Curbs shake up live-streaming industry
A week after Singles’ Day last year, analysts asked Alibaba Group Holding chief executive Daniel Zhang Yong if he thought the company relied too heavily on its top live-streamers to generate sales during the annual online shopping extravaganza.
Zhang did not answer the question directly, but said Alibaba’s Taobao Live platform treated all online influencers, big and small, fairly.
Fast-forward to today and Zhang’s silence on the question speaks volumes. Diantao, Alibaba’s live-streaming e-commerce app, fell behind rivals Douyin and Kuaishou in sales during the online shopping festival on June 18 after losing its top two influencers.
Austin Li Jiaqi and Viya, who represented their clients via the Taobao Live platform, were once formidable selling machines, promoting everything from lipstick to cars and even rocket launches.
Together, they sold 20 billion yuan (HK$23.4 billion) worth of goods on the first day of the Singles’ Day shopping festival last November, about twice the annual sales turnover of China’s largest department store chain.
Alibaba, which owns the Post, is credited with turning Singles’ Day into the country’s biggest annual online shopping festival.
The e-commmerce giant did not immediately respond to a request for comment.
Li and Viya, whose real name is Huang Wei, came from humble beginnings, but became the most recognisable faces of the country’s e-commerce boom, representing the endless possibilities the internet can offer.
Li, 30, was a former cosmetics salesman while Huang, 33, owned a clothing store. After jumping into live-streaming, they quickly won wealth, fame and even honorary political titles, motivating millions across the country to follow their lead.
A new business model was even created based on their popularity. ByteDance’s Douyin developed an army of influencers to enable it to tap into the e-commerce market, while Kuaishou boasts its own top influencer, a 32-year-old salesman called Xinba. Influencers became the magic weapon platforms used to compete for the attention of the country’s 1 billion online consumers.
But there are signs that the curtain is falling on the country’s top live-streaming influencers amid Beijing’s increased scrutiny on non-state centres of influence and their “irregularities” in areas such as content and taxation.
The first big crackdown came in the form of a tax investigation. Viya, who live-streamed almost every night, even on national holidays, was fined a record 1.3 billion yuan for tax evasion. Overnight, her live-streaming room and social media accounts were erased.
Similar tax evasion fines, and subsequent erasure of their online presence, befell other influencers,
Zhu Chenhui and Lin Shanshan, who were each fined tens of millions of yuan last November.
Li, who earned the nickname “Lipstick King”, survived the tax crackdown but has since disappeared online after he abruptly ended a live-streaming session on June 3.
At the time, he said the suspension was caused by a technical error, but there is speculation that he was forced to end his show by authorities after he displayed a tank-shaped ice cream. The tank image is a frequent target of Beijing’s censors because of its association with the Tiananmen Square crackdown on June 4, 1989.
“Since late last year, we have been thinking that the era of the live-streaming industry dominated by top-tier influencers may end … but we never expect it to happen so quickly,” said Franklin Chu, managing director for US at Azoya, which worked with Li and helps global brands expand into China.
“Platforms are [now] helping small and middle-sized influencers instead of using all their resources to create another toptier influencer.”
New faces will have a better chance of fame now that the top players are gone, according to analysts.
“In the past, small and medium-sized live-streamers had little chance to gain popularity as the top three on Taobao Live took the majority of the market share,” said Ashley Huang, an analyst at research firm Frost & Sullivan.
Beijing’s check on the power of top influencers comes as China’s overall consumer spending, including e-commerce, shows signs of weakening amid a broader economic slowdown. The country’s 344 million live-streaming viewers at the end of 2016 doubled to 703 million by the end of last year but the pace of growth is slowing, according to data published by the China Internet Network Information Centre.
With the silencing of its two top influencers, Alibaba’s livestreaming platform has been hit the hardest. Diantao fell behind Douyin and Kuaishou in terms of gross sales during this year’s June 18 shopping festival, according to Syntun Data.
No influencer from Taobao made it to the top five livestreamers in terms of sales, and Kuaishou host Dandan topped the chart by selling 1.6 billion yuan worth of goods and services.
That was in stark contrast to last year’s June 18 event when Taobao’s live-streamers dominated the top five rankings, led by Viya and Li with 5.9 billion yuan and 5.4 billion yuan in sales, respectively.
According to research firm YipitData, the absence of Li and Viya created “tailwinds” that helped influencers on other platforms such as Kuaishou. However, Kuaishou has not escaped controversy, with its top influencer Xinba having been banned for three months after Guangzhou’s market watchdog found he had promoted a fake sugar and water version of bird’s nest, considered an expensive delicacy.