Ogilvy China Digital Watch

Not all that much in the report issued last month by the China Internet Network Information Center (CNNIC) if you fine-toothed the year-end report for 2007. That’s not surprising given that all the data were drawn from the research for that report. But it does drill down a bit into the under-25 set’s behavior. Reading through it I highlighted a few items that are worth pondering, for sure:

• Internet Cafe use: Though this isn’t news to people who’ve spent time in China, and especially in lower-tier cities, the CNNIC report puts some numbers to the importance of Internet Cafes as an Internet access point for younger Chinese people. 33.5% of primary and middle school Internet users report accessing the Web from i-cafes, and 47.8% of Chinese netizens under-25 do so. Internet cafes are the primary point of access for 59.5% of rural Netizens, compared with 43.5% o urban users. (The higher proportion of urban to rural Netizens puts the overall average much closer to the urban average).
• Time spent online: While the average Chinese netizen spends 16.2 hours per week online, non-students in the under-25 set are far above this, with an average of 20.8 hours per week. College students average 14.8 hours per week, while primary through high school students average 6.4 hours a week.
• Importance of Online Games: CNNIC reports that 73.7% of the Chinese youth Internet users under 18 play online games, and primary through middle school students are playing games for an average of 3.3 hours a week. Just among middle school students, 5.5% are spending more than 10 hours a week on online games.
• Prevalence of Internet Addiction: Again, no surprises here: The report claims that almost 27.1% of youth Netizens have “an inclination toward Internet addiction.” Non-students in the under-25 age group have higher rates of addictive propensity, with about 36.5% exhibiting “withdrawal symptoms” within days or even mere hours of their last Internet fix — agitation, an irrepressible urge to get online, fear that they’re missing something. Somewhat surprisingly, youth Net junkies represent a smaller proportion of their age group than junkies in the overall population, where 40% are addicted or something close. (38.3% respond agree that “If I don’t go online for 1 day, I feel like I’ve missed something.”) Sign me up for treatment, then, because I can barely go the 6 or 7 hours of sleep I usually allow myself.
• Mobile Internet Access Higher Among Youth: 31% of youth Netizens report having used mobile phones to access the Internet in the six months prior to the survey, significantly above the 24% reported nationally. College students are the heaviest mobile Internet users, with 40.2% having accessed the Internet during that period.
• Youth are Heaviest IM Users: No duh, but penetration is at 91.3% for the under-25 set — almost 10 percentage points higher than the national average of 81.4%. The differential in usage rates of online games (9.5% higher) and online movies (6% higher) are also significant but not surprising.
• BBS Use Much Higher: Finally, no one who watches the Chinese Internet will be shocked to learn that youth are the heavies users of BBS. CNNIC reports that over 60% of college students report having posted messages on BBSs — a whopping 26.6 percentage points above the same figure for overall Chinese Internet users.

At 2:28 yesterday afternoon, I had stopped off at home in Beijing’s Central Business District after lunch and was writing an email to a VC friend of mine when I suddenly felt dizzy. For the first few seconds, I thought it was all in my head, but then there was the distinct sensation of physical movement. I asked my wife, “Is this an earthquake?” She was incredulous at first, but then found she almost lost her footing and held a wall for support. “It is an earthquake,” she said. I looked out the window toward the new office towers going up south of my building, and could have sworn I saw them swaying. We talked for a couple of seconds about what we should do–whether we should get under a doorway, or get downstairs. Then it all stopped, about 35 seconds afterward.

I had Twhirl, my Twitter client of choice, on my desktop, and immediately typed, “Did anyone else in Beijing just feel that earthquake?” The client refreshed “tweets” from others, and there were at least half a dozen comments before mine about the quake. Amazingly, I saw that there were people from Shanghai who’d felt it too.

My first instinct after that was to look at the U.S. Geological Survey website to see whether it had been reported yet. Clicking on “Outside of the U.S.” I saw a big red square on a map of Asia in what I could see was Sichuan Province, and it hadn’t been written up yet–it had happened only minutes before, and there wasn’t an entry on it yet, so I quickly filled out a report on what I’d experienced, still incredulous that I’d felt something from a quake I reckoned was probably well over a thousand kilometers away.

