Top 10 Events of China's Internet in 2010, Leisure Person Blog!
1. Shanda Company Continuously Entangled in "Porn Gate" and "Piracy Gate"
In 2010, the anti-porn campaign on the internet was carried out with great enthusiasm. Following the exposure of Google's involvement in pornography at the beginning of the year by CCTV, towards the end of the year, CCTV again exposed Shanda Literature's involvement in pornography, causing a huge uproar. Adding insult to injury, not long after the exposure of the pornography issue, Shanda was severely criticized by CITIC Publishing House, which pointed out that Shanda had pirated CITIC's new books.
CITIC Publishing House stated that a new book they were preparing to publish was already available for free download as a "pirated" version on the Shanda website, even though many bookstores had not yet received it. Regarding the theft of the publishing house's labor成果, neither Shanda Corporation nor Hou Xiaqiang, CEO of Shanda Literature, provided even basic notification, and also refused to negotiate settlement of the infringement matter. Yan Dong, Vice Editor-in-Chief of CITIC Publishing House, directly stated, "Shanda pretends to be ignorant while fully aware, bypassing the publisher to find authors for so-called original authorship and voluntary uploads, disregarding the exclusive digital copyright rights of this book. Has Jinsu (Shanda's paid e-book reader product) come to this?"
According to the usual model, generally, electronic versions are only released online after the sales of physical publications have slowed down through bookstore channels, so as not to affect the interests and income of authors and publishers. But currently, Shanda provides electronic downloads, making it difficult for current print runs to be absorbed, let alone reprints.
Commentary: Since Shanda's acquisition of Ku6 at the beginning of the year, it has apparently started an accelerated downward trend. Its leading position in online gaming is no longer secure, and in the video field, Ku6 is not very competitive, spending money without seeing returns. And in the once highly anticipated literary publishing field, it has successively encountered "Porn Gate" and "Piracy Gate." It can be said that the legendary status of today's Shanda no longer exists.
2. Sina and Sohu Battle Over Microblogging
Microblogging, as a typical application of Web 2.0, has become the target of all major internet giants, and could likely be the next breakout point for future internet profitability. The competition in China's microblogging market is becoming increasingly fierce, with each company vying for celebrity resources, utilizing star power to attract users. Since its launch in September 2009, Sina Weibo has continued the strategy of featuring celebrities from the blog era, giving it a significant lead in the microblogging market, making it the most popular microblogging platform in terms of user numbers and recognition. However, history has shown that dominance by one entity easily leads to monopolies, and reasonable competition brings harmony to the market.
Sohu, Sina's long-term competitor, has been promoting microblogging with full force recently. On November 15th, Zhang Chaoyang announced on his microblog, "It is a good day, the microblog battle begins," signaling Sohu's official entry into the microblogging battlefield under his personal supervision. Leveraging years of advantages and connections in the entertainment industry, Zhang Chaoyang successfully brought stars and famous friends into the Sohu microblogging camp. In just two weeks, Sohu microblogging suddenly surged, with first-line domestic stars such as Zhao Benshan, Jet Li, Sun Honglei, Cui Yongyuan, Zhu Jun, Yuquan, Liu Xiaqing, and Li Yong all opening Sohu microblogs, and the list of resident stars continues to expand rapidly. Not long ago, Zhang Chaoyang revealed that since November, the number of Sohu microblog users has increased threefold.
Commentary: It has been a long time since Sohu and Sina have engaged in such a large-scale battle. Perhaps, only microblogging can reignite the long-lost passion between these two portal giants. As a result, both parties are deeply embroiled in the struggle for celebrity resources. Not long ago, Ren Zhiqiang, a "celebrity-level" user of Sina Weibo, opened a microblog on Sohu, amidst a chorus of doubts. The always "straight-talking" Ren bluntly revealed the secret in a microblog post, "Being able to fully utilize every tool is most important. Just because you sold yourself to Sina, does that mean you won't appear on other media?" An increasing number of well-known figures who understand media operations have chosen to open microblogs simultaneously on Sohu and Sina, playing the game of "straddling two boats."
3. Video Websites Letv and Youku Successively Go Public
On August 12, 2010, Jia Yeting, chairman of Letv, rang the opening bell at the Shenzhen Stock Exchange. The opening price of Letv that day reached as high as 49.44 yuan, 20.24 yuan higher than the issuance price of 29.2 yuan, representing an increase of 69.32%. Thus, after five or six years of exploration, the first A-share network video company in China was born.
