MoonFox Analysis | Trapped in Commercialization: How Far Can the "Xiaoyuzhou FM" App Go on "Powered by Love" Alone?

About us: Aurora Mobile (NASDAQ: JG) established in 2011, is a leading customer engagement and marketing technology service provider in China. Its business includes notification services, marketing growth, development tools, and data products. As its sub-brand, MoonFox Data is a leading expert in data insights and analysis services across all scenarios, aiming to help companies gain market insights and empower precise decision-making.

SHENZHEN, China, Dec. 26, 2024 /PRNewswire/ -- After years of dormancy, Chinese podcasts have re-emerged in the mainstream media spotlight in 2024, attracting increasing attention for their commercial value and development potential. Traditionally, the growth of Chinese podcasts has relied on three types of content platforms: entertainment-focused audio platforms, general podcast platforms, and professional audio course platforms. In 2020, the Jike platform launched the Xiaoyuzhou FM App, the first to create a user-interaction community centered around podcasts, driving innovation in podcast content. Over the past two years, Xiaoyuzhou FM has attracted a large audience of young users, along with celebrities, actors, and brands entering the podcasting space, injecting fresh vitality into the Chinese podcast industry and accelerating its development.

However, the app's commercialization process has been slow, with monetization struggling to keep pace with the surge in emerging content. Many high-quality free offerings lack viable monetization channels, and original podcasts are often seen as operating on a "Powered by Love" model, raising concerns about sustainability. Despite these challenges, several breakout podcast shows in 2024 have sparked optimism about the commercialization prospects of Chinese podcasts.

Types of Platforms Supporting Chinese Podcasts

Data Source: Publicly available online information, compiled by MoonFox Research Institute

I. Lessons for Chinese Podcasters from the 2024 "U.S. Podcast Election"

The significant influence of podcasts during the U.S. elections has inspired new ideas among Chinese podcast creators. Notably, Joe Rogan's three-hour video podcast featuring Donald Trump went viral shortly after its release. Concurrently, listeners and content creators shared interview snippets, humorous memes, and other related content on platforms like TikTok and YouTube. On Spotify's 2024 U.S. Top 15 video podcast list, The Joe Rogan Experience secured the top spot.

Additionally, former President Joe Biden participated in five podcast programs during his term but never gave an interview to The New York Times. In the U.S., podcasts have emerged as an alternative platform for rallies, speeches, and debates. With more engaging content formats and highly efficient dissemination channels, politicians can effectively share their views. Compared to traditional media, podcasts have become a crucial tool for U.S. politicians to build trust with the public.

In comparison, the podcast ecosystems in China and the U.S. differ fundamentally in content formats. U.S. podcasts have evolved into mainstream media channels with both domestic and global influence, seamlessly integrating with various content forms. The B2B and B2C market education in the U.S. is more developed, with brand advertising serving as a cornerstone of podcast monetization. In contrast, Chinese podcasts remain relatively isolated as a niche social media channel, with limited integration into broader content ecosystems. Significant gaps persist in audience reach, content diversity, and business models, leaving substantial market potential untapped.

Comparison of the Podcast Markets in the U.S. and China

Data Source: "The Podcast Consumer 2024", Edison Research; "2024 New Insights into Chinese Podcasts", JUSTPOD; "2023 Q2 Podcast Advertising Report", Magellan AI; compiled by MoonFox Research Institute.

II. Reviewing the Development of Chinese Podcasts: Dependence on B2C Consumption and a Singular B2B Business Model

Turning to the domestic market, podcasts in China primarily generate revenue through B2C (consumer) payments, as a form of audio content consumed by internet users. LIZHI mainly earns its revenue from user-generated content (UGC), with brand advertising accounting for only 0.41% of its total revenue. The platform experienced a notable decline in revenue in the second half of 2023. According to Ximalaya's 2024 IPO prospectus, the platform has maintained consistent revenue growth over the past three years, with user payments contributing over 50% of its income. While B2C revenue reflects the large audience base of Chinese podcasts, B2B advertising revenue remains below 30%.