Right away, guys like Robert Scoble, the uberblogger who’s a huge evangelist for Twitter and is followed by over 20,000 people, were “retweeting” messages from people on Twitter in China. Within an hour or so, using Twitter location and search tools, people had identified two English-speaking young men, and soon after a third, who were using Twitter in Chengdu, about 95 kilometers east of the epicenter. Their eyewitness accounts, with aftershocks reported in near-real time and reassuring accounts that the damage — at least in Chengdu — didn’t seem severe, were really useful.

It wasn’t long before, within the community of Twitterati watching the horrors of the quake unfold, self-congratulatory messages talking about how Twitter was so much faster than the mainstream media, and how Twitter had proven itself indispensable. At first I was caught up in that feeling, too. But really, thinking back now on what happened, there was a little too much hubris in the rush to pronounce that Twitter’s moment had arrived.

Sure, in the immediate moments after the users in China — mostly in Beijing and Shanghai — felt their buildings sway, we were able to get it out that there had been an earthquake. We didn’t know where, though, until we went to more informed sources like the USGS. I for one thought that it had been somewhere much closer by — in Hebei Province, or perhaps in Inner Mongolia.

Twitter’s immediacy was nice, but by no means unique. The whole time I was twittering, my wife was on her instant messengers, with both QQ and MSN Live open. She was also monitoring all the portals’ news flashes on the quake. I didn’t feel like I had any more information than she did

Twitter’s public nature was of some real value both for ordinary folk and for professional journalists, who were able to quickly identify English-speakers on the scene who could be interviewed. The broadcast nature of Twitter, while it can bore one to tears when used to gratuitously announce one’s pedestrian comings and goings, was in this case something that made it better than simple IM.

The other dimension to Twitter that proved very useful in this case was its global usership: there were lots of Chinese messages I was following, and I was among many people bilingual individuals translating more useful, insightful, or interesting tweets from Chinese into English. Call it “bridge microblogging.”

It proved very useful as a means of quickly disseminating information gleaned from the mainstream media on the scene: Through the night, as the death toll numbers rose with horrific speed, people I’m following reported and provided links. Many people linked to the Chinese Red Cross donation page, which was again a good implementation of Twitter.

On balance, though, I feel there’s something fundamentally unsettling that attention within the Twitter community should have shifted at all off the matter at hand and on to a celebration of the particular communication tool we were using. There’s no doubt that it was useful, but by no means did this episode drive a nail in the coffin of traditional media, which by my lights has been exceptionally good in its reporting — Xinhua, Phoenix, CCTV, and many other Chinese news organizations have really taken full advantage of the candor Beijing seems to be allowing and encouraging.

Not that those of you with productivity-killing Twitter habits need any more reason to waste time, but if you haven’t seen this excellent list put together here on the Lo-Fi Librarian blog you should definitely check it out. Take some time to check out the blog itself, too, which I’ve put on the “Incredibly Useful Tools” list on the ol’ blog roll because that’s really what this individual’s blog is all about — incredibly useful tools.

Some other lists of Twitter tools — there’s some overlap, as one might expect — can be found at Forrester guru Jeremiah Owyang’s blog here,  and at TopRank’s online marketing blog here (h/t to @pdenlinger). And for those of you for whom Twitter’s become a sort of RSS, check out this excellent list of news organizations using Twitter (h/t to @jdar). I recently started following the New York Times, the LA Times, and FT financial news on Twitter and find it very useful.

Lots of blog posts out there these days about the Twitter phenomenon. One of the better ones I’ve read of late is from Melissa Sconyers, an ex-Neo@Ogilvy New York employee who also used to live in Beijing. Check it out here!

