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(dark synth music)
A few months ago,
as I was mindlessly scrolling through TikTok,
I stumbled across a strange video depicting women
sitting in a parking garage perfectly lined up
and what I can only describe as an influencer cubicle.
A small area on the ground with a tripod, camera,
lighting fixture, microphone,
and a number card to mark the makeshift set.
What piqued my interest even more about it though
was that they appeared to be having the time of their lives,
enthusiastically talking into the cameras.
It seemed so dystopian
that I was almost convinced it was fake.
However, a few scrolls later,
and I stumbled upon another similar video, and then another,
and realized that I had to dig a little deeper
to figure out what was really going on here.
As I searched for solutions, what became clear to me
was far more disturbing than I anticipated.
An entire underground world of influencer farms in China,
made possible by exploiting
not only the millions of viewers,
but also with the quote unquote influencers themselves.
From live streams fueled by virtual items
with a heavy price tag,
to the e-commerce livestream industry
pushing hundreds of billions of dollars worth of product,
this entire streaming industry goes much deeper
than one could imagine.
To understand how the live streaming factories
became a thing, we first need to understand
how different China's streaming is to the West.
China is a country with a deepening class divide
and a simultaneous nationwide thirst for material success.
As a young industry in China,
live streaming sprouted in the mid-2000s,
primarily focusing on performances live streamed
for those unable to go to the event.
But the market quickly changed,
favoring streams where viewers could interact
with a host as it went.
And so by 2015, hundreds of streaming platforms appeared,
mostly featuring live streamers
who made IRL and gaming content.
This was very similar to how West first developed
with gaming live streams,
and then later bridged into the commentary and IRL content.
However, from this point onward,
the divide between Western streaming and China streaming
became more apparent.
You see, in the West, tipping and donations
only make up a small percentage of a streamer's earnings,
with streamers instead of relying on brand deals, ads,
and paid subscriptions to ensure a stable income.
But in China, live streamers on every platform
have the ability to make money
through virtual items purchasable by the viewer
and redeemable for cash by the streamers.
The same system TikTok uses that has been making the rounds
in Western news for the way in which it enables
and encourages explicit behavior from users.
However, China is a different society
in which explicit content is not acceptable.
So instead, streamers found that the best way
to get audiences to like them and donate
while remaining safe for work
was to make them relate to them.
Chinese livestream viewers are 75% men,
and 70% under the age of 30, who after a long day at work,
come home to watch live streams
and forget about their real life struggles.
To appeal to them, streamers dress simply,
talk like common folk,
and call themselves losers or diaosi in Chinese,
to relate to viewers and prompt donations.
To make matters worse,
it's the poorest Chinese livestream viewers
who donated the most of their spare income to streamers.
And still, these gifts from the poor viewers
only make up a fraction of the market.
You see, the real money they made
was from the so-called tuhaos,
the whales of China's livestream industry.
The ones who have plenty of disposable income
they can spend on expensive virtual items.
However, there are two kinds of tuhaos.
The first are the honest people
with a fortune and a large income who've developed
some kind of parasocial relationship with the streamers,
and donate with the sole intention of exciting their friend
and getting attention.
But the second kind are the tuhaos
who expect something in return.
The ones who demand streamers to meet them in real life
or use their donations as bait
to lure streamers into agencies.
Essentially, it was a competition to flaunt wealth,
fight for attention, and induce envy into the diaosi.
And when I say it became a competition,
I really mean a competition.
As featured in the documentary
"The People's Republic of Desire,"
streaming websites hosted an annual tipping competition
with the streamer who received the most tips
being awarded as the most popular host or hostess.
And although this might seem harmless enough,
it really just made money become the ultimate judge
of who the next star is going to be.
In a way, this was also the birth
of the first Chinese influencer agencies,
as some of the biggest tuhaos realized
that they could determine
who the next big star would be with their money.
Their agencies enticed streamers
who had potential to join them,
by making large donations and promising them with fame.
And it worked, with large streamers reportedly making
9 to 10 million US dollars a year from streaming,
and smaller streamers feeling like the only way
to get up to that point was to join an agency.
However, when they joined the agencies,
they would be greeted with harsh conditions
and strict schedules.
The biggest agencies required streamers
stream for at least six hours a day,
post a minimum tip quota,
and require they undergo constant surveillance,
transforming the industry into a business model
where squeezing every last dollar they could from viewers
was the top priority.
However, that world of streaming would not last for long.
Live streaming in combination with large scale tipping
and competitions for money enabled behaviors
that the Chinese government did not approve of.
And so in 2017,
the government started cracking down on that world.
