The last less-regulated corner of China’s highly censored internet is about to get a lot less interesting.
Chinese authorities have issued new regulations to clamp down on live-streaming, one of the country’s most lucrative and fast-growing entertainment and e-commerce sectors, seeking to use AI and big data to promote only “positive” broadcasts in line with “core socialist values.”
An “intensive” clean-up campaign will be carried out between now and the end of the year, with companies that are unable to meet the new requirements shuttered, the National Radio and Television Administration said.
China is home to the earliest mass adopters of live-streaming, a form of entertainment in which vloggers pump out content in exchange for virtual gifts from fans. (Its early heyday was chronicled in indie filmmaker Wu Hao’s revealing doc “People’s Republic of Desire.”)
Around 560 million people watch live-streams in China as of March, according to the latest government data — a group larger than the entire U.S. population and more than quadruple the 126 million counted watching last June. Almost half of users were found to be watching e-commerce live-streams for online shopping.
Live-streamed e-commerce — a bit like a more Tik Tok-esque interactive version of the Home Shopping Network — began to emerge in China around 2016. Charismatic hosts flog products and discounts in real time, earning commissions on sales and receiving “rewards” from adoring viewers that host platforms paid out in cash.
The pandemic pushed the trend mainstream, as it shut down cinemas and gatherings but left the country’s diligent fleet of deliverymen on the go, serving new users who remained bored at home, glued to their phones. Last year, live-streamed e-commerce was estimated to be a nearly $70 billion industry in China. The Shanghai-based consultancy iResearch predicted in July that this year, it could more than double to around $170 billion. As the Chinese economy flags, authorities have praised the sector for staving off unemployment and driving growth.
But the sector is about to get a heavy dose of state regulation, with consequences for everyone from laid-off workers taking up virtual salesmanship to one of China’s biggest celebrities: Fan Bingbing.
According to a new nine-item list of regulations dated Nov. 12 but made public on Tuesday, China must beef up its surveillance of the live-streaming space in order to “create a healthy industry ecology” and “prevent and curb the breeding and spread of low, vulgar, kitschy or other such content bad for morale.”
The directive states that it’s critical for all platforms to “adhere to the right direction of prioritizing the socially beneficial, actively spread positive energy, depict truth, goodness and beauty, focus on generating a healthy spirit and promote clarity.”
The new regulations ask companies to develop new technical capacities to “boost good and punish bad content” — that is, to better detect and weed out content objectionable to the ruling Communist Party in real time.
In the past, controversial live-streams have led to vloggers’ detention or disappearance. In 2018, a 20-year-old with tens of millions of followers spent nearly a week in jail for briefly singing China’s national anthem in a humorous manner on the Huya live-stream platform. Meanwhile, Dong Yaoqiong, 29, was disappeared within hours after she live-streamed herself splashing ink on a poster of Chinese President Xi Jinping and expressing opposition to “his authoritarian dictatorship” that same year. She reappeared in January.
In recent months, a number of citizen journalists on the ground in Wuhan, the pandemic’s epicenter, were detained or disappeared following live-streams that criticized the government’s COVID-19 response or contradicted the controlled narratives from official outlets in the outbreak’s early months.
China’s regime is especially wary of social media activity capable of mobilizing large groups, particularly with unvetted messaging. It has capped chat groups on the ubiquitous Wechat app at 500 members. Millions of live-streams going out in real time pose a real technical challenge to censors. “It is necessary to establish a monitoring and censorship mechanism that integrates human and machine to track program dynamics, analyze public opinion and take timely measures to prevent deviations and problems,” the document stated.
Companies must “actively research and promote” new ways to propagate positive content and ensure it is “well-positioned and gets good traffic.” They should “actively explore the use of new technologies like big data and artificial intelligence… to let algorithms push the promotion of high-quality audiovisual content and issue early warnings against and quickly block illegal and bad content,” the document said.
Although the content regulations are not intended to address the financial or business sides of live-streaming, the sector is also suspected of concealing considerable fraudulent activity. In a 71-page report earlier this month U.S. investment firm Muddy Waters alleged “massive fraud” at YY Live, a streaming site that Baidu says it wants to buy from its parent JOYY Inc. The investor claims to have discovered that the company’s talent earns a small fraction of what it purports, that much traffic comes from bots, and that performers fake their popularity by roundtripping gifts to themselves. “We conclude that YY Live is ~90% fraudulent,” Muddy Waters assessed. JOYY Inc. denies the claim.
Part of this push towards “positivity” is a clause that deliberately cracks down on scandal-plagued celebs.