Of course I don’t really believe that Twitter’s a productivity suck when used judiciously. There’s a curve, though, but once you pass a certain point — not sure I’m there yet — I’m convinced it’s a net positive to your productivity. I’m not trying to rationalize a habit. Really, I’m not. No, really.

Business Week has a couple of articles out about virtual worlds — one on the pioneering, once-feted and now oft-maligned Second Life, written by virtual world evangelist Wagner James Au, and the other by Beijing-based Chi-Chu Tschang about China’s SL “clones,” HiPiHi, Novoking, and UOneNet. I’ve written about the first two here and here. UOneNet’s still unfamiliar to me but I’ll certainly check it out.

So far, despite some publicity, HiPiHi doesn’t seem to have gained a whole lot of traction. One San Francisco based virtual world enthusiast named Suezanne C. Baskerville, whose blog is rich in expert advice on how non-Chinese-speakers can “immigrate” to HiPiHi, commented in late April on Twitter that the current population on HiPiHi was 65 - the highest she’d seen to date. In his Business Week article, Tschang quotes a lonely avatar saying, “This world feels like it has been destroyed before.”

But Don’t count Chinese virtual worlds out. There’s still a lot that suggests to me that they’re really going to flourish — at least in users if not as profitable businesses.

For one, there’s China’s deep-rooted MMORPG culture. Couple that with the amply demonstrable willingness of Chinese to strike up online friendships with strangers — the whole culture of QQ really got started this way, and I’ll bet you anything the proportion of “real” to “we only know each other online” friends on IM buddy lists in China is far, far lower than among U.S. users. Of course, it may prove to be that the actual gaming elements of the experience — fighting monsters, gearing up with spells or armor or weapons, gaining gold and experience points — might prove more compelling than flying around, trading real estate, blinging out their avatars and chatting up strangers. I’m curious to see whether some teleological elements might end up entering China’s virtual worlds.

Chinese operators of these worlds, to repeat something I’ve said before, have had the second mover advantage of being able to watch what Linden Labs has done wrong with SL. The far lower barriers to entry in Novoking and HiPiHi — you don’t need to be a skilled coder to actually make things in the world and participate in economic life there, and there are lots of prefabricated public spaces to visit — are a smart approach by my lights.

Micropayments, as we’ve seen with the success of many online game companies and of course Tencent, are a well-established means of collecting revenue. The ubiquity of the free-to-play, pay-for-item model in gaming could easily be applied to the Chinese virtual worlds, sustaining them long enough to build large enough user bases to attract brand advertisers.

As for what advertisers should be thinking, Wagner James Au’s piece includes what, to me at least, seem like very sensible suggestions for the dos and don’ts.

 

The worst mistake that would-be virtual world marketers make is assuming their Second Life presence should mirror the real world—in other words, making their branded location look like a shopping mall. Some of the most successful grassroots locales play in the full spectrum of possibility: dystopian, Blade Runner-esque cities of the future, for example, or interactive art installations that seem like 3D dreamscapes. This is the essential eclecticism of the Second Life experience—what I call “bebop reality.”

Smart marketers will imagine their brands not as they are in the real world, but as they fit within this free-form play space. Among Second Life’s most popular locales is “Greenies,” a giant living room that makes avatars seem as small as ants. It’s here that a British agency launched a campaign for its client, L’Oréal Paris, not as a traditional billboard, but as custom-made virtual products discretely placed inside a lady’s SUV-size purse. After the first three months, Second Life residents had snatched up 34,000 copies of L’Oréal-branded objects—an amazing virtual item click-through rate of about 3% of the active user base (assuming some individuals took more than one).

With China, as with SL and its ilk on the Anglophone Internet, I tend to take a long view of this, and my sense is that there are enough investors who are sanguine about this area’s long-term prospects to sustain it. I would caution against being prematurely dismissive of virtual worlds however slow adoption looks today. I do see a trend toward avatar-based online interaction becoming commonplace — that prospect may chill you, as it sort of chills me — in education, job training, collaboration, meetings, and in many other aspects of work and leisure life.