Development Stages of Chinese Podcasts

Data Source: Publicly available online information, compiled by MoonFox Research Institute

Taking Ximalaya as an example of a leading platform in the industry, its public report indicates that the total monthly active users across all platforms exceeds 300 million, with over 40% of these users active on mobile devices. This large user base, combined with rich content offerings, ensures the platform's revenue and growth stability. While traditional podcast platforms generate most of their advertising revenue from information flow, pre-roll ads, and creator ad revenue shares, B2B advertising primarily aims to attract unique visitors (UVs), resulting in a relatively low proportion of commercial income.

In the past two years, leading brands across various industries have begun to create their own podcasts, expanding their marketing channels from video and text to audio. This shift enhances user perception through a multi-sensory experience. According to statistics from "Podcaster," over 171 brand podcasts were active in 2024, with most hosted on the Xiaoyuzhou FM app. These podcasts cover a wide range of consumer goods categories, including tea beverages, outdoor sports, luxury items, shoes and bags, dining, and beauty and skincare. Additionally, they encompass sectors such as capital securities, real estate, and the internet, with several major companies launching podcasts under their official names.

Representative Brand Podcasts from Various Industries

Data Source: Public data from Xiaoyuzhou FM App, compiled by MoonFox Research Institute as of December 10, 2024

III. Xiaoyuzhou FM's Unique Positioning in the Industry: Fostering Content Innovation and Shaping Young Lifestyles

Xiaoyuzhou FM has seen a surge of emerging podcast programs that break traditional content frameworks. These have shifted from serious podcasts (reviews, news) and one-way outputs (storytelling, lectures) to open dialogues centered around various industry themes. Emerging hosts use conversational formats and casual expressions to produce more non-serious podcasts, while introducing cross-industry hosts from diverse professions to understand user emotions and create engaging topics. This encourages users to leave comments within the platform and share content externally, sparking secondary dissemination.

According to MoonFox data, Ximalaya enjoys even penetration across all age groups and gender demographics. In contrast, Qingting FM is more popular among middle-aged male listeners, while LIZHI attracts a younger female audience. Xiaoyuzhou FM, however, has a predominantly youthful user base, primarily comprising individuals aged 16-25 and 26-35, with female users accounting for over 80% of the total audience.

Data Source: User profile analysis of MoonFox iApp, Xiaoyuzhou FM, Ximalaya, Qingting FM, and LIZHI as of December 2024

Xiaoyuzhou FM's podcast content effectively resonates with the emotions of young female users in first-tier and second-tier cities, catering to the cultural and aesthetic needs of Generation Z and Generation Alpha. However, this focus also limits the platform's user base, resulting in a relatively low revenue ceiling. According to Xiaoyuzhou FM's public data for 2023, the platform had 15 million registered users, with 4.5 million monthly active users, which is still significantly behind the leading platforms.

IV. Emerging Podcasts as "Social Currency": Expanding Podcast Marketing Beyond Branding and Advertising

Compared to the broad and comprehensive podcast content ecosystems of platforms like Ximalaya and Qingting FM, Xiaoyuzhou FM offers a lighter and more focused experience. The platform has moved away from content types with higher production barriers, such as audiobooks and professional courses, and instead emphasizes original podcast programs and the development of host IPs. In the early stages of its ecosystem, Xiaoyuzhou FM successfully attracted a diverse array of traditional media professionals, celebrities, entrepreneurs, cultural figures, and talk show hosts, establishing key opinion leaders (KOLs) in the Chinese podcasting landscape. Xiaoyuzhou FM's early development strategy shares similarities with that of the Zhihu platform, leveraging the "celebrity effect + content innovation" to boost awareness among its core user base and enhance the platform's "social currency." Additionally, other social media platforms have seen a rise in content such as "high-quality podcast recommendations" and "women's empowerment podcasts," often directing users to the Xiaoyuzhou FM app. As a result, emerging podcasts have evolved into a form of social and community identity for users.

This "social currency" attribute facilitates a smoother marketing conversion process. Podcasts enable brands to occupy users' minds while providing valuable insights to the audience. By fostering an interactive and shareable atmosphere, they stimulate user engagement and consumption. Currently, podcast commercialization in the B2B sector primarily follows two models: ITC (Inbound Content Marketing) and DTC (Direct-to-Consumer). Both models rely on high-quality content and a highly engaged user base as foundational elements.

