When you open Kuaishou, the video is often not buffered yet, and various BGMs hit your eardrums immediately and attract your attention.
It can be said that without these background music, the attractiveness of short videos to users will be at least half reduced.
Kuaishou, who is about to ring the bell at the Hong Kong Stock Exchange, has been thrust into the forefront of public opinion because of a dispute over the copyright of background music.
On February 1, the Audio Collection Association listed a list requiring Kuaishou to delete 155 million short videos suspected of copyright infringement.
This is not the first dispute. One day after Kuaishou released its IPO prospectus in November last year, the association held a rights protection conference, pointing out that Kuaishou violated music copyright and was unwilling to actively solve the problem.
Background music with independent copyright is an important part of video content. Content is the cornerstone of Kuaishou Commercial Building. If there is a problem with the roots, how can a fast player like a wolf and a tiger grow into a truly towering tree?
The Audio Collection Association fiercely battles Kuaishou
On February 1, the China Audiovisual Copyright Collective Management Association (referred to as the "Audio Collection Association") issued "About requesting Kuaishou APP to delete 10,000 suspected infringements" Video Announcement (First Batch)".
The announcement stated that the association entrusted the "12426 Copyright Monitoring Center" to monitor the unauthorized use of audio recordings managed by the association on the Kuaishou APP, and found that the number of suspected infringing videos reached 155 million.
The association announced the relevant links and issued a notice to Beijing Kuaishou Technology Co., Ltd. on February 1, requesting the relevant videos to be deleted, the infringement to be stopped, and the copyright of the songs to be self-examined.
At the same time, the Audio Collection Association stated that it will continue to monitor copyright infringements on short video platforms, and will continue to publish links in batches and take corresponding measures.
For example, in mid-January, the association launched "Kuaishou infringement removal complaints" to the six major domestic app stores and the Apple App Store. On January 28, the Apple App Store officially responded that it required Kuaishou to resolve copyright issues with the audio collection as soon as possible, otherwise it would be removed from the shelves.
The Audiovisual Collection Association is my country's only audiovisual collective management organization formally approved by the National Copyright Administration. It is a national and industry-based social group voluntarily formed by holders of audiovisual program copyrights or copyright-related rights in accordance with the law.
Many people know about the Music Collection Association because they have been fighting against the copyright of karaoke music for more than ten years. Today, the copyright environment in this area has improved significantly.
In fact, this is not the first confrontation between Yinji Xie and Kuaishou.
One day after Kuaishou disclosed the Hong Kong IPO prospectus, the association held a "press conference on music copyright protection on short video platforms", focusing on Kuaishou APP; this time, it was also 3 days before Kuaishou went public, and everything was accurate point in time.
At the press conference on November 7, the association stated: “Since September 2019, the Music Collection Association has repeatedly communicated with Kuaishou to request a stop to infringement, compensation to rights holders and establishment of copyright cooperation. However, Kuaishou was slow to respond and delayed, and was unwilling to actively resolve copyright issues.”
The press conference also revealed that the audio collection jointly sued Kuaishou for infringing the rights of the recording producers of five songs including “Hongyan” in October 2020. On the 12th, a case was filed in the Beijing Internet Court, demanding an end to the infringement and compensation of 130,000 yuan. The case was supposed to be heard on November 9, but was later postponed for unknown reasons.
Moreover, if we look into it carefully, potential copyright disputes are by no means limited to background music.
Video clips from TV series, movies, etc., core creative parts of creative videos, identity authentication of special individuals and organizations, etc... Risks are endless.
There should be many people who have "watched" a movie or TV series through several short videos on Kuaishou; how many similar videos are there on Kuaishou and Douyin? There are few disputes in this area, just because China's copyright protection is not in place; the media has previously exposed the business experience of copycat star short video accounts, attracting fans, selling accounts, traffic conversion and even fraud, forming a mature industrial chain...
Qixinbao shows that Kuaishou Technology has 738 risks of its own and 389 risks of related companies, most of which are intellectual property disputes.
Of course Kuaishou can argue that it is just a platform and the content uploaded by users has nothing to do with it. However, the responsibilities and powers of Internet platforms have long been defined. Moreover, it also depends on what Kuaishou provides during the user upload process, and what Kuaishou obtains through these UGC contents.
This short video platform, which was born in 2013, quickly rose to the forefront, but now, it has grown habitually and brutally, which has affected the healthy development of the industry ecology.
The challenge of the first short video stream
Although Kuaishou does not pay attention to the copyright issue, it is indeed not a trivial matter.