Microsoft has rescinded its buyout offer of Yahoo, reports TechCrunch, after the two parties failed to agree on an acquisition price. They were about $4 apart, with Microsoft going as high as $37 per share — up by about $5 billion from its original offer — but Yahoo still holding out for $37 per share. Read the press release from Microsoft here, hot off the presses. It includes the text of a letter from Steve Ballmer to Jerry Yang. Of particular interest is Ballmer’s concern that Yahoo will now pursue a strategy of outsourcing its paid search business to Google.

On the heels of Tudou.com’s big round comes news that Oak Pacific Interactive has raised the gargantuan sum of $43o million in a round led by Masayoshi Son’s Softbank Corp. Oak Pacific Interactive (OPI) runs entertainment-focused community portal Mop.com, IT blog site Donews, the (probably moribund) video sharing site UUMe and — in light of all the buzz around SNS in the last year — their jewel-in-the-crown, campus-based social network Xiaonei.com. Xiaonei, not surprisingly, is the business unit that’s expected to see be the biggest beneficiary of this investment, and Matt Marshall’s VentureBeat even headlined his post on this “Xiaonei, the Facebook of China, raises $420M — better funded than Facebook.”

A press release from Oak Pacific and Softbank on Business Wire here says that the $430 comes to about 35% of the company. It’s not clear, however, how this investment has been structured. The Wall Street Journal reported that Softbank has ponied up “about $96 million” in early April, representing 14% of the company. That would yield a valuation of about $685 million. But the $430 million number for 35% would be almost twice that, at $1.22 billion. I’m trying to square this. The WSJ says that Softbank has the option of making an additional investment of $288 million in one year’s time, and that Softbank does intend to exercise it, but that takes the total to $384, and I’m not clear on how much the other investors — SBI (I’m guessing this is SBI Holdings, a fund originally set up by Softbank but which has been independent since 2006? The Softbank family is so convoluted) and JOHO Capital LLC– contributed to the round. Anyone have the inside scoop? In any case, the journalist who reported the WSJ piece from Japan, says the one who reported it from China, spoke with Softbank as recently as Wednesday afternoon.

A source knowledgeable about the deal tells me that the existing OPI investors have, by the terms of this new round, agreed to sell their principal to Softbank. These investors — DCM Doll, General Atlantic, Accel, Legend Capital, and Technology Crossover Ventures — kicked in some $48 million back in early 2006: what was then an astronomical sum, the money was earmarked for a roll-up of Web properties in China that critics said never really happened — except for the fact that they picked up Xiaonei, which they merged with their own 5Q.com, a competing campus social network.

Could the company possibly be worth this much? Immediate reaction among observers I know was that this is a big glaring neon sign saying Bubble!, but think back to what Masayoshi Son paid into Alibaba back in the day. He may have had to wait a while to cash out, but cash out he did, and handsomely — first with the Alibaba-Yahoo deal (remember, Jack Ma was given $1 billion in cash back in August 2005 to take over Yahoo’s business, while Yahoo took a 40% stake in Alibaba) and then of course with Alibaba’s very splashy IPO. Softbank isn’t a VC: Masayoshi Son can invest for the long haul. It might be time for him to pick a pony, and Xiaonei’s not a bad choice.

For Xiaonei to really take off, the site is going to have to undergo major reconstructive surgery — a procedure that it can now afford, it looks like. Xiaonei was built at a time when opening your API to third party developers wasn’t the sine qua non of successful social networks, and there is of course the site’s rather uncanny resemblance to Facebook.

This isn’t the last major round of funding you’ll read about here for Chinese social networks. For weeks now I’ve been hearing rumors of a very large investment in 51.com, a social network that’s immensely popular in lower-tier Chinese cities. One venture capitalist I spoke to said that on a fact-finding trip in Henan province, practically Internet user he talked to was on 51.com. Stay tuned.

For more about Xiaonei and Oak Pacific, check out Plus8Star’s Benjamin Joffe’s post here.

