In today's digital landscape, the Chinese internet has developed a unique charging model that stands out. While many platforms rely on advertising or merchant fees as their main revenue streams, some have taken the bold step of making paid services the core of their business strategy. Among them, Tencent has emerged as one of the most successful examples. Beyond online games, few other models have shown similar effectiveness in monetizing users directly.
The free model remains dominant on the internet, driven by fierce competition and the need to attract and retain large user bases. Charging users upfront can easily lead to losing them, especially in an environment where alternatives are abundant. A strong, long-term user base is essential before introducing any paid services, as it ensures both trust and engagement.
Tencent’s success lies in its massive QQ user base and its near-monopoly in the instant messaging (IM) market. This gives it a powerful advantage, as QQ has become an integral part of daily life for millions of Chinese netizens. It's hard to imagine a significant portion of the 360 million internet users in China who don’t use QQ. No other platform has managed to replace it in such a critical role.
With this user loyalty, Tencent has effectively introduced various fee-based services, using Q Coins as a central medium. Users are drawn to advanced features and are willing to pay for them. By understanding user behavior and psychological tendencies, Tencent has successfully tapped into their spending habits.
This approach isn't limited to QQ alone. Other services like input methods, QQ Speed, and cross-fire line have also achieved great success by leveraging user demand and building on existing platforms. These examples show how a strong user base can drive innovation and profitability.
From Tencent’s experience, it’s clear that a solid user foundation is crucial for sustainable profit. Yang Yang emphasizes that websites should focus on user needs, build a good reputation early on, and avoid rushing into advertising. In the initial stages, improving content quality and user experience is key. Retaining users means retaining future revenue opportunities.
Looking at the rise of social networking sites (SNS), platforms like Kaixin and Xueqiu were among the first to gain traction. They built large user bases and relied heavily on embedded advertising for revenue. Without a substantial user base, such models wouldn’t be viable. Later entrants, like QQ Alumni or Sohu White Society, quickly captured market share by leveraging the existing user base of larger portals.
Even Microsoft’s MSN redesigned its homepage to include more social elements, aiming to boost user retention and increase market share in China. This shows that even major players recognize the importance of a loyal user base.
In short, when starting a website, the ultimate source of profit comes from user demand. A stable user base will naturally lead to new revenue opportunities. Whether through direct user payments or third-party partnerships, finding the right monetization strategy becomes easier once you understand your audience.
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