As China’s livestreaming frenzy starts to fade, fraud takes hold

Commercial livestreaming boomed in China while the COVID pandemic lasted and consumers couldn’t visit bricks-and-mortar shops; but as life began to return to normal from late last year, audiences have started to decline.

At its peak, it has been estimated that livestreaming viewers had jumped eightfold and reached over 500 million. The boom created huge leverage for China’s multi-channel network (MCN) agencies, which manage online influencers who front the livestreams, and negotiate their deals with brands. Now, an investigation by Sixth Tone has found fraud among these MCNs is a huge and growing problem.

The details

• Some influencer agencies are using click farms to generate fake numbers of audience clicks and sales, sales that are later cancelled. Many agencies charge large up-front amounts, known as “spot fees”, which can be the equivalent to tens of thousands of dollars. By the time the fraud is discovered, the money has been handed over.
• One agency employee told Sixth Tone her agency used five different click farms, and when companies later complain that low or no sales had been achieved, they are often just offered another livestreaming session with a different influencer.
• Despite clampdowns on click farms – the China Advertising Association banned their use last year – they appear to still be thriving, closing down when a campaign is launched against them, then reappearing under a different name when the pressure fades. One boasted it could boost any Douyin account by 10,000 followers within a few hours. 

Key quote

“The number of followers, views, and sales determine the spot fee for a livestreamer. We have to polish these numbers.” A 28-year-old employee at an MCN agency, speaking to Sixth Tone on condition of anonymity.

Sourced from Sixth Tone