YY started out as a social network for gamers. Gamers would make friends across China on YY, so they didn’t have to play video games alone. YY launched a service to solve the problem that gamers were having. Eric He, the CFO of YY, said “There’s no time for them to type text. When they play games, they are very concentrated. So they are very busy with their hands.” Eric explains YY provided high-quality audio software so players could just talk to each other while playing games. The conversations could be just saying hello or a heads up in the game.
However, YY quickly transformed when users started singing to each other on the YY gaming platform. It turned into a kind of bedroom or living room karaoke. When girls started to pop up on the male-dominated gamer site singing to thousands of viewers, the staff at YY didn’t know what to make of this growing trend. Eric He said it wasn’t until he decided to have a karaoke contest out of the growing trend that he realized the true monetary potential YY had. He stated, “We were trying to figure out, how should we rank, you know, performer A is better than performer B?” The staff at YY decided that they would give users free virtual tickets so users could vote for their favorite singers. However, before the contest kicked off, a staff member from YY was on Taobao, an Internet marketplace, and was surprised to see people selling the free virtual tickets for the karaoke contest. The tickets had a going price tag of 25 cents per ticket.
He said, “That was like lightning to us. We realized that the little ticket actually means something.” YY was a company with no business model and they did not know how they would generate money until this karaoke contest came about. YY members can now show karaoke singers their appreciation by emojis or text images that they can send to the performers. The emojis can be candy, beer, hearts, or virtual Bentleys with vanity plates. These emojis hold a monetary value, which is split between YY (60%) and the performer (40%). Emojis start at 10 to 15 cents and can range in price. Members have user status names like Dukes, Earls, and Kings. However, these status names come with a hefty price tag, King is Valued at 20,000 dollars.
The big take away from YY’s story is that they listen to their consumers and transformed their company and increased users by 3 percent, every week consecutively for 100 weeks. However, they were still not making money and had no business model. The consumers told YY what they wanted and basically made their business model for them. Maybe the Music Industry can take a page from YY’s story and listen to the consumers, instead of telling them what they want, and then make the needed changes.