I just saw this in Marbridge Daily (which, maddeningly, I have to fish out of my over-aggressive spam filter every freakin’ day). If you don’t subscribe to Marbridge, you ought at least sign up for their free daily newsletter, which will at least give you headlines from a broad daily scan of the Chinese tech press.

Alimama Releases User Statistics
Oriental Morning Post, 4/28/08

Alibaba’s advertising trading platform Alimama has announced it now covers 370,000 small and medium-sized websites and 180,000 personal weblogs, reaching an average of 70 mln people per day.

Alimama GM Wu Yongming revealed that the company aims to reach 80% of China’s Internet users by the end of the year.

That’s an impressively large ad network. Looks like Alimama’s making good on the potential that some of us saw when they  announced the exchange, which hard-launched in November of last year.

The following was written by my colleague Chris Reitermann for Global Entrepreneur and will appear there in Chinese in their next issue.

I just finished attending a range of major events, all focused entirely or partly on the fundamental changes that digital drives in our daily life, marketing and how brands communicate with consumers.

It all started out with Ogilvy’s signature event called VERGE – The Ogilvy Digital Summit. I attended both the signature New York event and the first Greater China Verge held in Hong Kong. VERGE is in its 4th year of existence and has been held in 25 cities around the globe. It has become the preeminent agency lead digital marketing forum for discussion and debate amongst clients and industry experts. The one day event features journalists, analysts, technologists, marketers and publishers, content creators and key Ogilvy thought leaders and clients, presenting engaging and provoking ideas – all related to redefining how brands navigate the digital age.

Attending both the New York and Hong Kong event gave a wonderful reflection of where the two markets stand. While New York was more philosophical and looking out in the future, Hong Kong was much focused on tackling today’s challenges. To me this reflected well the role of digital in both markets. While in the US digital is already the mainstream or getting there in giant steps, here in Asia there is still education needed for giving clients the confidence to shift attention and budgets to where their audiences increasingly spend their time.

New York’s theme was “Dada, Data, Alpha Beta.” Dadaism was an art rebellion, a backslash against the status quo, a breaking free of constraints and conventions. Translated into today’s marketing world it is about dramatically re-thinking traditional methods and models and embrace the new digital world with open arms. We need to come to grips that we’re not talking about a tiny shift, but a dramatic change. Dada reminds us not to foist traditional media notions onto new media platforms. How can brands tap into culture today to create, build, protect and celebrate brands? Data is the new currency of marketing. The internet is swimming in data. We can segment audiences, construct media plans, increase relevance and measure results in ways we never could before. Alpha is about the digital alpha dogs, mavens that spread opinion through the blogosphere, word of mouth, user generated content – the power has shifted to anyone that wants to have an opinion and wants to participate in the dialogue – instant, global, real-time. Brands need to embrace this shift and explore the endless opportunities that can be created through collaboration and co-creation. Perpetual Beta stands for the notion of nothing ever being finished. Digital technology allows us to continuously cut, past, mash-up, redesign and experiment. Don’t wait for the final answer, as it’ll never come. In today’s world we don’t need to get it right at the first time, we can immediately measure, evaluate and optimize. The winners today are fast to market, experiment, involve the consumer and don’t fear failure.

The speakers at Verge in NY all discussed around these topics. One of the most memorable speakers was George Bodenheimer – President of ESPN. He presented ‘the ESPN story’ – from a wild guess that there would be a market for pure sports entertainment in the late seventies to a multibillion dollar cross media franchise of total sports experience. ESPN pretty much transformed television, and has since moved to a variety of digital platforms from mobile to IPTV. His speech was rightly titled as Making the Ordinary EXTRAORDINARY. ESPN is not afraid of failure and is continuously innovating its programming and platforms.

Shelly Lazarus’s – Ogilvy’s Global CEO, proclaimed the creative economy in her speech. The power of ideas is the biggest asset corporations have in today’s digital world. Companies need to put a new value on ideas and innovation. In today’s world where everything can be copied and instantly researched and compared the biggest asset a company has is its brand. Her speech really set the tone for the day and was followed by global brands like Unilever and Cisco discussing their role in this creative economy.