On the evening of December 8, 2010, Youku (stock code: YOKU) successfully listed on the New York Stock Exchange. The closing price on the listing day was $33.44, an increase of 160% compared to the issuance price of $12.8. The market value has surpassed that of Sohu and Shanda. On the first day of Youku's listing, it set the highest record for the first-day increase of IPOs in the U.S. over the past five years. Liu Hong, COO of Letv, expressed that Youku's listing will promote the progress of domestic video copyright legalization.
Commentary: Currently, the majority of the revenue in China's online video industry comes from advertising placements by upstream advertisers. According to the latest research results from iResearch, the annual growth rate of video advertisements will exceed 90% in the next three years, far surpassing other forms of advertisements. Although the video industry has not yet achieved large-scale profitability, its enormous market potential has been recognized by the market. It is expected that at least two to three more video companies will go public in the next two years.
In recent years, the number of domestic video websites has reduced from over 300 to more than 10, with an elimination rate of nearly 90%. The successful listing of Letv will undoubtedly serve as a role model for the domestic video industry, greatly promoting the rapid development of the network video industry. Its legitimate, high-definition, multi-screen integration, "paid + free" unique profit model and innovative awareness will lead a new transformation in the domestic video industry.
Before Youku's listing, a video war centered on "high definition" unfolded among Youku, Storm Player, PPS, and other video websites. Some analysts say that after the listing, Youku will have more funds to solve issues related to video clarity. Secondly, Youku's listing marks a historical milestone, indicating that the entire video industry has stepped onto the mainstream stage and truly gained capital recognition. The listings of these two websites will have a promoting effect on the industry. The future competition and landscape changes in the video website sector remain unknown, but at least these two have taken the lead in the capital market.
4. E-commerce Websites MaikaoLin and Dangdang.com Go Public
On October 26, 2010, MaikaoLin (stock code: MCOX) went public on NASDAQ, opening at $17.5 and closing at $17.26, up 56.91% from the issuance price of $11. MaikaoLin issued 11.7429 million American Depositary Shares (ADS), raising approximately $200 million through the IPO, becoming the first apparel vertical B2C enterprise in China to list on NASDAQ. MaikaoLin operates through three channels: online shopping (Maiwang m18.com), mail-order catalogs, and offline physical stores, creating a 24-hour shopping circle that targets consumers and is a business retail company providing 24-hour service.
On December 8, 2010, China's e-commerce company Dangdang.com (stock code: DANG) was listed on the New York Stock Exchange, raising $272 million. Dangdang.com's stock price on the first day of listing was $29.91, up 86.94% from the issuance price. Relevant data shows that Dangdang ranks first in the domestic book category B2C. As of September 30, 2010, Dangdang offered 590,000 types of books, including 570,000 Chinese titles, claiming it to be the largest book database among China's online and offline book dealers. Besides Chinese books, Dangdang also sells foreign language books and audio-visual products.
Commentary: Since 1999, China's online shopping market has experienced over a decade of growth, and only after 2008 did it see rapid development. In recent years, the Chinese online shopping industry has received substantial support from venture capital. With improvements in online shopping credibility, payment, and logistics, the market will see significant growth. In 2009, China's online shopping market reached nearly 40 billion yuan in transaction volume, and China's e-commerce is growing almost twofold annually. In December 2010, there was a concentrated wave of e-commerce company listings, making early-stage venture capital exits a reality. The e-commerce industry is a field with long investment periods and high capital needs. Through IPO financing, it helps enhance the overall service level of the industry and will benefit listed companies in cultivating their core advantages. iResearch expects that in the next 2-3 years, China's online shopping sector will witness a wave of IPOs.
5. Group-buying Websites Sprout Up, Sparking Online Shopping Craze
The rapid rise of Groupon, the "daily deal" group-buying website in the United States, led to a surge in similar group-buying websites in China starting from March 2010, reaching hundreds in number. This phenomenon was humorously referred to as the "Battle of Hundreds of Groups". On June 23, 2010, Nuomi.com launched a 40-yuan double-person movie package (2 movie tickets + 2 cups of cola + 1 serving of popcorn + 1 scoop of Häagen-Dazs ice cream), attracting over 150,000 participants within a day. On September 9, 2010, Taobao's Juhuasuan platform launched a group-buying event for Mercedes-Benz Smart cars. Within just 3 hours and 28 minutes of going live, all 205 SMART cars were sold out.
As the group-buying model continues to gain popularity, the "Battle of Hundreds of Groups" quickly escalated into the "Battle of Thousands of Groups" and then the "Battle of Ten Thousand Groups". The threshold for group-buying functionality is getting lower and lower, becoming a standard feature. The "Battle of Hundreds of Groups" may soon evolve into a "Battle of Millions of Groups", ultimately benefiting consumers.
