Transparency of Information

So there was this conversation I had with a girl working at a local Internet café.

She sort of disclosed her salary to me and how she makes money for the recent years.

Something kind of ticked me as she went through the long details of her games of money.

Although not to my surprise, it is known that some streaming apps have become quite popular in China recently. One is Kuaishou and the other is Douyin. Streaming is already not a new topic, what is hot right here is the popularity surrounding the two apps. Kuaishou is a streaming platform whereas Douyin is a short videos sharing platform, which resembles Vine. I am not quite sure how Meipai died and being superceded by Douyin, but anyway.

The girl introduced me with the two apps in fashion, as I appeared to be some sort of caveman just got into town.

So here’s the thing how all these apps work. All of them.

You need to build a follower base, an audience. I talked about this in a very early article on this blog, The New Generation. It is basically an economy revolving around idols and their followers.

What surprised me in the conversation was that the girl is incredibly savvy in this Internet sphere–she knows the ins and outs of the game rules of these apps and how to make money from them. If she did not tell me how she got the info, I’d think of her as some sort of very hardworking person that is dedicating in improving her life.

There was a twist.

Everyone knows this. This is so common it is everywhere.

“Everyone knows this? Like every one?”

“Yeah, this is how you play these apps. It is simple. You only need to stream one hour or two a day and you can have income from them.

And then, you can build a follower base. They would ask you for your personal contact and later you can market them. It is easy.”

I was surprised as how she had already the savviness of marketing and the fact that everyone knows this, kind of bothers me.

It not only made me look like a caveman who doesn’t interact with the outside world at all, also made me contemplate:

It sort of boggles me. Although every game has its own rules and every game has its good players and bad players. But all those fluctuations in a game are made with the nontransparency of information.

Information transparency is dangerous for business. It is so dangerous it hurts businesses. There are always tacit rules in any industry. And keeping these information secretive means to play by the rules. However were you to disclose these rules, then they are not tacit anymore, and you hurt people who have always played by the rules.

Although I advocate transparency of knowledge, I don’t think transparency of information is a good idea. Sure, some people are happy to see some concealed info disclosed, but it hurts other people’s interests as these info are disclosed.

Transparency of information makes two results of a market:

  • One, the market becomes uncompetitive due to information transparency, a good chunk of value is lost during the disclosure of information, consumers start to know the real cost behind goods.
  • Two, the market becomes fiercer in competition. Because the information are propagated, and business owners do not wish to back down as they deem the venture valuable to keep on. They start to offer better deals and prices to beat their competitors, and let consumers take advantage of the market.

The former one is the more common scenario in the market, whenever information gets disclosed. The latter one can be found in certain business ventures that are hard to mimic. What do I mean by that? For example, coke is hard to copy. You can’t start from zero and build another coke company that is able to compete with Pepsi and Coca Cola. Even though the market already knew the recipe and actual cost of a coke. The strong and established market dominions of Pepsi and Coca Cola are hard to beat. Thus Coca Cola and Pepsi are competing for the market and offering better deals and prices for customers.

With all that being said, streaming apps like this are likely become the former scenario, where streamers become cheap and nobody would really spend a dime on them.

The conversion rate of a popular “idol” on Kuaishou is under 5%. When I asked her about how many people would pay for her streaming, she said, out of 1000 followers she’s got, only 1-10 guys occasionally tip her some money. And this is because she is a girl, god knows how hard this is going to be for guys.

But seriously what am I kidding with? This is China, god knows what the hell will happen here.

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