An interesting report has just emerged on the nature of traffic on Sina’s (Nasdaq: SINA) Weibo microblogging service, casting a spotlight on how people use the platform just a week before it gets set to make a major New York IPO. The timing of this latest report looks a bit suspicious, aimed perhaps at further cooling sentiment towards an IPO that was already losing momentum. But from my perspective, this latest finding that a very small number of Weibo users are responsible for most of the site’s original postings isn’t necessarily a bad thing. To the contrary, this kind of revelation could even help Weibo by differentiating it from rival service WeChat, which is growing much faster.
Before going any further with this latest news on Weibo, I need to quickly apologize for a mistake I made earlier this week in saying the company was worth just $1.7 billion based on its latest IPO filing. That figure — which would have been down sharply from its level just a year earlier — was based on a report from my former employer Reuters, which usually gets such information right. But several people have pointed out that the value should be about $3.9 billion, which is actually higher than its year-ago level of $3.3 billion, and Reuters has since updated its own figure.
Now that I’ve gotten that apology out of the way, let’s move on to the latest headlines that cite a new analysis showing that just 5 percent of active users on Weibo, often called the Twitter of China, account for most of the original content on the site. (English article) The study found that some 94 percent of content on the site comes from just 10 million of Weibo’s roughly 200 million active users.
The study itself looks relatively reputable, conducted by a professor at the University of Hong Kong, the leading university in the former British colony. The professor also found that nearly 60 percent of accounts had never posted anything on the service as of early January this year. That implies that more than half of registered accounts on Weibo are so-called “zombies”, or fake accounts, often set up to let people inflate their number of followers and boost their status on the site. The high number of such zombie accounts isn’t really news, and Weibo and other similar services have always said their number of active users is far lower than total number of registered accounts.
Weibo counts Sina as its controlling shareholder, and last year also sold a major stake to leading e-commerce firm Alibaba in the run-up to a Nasdaq IPO that could come as early as next week. That IPO was originally set to raise up to $500 million, but the upper limit was scaled back to $440 million last week after meeting with lukewarm demand.
While the latest analysis on the surface looks somewhat negative, in my view it could actually be a positive factor in helping to define what Weibo is and differentiating it from Tencent’s (HKEx: 700) WeChat. Whereas WeChat is a mobile instant messaging service mostly used for one-to-one communication, this latest analysis shows that Weibo at its core is really more like a news service.
In China’s tightly controlled media environment, many people don’t trust the news in official media and increasingly look to online sources for more reliable information. This latest study seems to underscore that Weibo has emerged as the leading source for such third-party news. In that light, the fact that only a small group of people are making original posts could be a good thing, as it eliminates a lot of the background noise that might otherwise make the site difficult to navigate as a source for quality third-party information. Such a news function for Weibo is also more in sync with Sina’s own role as China’s leading Internet portal and a top independent news sources.
Bottom line: A new study showing a small number of Weibo users generate most of its content underscores the site’s role as a news source, helping to differentiate it from other social media like WeChat.