Background music is an important factor in the spread and popularity of short videos, and is a key component of the content. Content is the foundation of Kuaishou’s business model.
In the nine months ended September 30, 2020, tens of thousands of content creators produced 2.34 trillion short videos and live broadcast points on the Kuaishou platform (APPs, mini programs, etc.) Likes, reposts and comments, these contents retain an average of 305 million daily active users (DAU) and an average of 769 million monthly active users.
However, Kuaishou is experiencing a comprehensive decline in user numbers. During the above-mentioned period, the number of active content creators on Kuaishou dropped by 26. On January 25, 2020, the daily activity of Kuaishou APP reached a peak of 300 million; in the eleven months ended on November 30, DAU dropped to 263.8 million. In other words, Kuaishou lost 40 million daily active users in more than half a year.
Kuaishou, the pioneer in the short video field, was not only surpassed by the latecomer Douyin, but also recently felt the impact of video accounts.
Douyin announced in August 2020 that its daily active users exceeded 600 million, which does not include Douyin’s overseas version Tiktok; the video account announced in the middle of last year that its DAU exceeded 200 million, and it is uniquely blessed with the traffic of WeChat Support, surpassing Kuaishou should be just around the corner.
During the Spring Festival this year, Douyin was preparing to send out 2 billion yuan in red envelopes. Kuaishou immediately announced an official allocation of 2.1 billion yuan, and Baidu jumped out and gave away 2.2 billion yuan. Behind this slightly naive digital game is the involution of China Mobile Internet. In the past few years, the scale of users has changed from incremental acquisition to competition for stock, and the giants have seen redness, not just once or twice.
In June 2019, Kuaishou made its anxiety public for the first time. Founders Su Hua and Cheng Yixiao issued an internal letter to all employees, expressing dissatisfaction with the company’s long-term Buddhist status and announcing that it was entering combat mode. The goal of 300 million daily active users was proposed at that time.
In order to overcome this hurdle, the company spent money like crazy. From 2017 to 2019, Kuaishou’s sales and marketing expenses were 1.360 billion yuan, 4.262 billion yuan, and 9.865 billion yuan respectively. In the first three quarters of 2020, they reached an astonishing 19.833 billion yuan.
The 20 billion spent last year not only failed to stabilize the company's 300 million DAU, but also caused a larger loss.
From 2017 to 2019, the company’s revenue was 8.340 billion yuan, 20.301 billion yuan, and 39.120 billion yuan respectively, and the profits attributable to the company’s equity holders were -20.045 billion yuan, -12.429 billion yuan, and -19.652 billion yuan. Of course, adjusted profits have been positive in all three years.
In the first three quarters of last year, the company’s revenue and attributable profits were 40.677 billion yuan and -97.371 billion yuan respectively, and the adjusted profit was -7.244 billion yuan.
Kuaishou is the second largest short video platform after Douyin and the second largest live broadcast e-commerce platform after Taobao Live.
However, Kuaishou live broadcast e-commerce shows the characteristics of high GMV and low operating income. The monetization rate (operating income/GMV) in the first half of last year was as low as less than 0.8. The overall industry level is generally around 5.
In the first three quarters of 2020, the company’s live e-commerce GMV reached 204.1 billion yuan, but the operating income from e-commerce, online games and other value-added service sectors only accounted for 5% of the company’s total revenue, which was approximately 2 billion yuan. .
Therefore, among Kuaishou’s three major business sectors, the company’s revenue still relies heavily on the original live streaming rewards and traffic advertising, with the proportions in the first three quarters of 2020 being 62.2 and 32.8 respectively.
But this does not prevent Kuaishou from telling the story of live streaming e-commerce during its listing road show. There is no way to do this. Daily activity is declining, there is Douyin before, and there are video accounts later. Revenue growth is declining, and long-term huge losses can only be achieved through the fast-growing live broadcast e-commerce GMV.
Judging from the current situation, the primary market has already eaten up this pie.
At the end of January, Kuaishou announced its issuance plan. The IPO plans to publicly sell 365 million shares at an issue price of HK$105 to HK$115, corresponding to a market value of HK$431.4 billion to HK$472.4 billion. It is expected to raise about HK$40 billion. .
Currently, Kuaishou’s new shares have been subscribed hundreds of times. On February 1, Kuaishou shares were traded on the over-the-counter market, with the transaction price reaching HK$250.
It seems that the game will continue with Kuaishou’s stock price on February 5 and after. After all, the pie is too big and needs to be digested