Commentary: In 2010, the online group-buying market was particularly hot, with the situation described as the "Battle of Thousands of Groups". This was due to the low entry barrier for the market, strong merchant promotion, and robust consumer demand. Whether it's local life merchants, B-type sellers on the Taobao platform, or newly established e-commerce enterprises, they all need marketing promotion. Group-buying websites provide them with an excellent way to do so, and unlike other promotional methods, group-buying is paid based on results, making the return on investment more controllable. Additionally, more and more consumers are accustomed to online shopping, and group-buying offers them products with better cost-performance ratios.
Moreover, the group-buying method also helps many media outlets extend and convert from information provision to shopping, becoming a new business growth point. Therefore, group-buying has become a standard feature of various websites, with Sohu also launching a group-buying site called Aibangtuan. The future market will present a coexistence of national group-buying websites and regional ones.
6. National Team of Third-party Payment Systems Super Online Banking Goes Live
Due to the rapid development of emerging electronic payment businesses, third-party payment services provided by non-bank payment service organizations have also been widely accepted by the public. The business functions and service targets of the first-generation payment system need further expansion, hence the emergence of the central bank's second-generation payment system.
On August 29, 2010, the People's Bank of China's second-generation payment system, known as "Super Online Banking", officially went live on August 30, with the first batch of cities being Beijing, Tianjin, Guangzhou, and Shenzhen. On December 15, following the launch of the "Super Online Banking" in the first batch of cities led by the central bank, it has now landed in ten second-batch cities including Shanghai, Changsha, Hangzhou, and Nanjing.
After the launch of "Super Online Banking", it will significantly improve banking service efficiency and reduce costs, but the popularization of "Super Online Banking" will take some time. Currently, "Super Online Banking" is still in its initial stage, and due to different cross-bank transfer fee standards among banks, the charging issue of "Super Online Banking" is a focus of attention.
Commentary: Recent statistics show that China's online payment transaction scale will exceed the trillion-yuan mark in 2010. Online payment has expanded from online shopping and travel booking to utility payments, fund subscriptions, insurance claims, and more. With the rapid development of China's online banking, the introduction of "Super Online Banking" primarily focused on standardized cross-bank online financial services reflects the central bank's emphasis on achieving internet-based financial services for banking-centered financial institutions, and also indicates that online banking payments are showing a trend towards platform development. However, in specific implementation, there are still multiple obstacles such as insufficient cooperation motivation among banks, and its impact on third-party payment companies is relatively limited.
7. Tencent vs. 360 Sparks Nationwide Concern Over Privacy Issues
During the Spring Festival of 2010, Tencent promoted QQ Doctor security software in second- and third-tier cities and lower. Overnight, QQ Doctor occupied about 100 million computers domestically, capturing nearly 40% of the market share. Tencent's move clearly "invaded" 360's territory. Before the National Day holiday, 360 launched Privacy Manager, directly accusing QQ of infringing on user privacy. Subsequently, 360 released QQ Guard, which protected QQ user privacy and could block QQ Show, QQ ads, QQ Mini Home pop-ups, and QQ news alerts. Its functions directly targeted the foundation of QQ's success. In response, Pony Ma sent an open letter to all QQ users, stating: Dear QQ users, when you read this letter, we have just made a very difficult decision. Before 360 stops external plug-ins and malicious defamation against QQ, we have decided to stop running QQ software on computers with 360 software installed.
Additionally, during the intense 3Q battle, companies like Baidu, Kingsoft, Maxthon, and Kaspersky jointly issued statements opposing 360.
Commentary: The 3Q battle finally officially pushed 360 into the ranks of internet giants. Despite 360 Chairman Zhou Hongyi often referring to himself as part of a small company, this small company's ambition or rather, its grand vision, is anything but small. In fact, industry leaders have never underestimated or dared to underestimate this wolfish company. Moreover, what made the 3Q battle classic was the phrase in Tencent's statement, "We have just made a very difficult decision." This seemingly helpless and tragic remark made the public perceive it as humorous. Indeed, if even a powerful entity like Tencent has to make a very difficult decision, how easy would any decision be for ordinary people? The 3Q battle will eventually pass, and Ma Huateng and Zhou Hongyi might reconcile. However, this "difficult decision" will remain etched in the memory of those living tough lives.
