 5D Mark III DSLR camera, which enabled extended recording of high-definition (HD) video, drastically reducing production costs from 1 million to 50,000 renminbi.
Playing on the Chinese saying that “even pigs can fly in strong winds,” Luo likes to say that if pigs are flying, then a strong draft has appeared.
He jumped on that draft to open a global WeChat account without delay and host a knowledge-oriented talk show, a natural outgrowth of his talents.
“A single camera, a notebook (computer), five lights… that’s all the gear we use,” he notes. Luo relates that he has had a knack for retelling things since he was little, and that as long as he understands something he can rearrange it in his mind and then go about explaining it better and more effectively to others.
In its first two years, the Luogic Show attempted to do everything, from selling books and advertisements to mooncakes. With each of its moves it caused a sensation, but afterwards everything would reset and the next time he would have to start again from zero. He came to realize that this sort of growth could not continue unabated and that he should look for other models to keep building momentum.
Straight, Simple Talk
Last year Luo made the decision to create an app called Dedao (meaning ‘get’ in English). To make the transition, he sold all of his investments for 50 million renminbi, exactly what he had put into them, and concentrated his resources on the app.
Before its introduction, insiders were calling Dedao a “freak,” since no one had pulled this sort of thing off, and it defied easy definition. That is, until one time during a meeting at which everyone was debating if this was a “freak” that wanted to try to tell its users something, or whether it cared what users got from it.
“Naturally, users want to ‘get’ something each day. This lit a spark and it was an excellent concept, so we called it Dedao (‘get’ it), which also reflected changes in our company,” relates Luogic Show co-founder and chief operating officer Li Tiantian.
Dedao was released last May, with paid subscription podcasts as its main product. At eight minutes per broadcast each day for 199 Rmb (around NT$870 or US$29) per year, Dedao has accumulated nearly 1.5 million paid subscribers and revenue roughly estimated at around 298 million renminbi (around NT$1.3 billion or US$43.2 million) in the span of less than a year.
The product is the main key to Dedao’s success. Li Tiantian reveals that as a product Dedao required three phases of development, beginning with defining the product and figuring out what it is. For instance, Xue Zhaofeng’s Peking University economics class, which has 80,000 subscribers, is about economics, but which aspect of economics? Many possibilities were discussed – from economists, to major theories to case studies – but none of those topics were capable of supporting the product. The team then wondered if it wouldn’t be a more valuable service to move Peking University economics classes online and make them available for people to listen to for just .5 renminbi per day.
Once the product has been defined, the host must get to know the users: what is their pain point? Under what sorts of situations do they use the product? Li Tiantian informed Xue Zhaofeng that his users were young self-starters whose minds energized with optimism as they listen to his classes each day while brushing their teeth, washing their face, and riding their bike to work. What sort of products do users like these need?
The second stage involved fleshing out a year’s worth of content once the product had been defined, then putting it into practice day by day. The host had to make over 10 days of demo programs before he could go ahead with daily production.
In Xue Zhaofeng’s case, he first had to record his lecture into his recording stick, then copy the content into a script. Next, a research assistant would conduct research, check facts, and supplement material based on the draft script before handing it back to Xue to rewrite it in plain colloquial form.
1 Million RMB Base Income
Every other day Xue went to the eighth-floor Luogic Show office in Beijing’s Vintage sector to record his program. He delivered his lessons to a female editor majoring in travel and hospitality, and kept repeating key ideas she failed to grasp until she finally understood
It took half a year from creating the concept to going on line and each eight-minute episode had to undergo constant revisions. This was quite stressful for a host like Xue, who admits that it was tougher than teaching classes at Peking University.
Not putting stock in big name celebrities, Luo Zhenyu spent a lot of time looking for teachers. Having recently put together an art history program, he thought about enlisting expert teachers to talk about one painting each day. Yet after looking all over China for art history teachers, he has yet to find anyone to his satisfaction.
A cluster of hot companies turning ideas into profits, like Guokr, Fenda, Zaih, and Logic Show, is situated in Vintage on Beijing’s Tonghui River Road.
In the effort to retain talent, Luo Zhenyu set the bar high, further guaranteeing that each host teacher will make a minimum of 1million renminbi (US$145,000), to be paid in full upon signing the contract. He believes that this is a benchmark for intellectuals to concentrate on their work and enjoy a respectable standard of living without having to worry about making ends meet.
The third phase involved backend data analysis after the product came on line. Rather than look at traffic and hits, Luo only cares about the “completion rate” among users – how many listeners finished listening to the entire eight-minute recording? At which point in the presentation did users leave? Luogic Show’s 70-odd technical personnel run the backend data every day, analyzing user behavior and providing feedback to “put the product in place.”
For instance, Dedao boasts China’s most popular classical music product, which lasts a total of 12 minutes, consisting of three minutes of commentary and musical excerpts the rest of the time.
Prior to going online, internal conjecture assumed that users would be interested in hearing music, so they spent time to find the best version, repeatedly testing the online streaming acoustic quality. However, backend data surprisingly illustrated that half of the users went away after three minutes. It turns out that most of the subscribers are brainy, and wanted to hear the host’s remarks rather than listen to music. The product was adjusted with this in mind, increasing the density of knowledge shared.
An additional key to Dedao’s success is its business model.
“Our company’s core competitiveness is my agnosticism regarding platform logic,” explains Luo.
Most content platforms let users open a free account, so that the higher the number of users the greater the platform’s value becomes.
Instead of getting caught up in that kind of thinking, Luo works on the product to make users part with their money. “We are more like conventional manufacturing companies, concentrating on selling products until we grow big enough,” he observes.
Guided by such thinking, Luogic Show has recently ceased broadcasting television programs in lieu of audio, which can only be heard on the Dedao platform.
Shanghai-based author Guo Yujie, a veteran of around a dozen years in the media, breaks it down, noting that there is no bottom line on competition in the Chinese market. Whenever a company succeeds a whole host of copycats appear within short order. Smartly, Luo focuses precisely on the group of people among the Chinese population that feels the deepest angst and is most concerned about becoming better, providing them easily palatable and assimilable sustenance that cannot be easily copied.
In Luo Zhenyu’s parlance, of course, that depends on people “getting” it.
Translated from the Chinese by David Toman