The lies inside the livestream profession

The fraudulent numbers seem to be a well-known fact, but no one admits.

*Translation of SCMP article about fraud when livestreaming sales in China.

In 2018, when China’s livestream industry was growing rapidly, Huang Xiaobing thought she couldn’t go any further at work. She decided to set up her own management company for streamers, with all kinds of entertainment from singing, dancing or chatting with fans online to receive virtual gifts, then exchanged money.

Virtual gifts are one of the best-selling products on the Internet, allowing fans to express their feelings physically, thereby increasing the amount of interaction and popularity of the giver. However, like its name suggests, virtual gifts also have questions about honesty.

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Buying virtual views and payments on livestreams is a familiar behavior in China. Photo: EPA.

“My company will spend about 3,000-5,000 yuan buying virtual gifts and filling chat sessions,” Huang recounts how her company, with at most 40 streamer, uses money to buy popularity.

“Everyone does that”

Huang also argued that in order for a live stream to be shown on the platform’s main page, the number of viewers must be 10-50 times higher than the actual number. Therefore, the management companies find enough ways to “pull” their livestreams up.

“Everyone does the same thing, although the way to do it may be a little different,” Huang said. Although she does not spend money on all livestream videos, her company still buys virtual gifts, virtual views in some important videos. The live streaming platforms sometimes show a much higher number of viewers than the actual number.

Another way to pull in engagement is that streamers will spend their own money to buy the product during their live stream. They may find a way to return the item later, but still enjoy a 20% share from the session sales.

“Virtual traffic is everywhere, from the biggest tech companies to little-known KOLs. Everyone uses virtual numbers to bypass algorithms, managers and partners. It’s a behavior. old, but has been adapted for the industry to be a layered trick, “commented Elijah Whaley, marketing director at streamer management firm Parklu.

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Billionaire Jack Ma (right) and “lipstick king” Austin Li Jiaqi collaborated on a 2018 sales livestream campaign. Photo: Youku.

The virtual numbers gained even more attention last month, when US finance company Muddy Waters accused China’s live streaming platform YY of multifaceted realities to defraud billions of dollars. According to this report, up to 90% of the revenue from YY’s livestream platform is fraudulent.

In his response, YY said that Muddy Waters “doesn’t understand the basics” of China’s streaming industry, and that the figures they come up with are “frequently used” in the industry.

China’s livestream industry is estimated to be worth 310 billion yuan by 2024, according to Frost & Sullivan’s statistics.

Not only Chinese platforms, but also Facebook or Twitter are suspected of fraudulent views.

“Virtual traffic is a common problem that the entire Internet industry is trying to overcome, not just in the livestream sector,” said Zhang Dingding, former director of Sootoo Research Center in Beijing, China.

“There’s no doubt about fake users, but what’s more important is who is behind those hits, and whether Muddy Waters’s estimates are correct,” Dingding said.

Large scale fraud

However, when everyone tries to cheat, only large-scale efforts really come into play.

“It takes a multi-channel network, with hundreds of streamers for this model to work. Even if one person’s revenue decreases, they can still make enough because the streamers need to broadcast up to 8 hours. every day, and they own 100 of them, ”commented Mr. Whaley.

“I always have doubts and think about 20% of the views on the livestreams are suspicious. For counterfeit purchases, in my experience, it is only possible to track through the number of returns. It should be suspected of being unusually tall, “said Michael Norris, market researcher at consulting firm AgencyChina.

During the 11/11 procurement alone, the China Consumer Commission received 334,000 sales-related feedbacks via livestream, mostly coming from virtual orders.

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In the first half of 2020, there are about 10 million livestreams in China. Photo: EPA.

On the Taobao commerce site, searching with the keyword “livestream views” will return a series of posts promoting “optimized viewers” service. The amount can range from CNY 50 for 100 bot views, or CNY 5 to 30,000 likes on Douyin, the Chinese version of TikTok.

For 20 yuan, the broadcaster will receive a “in purchase” mark, a special mark on multiple platforms, every 3-5 seconds.

Earlier this month, the Chinese network regulator drafted a bill to combat the behavior of creating virtual followers, views, and likes across multiple livestream platforms.

This draft requires the platforms to tighten their management tools based on predetermined parameters. Streamer and followers must register with their real name.

According to the Ministry of Commerce of China, only in the first half of 2020 there were 10 million livestreams in China, attracting about 50 billion views. Livestream sellers are considered an important driver for the Chinese retail industry to recover from the Covid-19 epidemic.

“Demand for traffic will remain, and even costs will be lower. This is an issue for both the livestream industry and e-commerce, social media, media companies and all services. Other Internet, “commented Mr. Zhang Dingding.

According to the Zing / SCMP

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