Building a Platform: Does the Traffic Belong to You or to the Stars?

Robin: ‘Platform founders need to think clearly: does traffic come from the influencer, key opinion leader, or teacher’s own following, or from the platform? If it all comes from major influencers, it may vanish as quickly as it arrives.’ ---- Yu Minhong’s East Buy and Dong Yuhui’s 與輝同行 have formally parted ways. Liu Run discussed this on his public WeChat account. One perspective was that this split, and the earlier friction, stemmed from an inherent paradox in livestream commerce. The company invests heavily, but the resulting value does not accumulate inside the company. It concentrates in the host instead, creating unbalanced expectations. First, the company may invest in developing 1,000 hosts at once, much like a diversified portfolio. Ultimately, only one becomes a star. The company sees that star as a successful investment and wants to recover the cost of all 1,000 through that person. Second, the superstar host sees it differently: the company makes money because of them. They therefore want it to give them as much as possible. Finally, the company’s and the star’s expectations become completely misaligned. Problems naturally follow. Note that Liu Run was discussing the paradox inherent in livestream commerce, not specifically East Buy and Dong Yuhui. #Dedao Headlines 20240727 ----- Robin: ‘No partnership lasts forever. This story reminds me of the management contract between Jacky Wu and Jay Chou; something similar may apply. The same goes for S.H.E and HIM International Music. A recording company’s advantage is owning the copyrights, so it can continue selling recordings. A management contract, however, often ends when it ends. A platform is a traffic aggregator. One approach at the beginning is to offer favorable terms to gather traffic from top stars. Once that traffic arrives, build the platform’s reputation quickly. Combine traffic from stars, advertising, and the platform’s own brand recognition, then distribute it to second- and third-tier creators and newcomers. Another key is to develop distinctive features and a moat, forming a platform flywheel. Ultimately, the platform must have recognition and its own brand-driven traffic. Otherwise stars will dominate it, or move among platforms seeking the best terms for themselves.’