8. Real-name System for Online Games Officially Implemented
The real-name system for online games refers to a system where players need to input their real identity information when playing online games. On June 22, 2010, the Ministry of Culture officially released relevant legislation for the real-name system for online games, the "Interim Measures for the Administration of Online Games," which was implemented on August 1.
The real-name system for online games consists of three systems: First, a registration system where players need to provide identity information; Second, a query system open to society where parents can check which games their children are playing and their online status; Third, an authentication system that works with the public security department to verify registration information. Once users registered with false identities are discovered, their player levels, experience points, items, etc., will be reset to zero.
The state promotes the real-name system for online games with the fundamental aim of using technical means to limit minors' gaming time online, preventing minors from logging into PK leveling-up type games, and standardizing the online game environment. Most players express support for this, while others worry whether the real-name system can be effectively implemented and whether the personal information submitted can be kept confidential.
Players who support the real-name system believe that after its implementation, cases of account theft and virtual item theft in the online gaming world will decrease. However, some argue that the purpose of playing online games is for leisure and entertainment, and requiring ID registration feels contrary to the original purpose of gaming.
Commentary: With the implementation of measures such as real-name systems for online merchants and online games, a comprehensive real-name system on the internet is not far off.
However, the phenomenon of stealing personal privacy online is becoming increasingly serious, with some websites even providing public query services for personal privacy without any procedures, requiring only a small fee. In the absence of a thorough resolution to privacy protection issues, real-name registration on the internet indeed raises concerns.
9. Domain Name Dispute Between Genuine and Fake Kaixin.com Finally Settled
In March 2008, Kaixin.com (kaixin001.com) began formal operations. Six months later, Qianxiang acquired the kaixin.com domain name at a high price and launched another website named "Kaixin.com". In May 2009, kaixin001.com sued Qianxiang for unfair competition, demanding it stop using the name and seeking compensation of 10 million yuan. On October 28, 2009, the case was first heard in court but no verdict was immediately announced. In June 2010, the case was heard again, with Qianxiang requesting an appraisal of whether kaixin.com was well-known and had a distinctive name in October 2008, which was rejected by the court. In September 2010, Qianxiang merged Kaixin.com with Renren, enabling account interoperability. In October 2010, the dispute between genuine and fake Kaixin.com was finally settled, with Qianxiang's "Kaixin.com" ordered to stop using the "Kaixin" name and compensate 400,000 yuan. In response, Chen Yizhou, CEO of Qianxiang, wrote a blog post expressing willingness to "forgive and forget" with Kaixin.com.
Commentary: The marathon-like domain name lawsuit between Kaixin.com and Renren has finally come to an end. After the verdict, Chen Yizhou, chairman of Renren, extended goodwill via Weibo to Cheng Binghao, chairman of Kaixin.com, but did not receive reciprocal acknowledgment. In fact, during their back-and-forth disputes over the domain name, the golden age of SNS had passed, replaced by the newer microblogging platforms. However, without SNS, Chen Yizhou still has Nuomi.com, MaoPu, DONEWS, etc., while losing SNS leaves Cheng Binghao with nothing. Therefore, Chen Yizhou's tactic of "delay" proved to be perfectly timed.
10. Website National Team Initiates Listing Process
In August 2010, relevant department leaders publicly announced regarding the listing of 10 mainland China news websites on the A-share market, stating that Xinhua News Agency's A-share listing plan had been approved by relevant departments. If everything goes smoothly, Xinhua will become the first pioneer of the website national team to list on the A-share market.
This top 10 list includes CNTV (China Network Television), People's Daily Online, Qianlong.com, Orientalnet, Northernnet, Dazhong.net, Huasheng Online, Zhejiang Online, and Sichuan Online. It is reported that besides Xinhua, People's Daily Online's listing is under review by the Publicity Department of the Central Committee, and two websites, including CCTV.com, are actively formulating plans.
There are rumors that People's Daily Online generated 3 billion yuan in revenue last year, with advertising earnings doubling for the past two years. They are currently setting up a dedicated advertising company to expand their advertising business. CCTV.com has been profitable for five consecutive years, earning billions solely from the broadcasting rights of the Olympics and the World Cup. Additionally, six other websites are in the approval queue. According to predictions, around two should successfully list in 2011. Once the pioneers successfully list, their successful operational models will inevitably be emulated by later entrants.
Commentary: Watching commercial websites like Sina and Sohu make huge profits, the long-suffering national team websites naturally feel不甘心.
Under the current circumstances, the only way to alleviate the shortage of funds is through listing, and the possibility of overseas listing is virtually zero, leaving only the A-share market as an option. But even if all of them list, will they become stronger?
Label: 2010 Internet Events
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