In fact, the experience in printed media has not only helped build his values but lent him the insight into the nature, law and strategy in the media and content industry.
“Already, I was different from some young people involved in other video sites. I didn’t need a business to improve my living. To a certain degree, I took online video as a lifelong cause. What I needed was a long-term mechanism, a clear-cut business mode,” said Lv.
Actually, a fairly mature mode already existed in 2005; that is the VOD payment by telecommunication operators. Drawing inspiration from this mode, Lv believed that the accumulation of copyright was a must for a legitimate video site. Then he put forward the idea of a video portal, instead of sharing, because sharing would be empty talk without content.
But the idea was “laughed at” in the beginning. On the one hand, investors were not interested; on the other hand, inside his company some believed the site could never survive by relying on purchasing copyright videos.
“I had been trying so hard to persuade my staff in the past few years, and we all felt the pain of seeing traffic soaring to other sites. Even last year, in October 2008, there were inside voices calling for the uploading of a little piracy to boost our traffic,” Lv told reporter with a smile.
Of course, Lv understood that a copyright site cannot stand on ideal and impulse, and a commercial act should pay off. From the moment he chose to pay for his copyrights, he explored the industrial chain and laid down his strategy. When others didn’t care about copyrights, he built up his own resources, cooperative partners and network, waiting for a moment of explosive opportunity.
“I believe patience is needed in making media, along with two elements. One is the larger environment for industry development, and the other is corporate capability in integrating resources. In making a site, it is not as simple as believing that big traffic brings in money. It is actually a sophisticated question of business management and operation,” said Lv. “We didn’t take a penny from venture investors until we found a clear business mode.”
Layout Lv was patient enough. He began accumulating his own copyright resources in 2005. “Joy.cn would be a content industry company centered on content.”
There are three sources of content. Unlike other video sites, Joy.cn as a portal integrated many TV news resources and became a site of “information in videos.” Besides, it has been insisting on purchasing the copyrights of films and TV series.
Joy.cn also engaged in creation, which generated copyright. Lv spent 60 million Yuan in the past few years supporting a team called “Joke.’’ He explained his understanding of “video sharing” this way: “pictures and words can be shared, for you only need to open a blog and write down your ideas, and others can come and read. But a video, except a documentary one, always needs a team to complete the project. So making a video is a commercial act by nature. The question is how to share if everybody cares about copyright?” Now, he has begun to invest in films, with content as his sole object.
Of course, profit is a more practical question, no matter how excellent the content is as the base and product of a site. This is especially true when we must invest so much “extra” costs to pay for copyrights.
“I have been walking on two legs in making profit; one is advertisement income, the other is user payment,” said Lv.
He became somewhat “excited” talking about the prospect of advertising, for in his eyes, ads on video sites are higher than those on text and picture sites in both form and market value. Video ads are not limited by site space and time. On-screen advertising in particular can reach audiences very well whether or not they are on the front or channel page. For users, video ads are more trusted and accepted. Their value will double when one cannot tell ad from content. For advertisers, Lv believes that ads on video sites liberated many advertisers of the medium and small enterprises, for they are not as expensive as TV ads, but bear the same form and are even more creative. “Our ‘Joke’ team shoots ads for such enterprises,” he said.
Another profit mode is user payment, the largest part of future market in Lv’s eyes. “This year we bought the exclusive copyright of My Brother Is Named Shunliu, which brought us 30 million hits. If each user pays 0.5 Yuan it would equal 15 million Yuan; the market is huge. More than that, user payment (B2C) is easier than advertising (B2B), because in a rational agreement advertisers pay to generate user consumption, but impulse consumption is something users pay for.”
But presently there is a great barrier for obtaining user payments. It is not that users are unwilling to pay for watching videos, but the system lacks a payment channel and user experience to make it easy for consumers to do so. There is hardly any channel for allowing viewers to pay very small sums. In addition, online video cannot provide a high quality experience which is equal to DVD and TV. “Now we pay great attention to paying through cell phones, and also developing our own modes, such as a mode similar to point cards in online games. Based on experience, it is a technical problem that can be easily solved,” said Lv.