“It is necessary to take effective measures to not give unlawful and unethical artists a chance at public appearances or speaking opportunities,” the directive warned companies. Blocking out such stars would help “to prevent and curb the spread of low, vulgar bad habits such as flaunting wealth” that “pollute” the country’s internet space, it said.
China’s government-driven “cancel culture” can be extreme: tarnished stars find themselves immediately out of work and even digitally erased from past projects. Many, including Fan Bingbing, the A-lister who disappeared for months after a tax fraud scandal, and Li Xiaolu, the charming star of Joan Chen’s “Xiu Xiu: The Sent Down Girl” who fell from grace after a high-profile romantic affair, have turned to e-commerce as a way of making money and staying relevant while otherwise banned from Chinese show business.
Typically, the strategy has paid off. In April, one of Li’s early attempts at live-streamed e-commerce netted her more than $7 million in sales in just four hours, according to Chinese reports. Over the recent Nov. 11 “Singles’ Day” shopping event, a sort of Chinese Black Friday, Fan Bingbing sold more than $15 million in beauty products from her new line, a 150% year-on-year increase.
But “the latest announcement from the National Radio and TV Administration has undoubtedly killed her opportunity to sell goods” online going forward, making a comeback even harder, one Chinese commentary assessed.
Even the staid, state-run Xinhua news agency chimed in with an op-ed on the regulations Wednesday, essentially confirming as much.
“Online live-streams are a platform for public communication — they should not and cannot become a channel to show off wealth, money worshipping, and other kitschy, bad habits,” it read. “You must deal a heavy blow to deal with chaos — there must be ‘zero tolerance’ for immoral artists. Only by establishing clear rules and drawing a bottom line can…[we] return to a clean Internet space.”
The new regulations and political winds appear to have already spooked some in the biz: last week, a red carpet live-stream of a local film awards show was cut off just before Fan arrived, staining one of her first high-profile film-related appearances since her downfall two years ago.
On Wednesday, speculation was rife on Chinese social media around the other “immoral artists” who might be affected by the new rules.
Beyond banning bad influences, additional measures will be deployed to keep platforms and users in line.
Companies must now classify live-stream content according to category labels such as “music,” “dance, “fitness” and so on, the directive said. Every live-stream room must be marked with a category label and room number prominently on its live page. Hosts cannot change the category of their program without review and approval from the platform.
Any appearances of celebrities or foreigners must be reported in advance. Any livestreamed e-commerce events must report detailed information on program content and list those attending and hosting to China’s censorship authorities 14 working days beforehand.
Platforms must keep a file running for each live broadcast room and individual host, which will track a new system of points issued for quality or detracted for violations. Their score should be used to determine what content to promote. Rooms or hosts with repeated violations should be punished via tactics like setting limits to streaming durations or algorithmically burying content at the bottom of search rankings. Those who still don’t shape up will have their accounts deleted and be blacklisted by Chinese authorities, unable to live-stream again even on a different platform.
Such bans will be facilitated by stricter requirements for the real-name registration of both hosts and users, which will be confirmed by both company employees and facial recognition technology, the regulations said. Such a measure allows the government to better track what anyone is saying online at any time. It also helps to limit the actions of underage users, who have run into trouble for gifting hosts massive sums online.
To oversee all this and expand their ability to self-censor to remain in compliance, companies will have to invest in new personnel at their own expense.
At least one censor is now required for every 50 live broadcast rooms and platform runs. Companies are encouraged to employ even more than that so as to “dynamically adjust and enhance monitoring and censoring power in accordance [with] changes in online public opinion.” Training for censors will be increased, and those who have passed must be formally registered in a new government database.
Platforms must now report their numbers of live broadcast rooms, hosts and censors to their provincial authorities every quarter.
The document also states that “platforms must not adopt operating strategies that encourage users to irrationally issue ‘rewards’” — which up to now has been key to the sector’s business model.
Companies are now required to limit the maximum amount a user can gift over a daily and monthly time period. At the halfway mark, users should be sent a reminder of their consumption level that they must verify by text message or other means before they can begin spending again. Meanwhile, platforms must now delay issuing payouts of rewards to hosts as a bribe for good behavior, returning the gifted money back to users should the host commit any “illegal” actions.
Under Chinese President Xi Jinping, China’s internet space has become increasingly regulated and controlled. Last month, the country’s top cyber authority announced it would also begin a campaign to rein in the “chaos” of information published online by Chinese mobile internet browsers, calling on companies to review their practices and clean up unregulated reports.