First, they banned over 400 live apps
for hosting content that promotes violence,
pornography, gambling, superstition,
and other values harmful to public morality.
They then introduced an Orwellian code of conduct
for online streamers, that among other things,
required streamers to demonstrate socialist core values.
The final blow came when the government
attempted to set restrictions on the amount of money
people are allowed to tip to streamers.
Up until this point,
streamers mostly made money through tips.
And limiting the amount people can tip
ruined their main source of income.
And if the hit was hard for the streamers themselves,
it was even harder for the agencies,
who lost all of their leverage
of being capable of making people stars
through simply donating loads of money.
They needed to find something to make them money
through live streaming.
And during the pandemic,
they found exactly what they needed.
In 2016, Alibaba introduced a live streaming feature
in their TaoBao marketplace that was moderately successful
for sellers to promote their items on.
And with the boom of e-commerce during the pandemic,
real streamers saw the opportunity
to partner with Chinese sellers
and sell items to their followers for an affiliate cut.
Not only was this a massive success,
but it netted most streamers more than tipping ever did.
The phrase live shopping
has been around for decades in the West.
For some the term evokes memories
of enthusiastic hosts on late night TV channels
attempting to sell two-headed wonder mops,
electric exercise equipment, and super sharp knives.
When applied to live streaming and a Chinese audience,
it was a massive success,
with hundreds of thousands of streamers
joining as hosts in 2019 alone.
And so we arrive at the present,
a golden age for both sellers and creators alike.
In 2020 alone, there is at least 1.23 million
livestream hosts working in the industry,
with Alibaba hosting over 68.5%
of all livestream viewers in China,
an industry now worth over 500 billion US dollars annually,
with individuals like Huang Wei
able to sell $8 billion worth of goods in a single year.
For scale, this one individual is equivalent
to almost a third of the total global sales of Macy's.
However, influencer agencies
were no longer able to leverage their funds
by boosting celebrities with donations.
And so they found a way to exploit
the poor, young and impressionable once again.
For a salary of only $120 a month,
agencies will now recruit and train heaps of young women
who want to get into the industry,
but lack the equipment and experience.
And this new model
is exactly how the dystopian footage came to be.
These agencies are trying to save every penny,
setting up training facilities in abandoned garages,
and barely providing cheap portable filming sets
in an attempt to hide the fact
that they are quite literally farming influencers.
If the influencers want to have any chance
of getting out of the training sets on the street,
they have to outperform the others.
This results in streamers doing everything they can
to get an advantage, from putting on a desperate act
to preying on the viewers' emotions.
In some videos, you might even see streamers
gathered on a bridge or sidewalk.
This too is part of the system.
The algorithms on some Chinese platforms
utilize locations for promotion.
Meaning, if a streamer can go live
from a wealthier neighborhood or shopping area,
their audience will consist of wealthier individuals
more likely to buy products.
The few who make it through the bootcamp
will be hired full-time by the agency.
This means they'll be paid about $780 a month
and be required to work a minimum of six hours a day,
as well as abide by performance minimums and sales
if they want to keep their job.
And of course, to make it
so that there is no risk of losing the influencer,
agencies put harsh clauses in the contracts.
The reason why it happens in China, however,
makes much more sense
when you look at who is actually funding
the streaming influencer farm boom.
None other than Alibaba itself,
which announced it will be supporting
the training of hundreds of thousands of streamers
by funding over 1000 of these streaming studios
that we see in the videos.
It seems that the money is just too good
for companies to not take advantage of.
And the concerning part is,
Western companies are beginning to realize this too.
In December of 2022, for instance, Walmart and NBCUniversal
partnered for a livestream shopping event.
Snap Inc is also investing in augmented reality technology
to cut back on returns.
And Amazon just recently launched
its own livestream shopping platform.
And this is the point where we reach some deeper questions.
With surveys in the US showing the dream career
for the next generation is becoming an influencer,
could the livestream shopping industry
be the next logical step?
Could this be the start of a new salespeople generation
based entirely online?
There really isn't a clear answer.
But if one thing is certain,
it's that this method of advertisement turns a profit.
And where there is profit,
there will be companies behind it.
Imagine a world where a majority of the live streaming space
is made up of influencers peddling products
to hit sales and earning quotas.
A grim world undoubtedly,
but one we might be heading right for.
Thank you guys so much
for making it to the end of the video.
If you enjoyed, please consider subscribing,
or leaving a link, as it really helps me out.
What do you guys think of these influencer farms?
Is it something that worries you?
Let me know down in the comments,
as I'd really like to hear your thoughts.
Thanks again for watching, and have a good night.