The day went on with thought leaders like John Battelle (author of The Search) and Owen Van Natta, formely Facebook’s Chief Revenue Officer being the Alpha Dogs, discussing how instantaneous the internet has made the world of marketing.

Overall it was a really impressive event with many good thought starters being taken back to China. Only two weeks later Verge moved to Hong Kong for the first ever Greater China Verge. Hong Kong was an ideal location for this event, bringing together leading global and Chinese industry mavericks. The event was held at Cyberport which in itself is a testament to the massive scale changes that digital brings to life. Cyberport is an entire city built on the premise of complete digitization. The opening key note was held by Brian Fetherstonhaugh – OgilvyOne’s Global CEO – and one of the most visible evangelists on digital marketing. He explained to the audience how the traditional notion of the 4 P’s (Product, Price, Place, Promotion) will cease to exist and give way to the 4E’s (Experience, Everyday, Exchange, Evangelism). Brands will need to listen, take a seat at the table and immerse into the consumers world, rather than shouting out loud. He also highlighted the growing “Marketing Confidence Gap” – the phenomena where consumers time and involvement in digital channels is growing disproportional to spending of marketers on these channels. While common belief would be that this gap is getting smaller it is in fact widening. So the consumer is ahead of the marketers it seems.

Kent Lindstrom – President of Friendster, was giving a keynote on social networks. It was extremely insightful to see the drivers and dynamics behind successful social networking sites like Facebook and Friendster. An other interesting perspective was that of several panelists discussing measurement in the digital space. To me a key obstacle for clients not spending or not having enough confidence to spend on online marketing. The panel concluded that standards and industry benchmarks are needed but also highlighted that we do not need to try to transplant traditional measures like GRP to the online world. My colleague Kaiser Kuo moderated a panel with leading Chinese web 2.0 figures like Jay Chang – CEO of 56.com and Wang Xing – Founder of Xiaonei.com, which gave the audience a good insight into the dynamics of the Chinese 2.0 landscape. A third keynote of the day was SY Lau – VP of Chinese Internet giant Tencent. Tencent has taken an active role in driving the development of the Chinese online advertising marketing, and SY gave the audience a first hand view on the depth of offering and innovation at Tencent. Overall the Hong Kong event was very successful and received great praise from all participants and attendees.

After Hong Kong, back to Beijing (didn’t see my kid in 3 weeks) and off to the next event - TENCENT MIND. Tencent pulled together a great event in Beijing with the crème of China’s digital marketing professionals speaking to over 500 people in the audience. The main speaker of the day was Professor Dr. Don Schultz, who told the audience about the new model for integrated marketing communications. He went to an extreme in telling the audience that all his books written about marketing up to date were obsolete and needed to be rewritten in today’s digital world. I wouldn’t quite go that far, but it was certainly a great reminder. The day continued with speakers and insights from brands like Nokia, Nike, media professionals and agency speakers. I had to leave the event early, but heard nothing but great reviews. Next to Shanghai to attend the Ogilvy Worldwide board meeting. Oglvy’s worldwide board came to Shanghai to hold its meeting in recognition of China’s increasing importance to the agency. An entire day was dedicated to one topic – China. While we presented our China plan, we also invited leading industry professionals to present to our board a variety of topics that move China. From Olympics to the economy, the new rich and obviously digital. We were honored to have three leading industry mavericks speaking to the board. Gary Wang – Founder of Tudou.com, David Zhu – CEO of Allyes and SY Lau – EVP of Tencent. It was a great mix of speakers, and our board came away with an entirely new view of the Chinese internet and how it changes not only branding and marketing but also consumers and human interaction. I always find it amazing how westerners coming from a world of Facebook, Google and Yahoo are intrigued by the level of innovation and dynamics unique to China.

