KAMPALA – As the new generation of Chinese internet firms seek to establish themselves in a market dominated by much bigger players, they have come up with more innovative ways of baiting readers.
With its extraordinary pay-your-user strategy, Tencent-backed Qutoutiao Inc – pronounced “chew-tow-ti-ow” – has drawn in 20 million daily readers; with the top-earning user collecting more than $50,000 (UGX187m).
Digital gold coins are earned by playing games that involve reading stories or by convincing others to join up. The strong players receive the title of ‘master’.
This development is an extreme example of financial innovations used by companies to stay in the race of business competition.
According to Kenya’s Business Daily, Shanghai-based managing partner at technology-focused Prometheus Fund, Zhang Chenhao, said: “Acquiring new users if you’re competing with Alibaba, Baidu, Tencent and traditional mobile players, you need to come up with something new.”
And the trick seems to have worked. The news firm, which listed in the United States in September, tripled its number of daily users over the last year, with revenues increasing.
The strategy doesn’t come cheap, even if individual amounts paid to users are ‘trivial’ as the firm claims.
“It is getting more and more expensive to get traffic,” Chief Financial Officer Wang Jingbo told Reuters in an interview, but said the cash giveaways were a key hook and a long-term strategy.
“It’s the eyeball economy. Previously, people had to spend money to see content, but with the changing internet they no longer have to pay… users now need to earn something as well.”
But industry experts question the sustainability of the cash-donating innovation such companies are adopting.