• ITC (Influencer to Consumer) model has been widely applied in traditional podcasts, primarily in the form of sponsorships and brand partnerships, where podcasts are used as a UV channel rather than focusing on conversion effectiveness. In contrast, the emerging podcast format, with its relaxed, engaging, and open-dialogue style, makes ad placements more natural and allows customized content focused on brand concepts to be more easily accepted by users. As a result, there has been an increase in effective ads on podcast platforms. Brands value the influence of podcast hosts' IP on their target audiences, leveraging these hosts for endorsement to directly communicate brand values or promotional messages, thus driving consumer conversion within core customer groups.

Podcast × Brand Collaboration Cases

Mostly Harmless × Hair Growth Brand "Dafeixin": Offering discount coupons to fans, verbal endorsement

Li Dan × Quark: Brand sponsorship, verbal endorsement

Siwen, A "Bad" Girl × Soul: Brand sponsorship, customized content

• In the DTC (Direct to Consumer) model, podcasting emphasizes the creation of proprietary brand podcasts. The value of brand-owned podcasts lies in cultivating a private domain user base and acquiring potential customers, which reduces the overt marketing feel of the brand and enhances user trust.
  
  Brand-owned podcasts typically prioritize understanding and addressing the needs of their target audience rather than focusing on the product itself. For example, Aranya's brand podcast, launched in 2021, seeks to engage users by promoting an ideal lifestyle, thereby encouraging participation in offline experiences and driving local cultural tourism consumption. Similarly, the accounting software brand Youzhiyouxing launched the podcast "Zhixing Tavern," which explores themes like "money-making girls" and "young people's financial management." This podcast discusses topics such as personal finance, consumption, and career development to accumulate user visits (UVs) for the platform.
  
  The Italian luxury brand GIADA produced the podcast "Flower on the Rock," featuring Chen Luyu as the permanent host. In this 80-minute show, she engages in conversations with guests from various industries and generations, discussing life philosophies and personal insights, thereby creating relaxed and engaging content. There is minimal direct promotion of brand or product information; instead, the focus remains on the guests, using thought-provoking discussions to convey the brand's philosophy of "the strength of women that combines resilience and tenderness." In 2024, Chen Luyu's interviews with celebrities like Zhan Qingyun and Zhang Chun garnered significant attention, with a single episode reaching 700,000 plays on Xiaoyuzhou FM. The podcast IP created by the brand went viral, enhancing B2B brand marketing confidence.

V. The Commercial Potential of Chinese Podcasts Remains Unleashed

Overall, Chinese podcasts are entering a new growth cycle. "Podcast Socializing" has garnered the attention of mainstream media, sparking a new wave of cultural consumption among Generation Z and Generation Alpha. Meanwhile, brands are shifting their focus from merely acquiring user visits (UV) through podcast platforms to emphasizing the conversion results that podcasts can deliver. The development of proprietary podcast channels is becoming increasingly popular among new consumer categories.

Compared to the large user base and PGC characteristics of leading platforms, Xiaoyuzhou FM's lightweight and entertaining content style has made it less effective at driving user payments on the B2C side. However, its unique "social currency" attribute offers fertile ground for B2B commercialization. In the future, B2B commercialization could emerge as a new growth point for the Chinese podcast industry. However, as it stands, platforms, podcast brands, and individual hosts all face numerous challenges in this area. For instance, the industry lacks a dedicated marketing methodology for podcasts, a scientific evaluation system, and a digital management system, all of which create barriers to brand participation.

The development of the Chinese podcast industry requires increased commercialization to support the growth of high-quality content. Exploring B2B commercial value is not only essential for generating revenue for brands but also acts as a crucial driver for platforms to enhance the supply of high-quality content on the B2C side. Xiaoyuzhou FM, often labeled as "Powered by Love," needs to offer more refined services in B2B partnerships, identify reusable marketing solutions, and unlock additional commercial value to advance further in content innovation.

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SOURCE Aurora Mobile Ltd