Amid surging popularity for the hit audio-focused social media app Clubhouse, the founder of Chinese company Lizhi, behind the country’s second-largest podcast app, sees an opportunity overseas for its own audio chat app Tiya, even as censors at home have cracked down on the US audio platform.
Lizhi founder and CEO Marco Lai Jinnan said in an interview with the South China Morning Post that Clubhouse-like apps are unlikely to succeed in China because of the country’s strict content regulations, but he believes Chinese companies are still well-positioned to capitalise the new social audio app craze in other countries.
“It will be very difficult to create a Clubhouse-like app in China. The form of Clubhouse will most likely be altered in China,” Lai said. “The regulatory environments are different, content safety requirements are also quite different. So it’s hard to just replicate its existing form.”
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As in many other countries in recent months, Clubhouse had been gaining popularity in China among people who were able to get invitation codes to join the iOS-only app that allows people to chat in rooms of up to 5,000 users. The app became inaccessible behind mainland China’s Great Firewall earlier this month.
Clubhouse, launched in March of last year, has quickly become the hottest new social app in Silicon Valley. Its popularity exploded this month after Tesla and SpaceX CEO Elon Musk joined and promoted the app on Twitter. The main appeal in China, though, may have been the fact that it was both accessible and uncensored, as similar apps have existed in the country for at least a couple years, including Tiya.
Launched in 2019, Tiya has ranked among the top 15 social networking apps in the US for the last month. Unlike the all-purpose Clubhouse, Tiya focuses on serving young players of social games like Roblox and Among Us.
Lai is no stranger to the challenges of trying to make such an app work in China.
Founded in 2013, Lizhi was one of China’s first companies making products for user-generated audio content. In 2018, it launched Zhiya, an app that blended social audio with online dating. It was removed from app stores in China along with 25 other audio apps in June 2019 as part of a clean-up campaign by regulators in the lead-up to the 70th anniversary of the founding of the People‘s Republic of China that October.
After this experience, Lai decided to focus his next audio app on markets outside China.
“We think that social audio has a better future on the global stage. So we decided to develop our social audio business globally rather than simply looking at China,” Lai said. “So we have set up Tiya in the US … and we operate it as an US company.”
Lai also dismissed the idea that the Clubhouse model would appeal to the general Chinese public.
“This style [of app] is actually very much in line with Western culture and habits. But in China, I think it may not be very suitable,” Laid said. “There may be a small number of elites who like it a lot, but the general public may not necessarily like this style very much.”
The audio app boom is already benefiting Lizhi and other Chinese companies. The Guangzhou-based creator of Tiya, which went public on the Nasdaq in January 2020, saw its shares rise nearly fourfold this month. Agora, another Chinese-founded company that provides the back-end audio service for Clubhouse, saw its stock jump 30 per cent the day Musk made his appearance.
In recent years, it has become increasingly common for Chinese companies to turn to overseas markets for growth in segments facing harsh restrictions in China, including video games, sports betting and live streaming. One way of doing this is setting up overseas subsidiaries that position themselves as Western companies.
The most notable example of this is ByteDance, which operates TikTok separately from the Chinese version, Douyin. ByteDance has long maintained that TikTok is operationally independent from its Chinese counterpart, but this has not appeased foreign governments like those in the US and India, which have raised scrutiny of Chinese apps.
Lai likened audio apps to short video apps like TikTok and competitor Kuaishou, offering it as an example of how China has an advantage in developing social audio technologies and related business models.
“In social audio, I believe, across the entire global market, there will be places for Chinese companies,” Lai said. “That’s because Chinese companies have been exploring this vertical for a long time and have developed a very deep understanding, as well as a cohort of talent, be it in terms of products or technologies.”
Not all Chinese audio apps are so concerned about doing business in the domestic market. Live-streaming company Inke recently launched a social audio app called Duihuaba, which looks nearly identical to Clubhouse. Justin Sun, the millennial founder of cryptocurrency platform and BitTorrent owner Tron, recently invested in Two, which he called a Chinese version of Clubhouse.
Even as Tiya focuses on user acquisition overseas, Lizhi does not yet make any money from the app. The company still owes its success to its domestic market, where it pulled in 361.5 million yuan (US$55.7 million) in revenue in the third quarter of 2020, a 10 per cent rise over the same period in 2019, according to financial filings.
The bulk of its revenue has come from taking a cut of virtual gifts that listeners give to hosts through its apps, according to its filings, which also show the company’s monthly active users rose 21 per cent to 56.2 million in third quarter, and paying users reached 448,300.
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