Overall the month on the event trail did make one thing clear – digital is here to stay, and while we’re catching up fast in China, the industry still needs to mature. Marketers need to be given the confidence to make drastic shifts. While we’re certainly in BETA mode for some time to come, standards and measurement benchmarks will help give marketers confidence in making decisions towards digital. We have the once in a lifetime chance to go by trial and error, learn as we go. This shouldn’t be seen as an impediment but an encouragement to do things that make a difference.

This has to be some kind of a record for self-referential narcissism clustered on the use of what could easily prove to be a faddish Web app. Active China-based users of Twitter, who’ve apparently been identified and placed on a list by major Twitter-addict Christine Lu (the California-based founder of the China Business Network) have now been subjected to a sort of statistical analysis by my buddy Elliott Ng here. Elliott contributes to the group blog CNReviews, where his study is posted. Joining him in this blog project is the proudly polyglot, Chinese-born Swiss national Mac enthusiast named David Feng who, as is easily discerned by the content of his prolific posts on Twitter, has what I’d charitably describe as an unusual obsession with Beijing’s subway lines and stations. David, who I’ve not yet met,  was also one of the organizers of a Beijing “Tweet-up,” in which addicts gathered in a local English-language bookstore/lending library and — you got it — sent Twitter messages to one another and to others who happened to be following them.

Each to his own, of course. But am I wrong in thinking that there’s something not quite healthy and weirdly solipsistic about this? Mind you, I do find Twitter useful, as I made clear in a post of mine last week — a post which, as if to prove the point it made, rode a wave of Twitter-distribution to become one of my most widely-read posts to date. But if we all start looking like a bunch of excitable dorks (which many clearly are) we’ll scare away people who actually might make truly useful contributions — links to great stories, life hacks, great recommendations on apps or software or books or eats, real insights into the things that matter: things predicated on actually having a life.

Will the three-way battle for supremacy now raging in China’s video sharing marketplace between Tudou, Youku, and 56.com  — some would include a fourth, Ku6.com — ultimately be decided by the respective size of the combatants’ war chests? In this costly contest, money certainly matters: without significant content differentiation, delivering a glitchless user experience is really the way to win, and that costs money for bandwidth, for servers, for content delivery networks (CDNs — either your own or offered by third parties). For consumers, this is great: All the major Chinese video sharing sites deliver very smoothly, at least within China.

If, as the Roman rhetorician and statesman Cicero famously said, “endless money forms the sinews of war,” then Shanghai-based Tudou’s new infusion of cash has given it some stout sinews. I won’t out the investors here — not the new ones, anyway, who’ve followed earlier investors IDG, Granite Global Vetures, and General Catalyst in putting in new money at what’s said to be a $150 million valuation. But hats off for being able to close this round during the harrowing run-in with SARFT, which some have described as a near-death situation for Tudou. Instead, I’ll just post below the English translation — theirs — of the press release I just got from the company announcing their new round.

Recently there have been lots of rumors in the media about our funding. Originally we didn’t plan on making a big announcement, but it seems our silence only generated more questions and speculation, so we thought it best to issue an official statement confirming that we have closed our fourth round of funding.  Our “Series D” (as they call it) was for an additional $57 million USD, which we see as sufficient to support our expansion plans for a significant time going forward.  We were very happy that our existing investors decided to double-down on us by re-investing in this round, and we were also very happy to welcome a couple of new investors, family and venture funds from Singapore and the US who prefer to remain unnamed for now.  In addition to our earlier funding rounds (500k, 8.5M, and 19M), we’ve now raised a total of $85 million.

Everybody knows that video sharing websites require a huge amount of bandwidth and servers to maintain a good service level to users; and as the #1 video sharing website in China, Tudou needs the most bandwidth and servers of all. Users constantly want faster delivery and higher resolution videos, which although expensive we are happily doing by rolling out H.264 high definition videos across the entire site.  With over 100 million clip views & page views to over 10 million unique users every day & over 60 million unique users every month, we support a huge amount of high definition videos streaming out to about a third of China’s 175 million broadband internet users.

We know $57 million sounds like a lot – and is probably the largest amount ever raised for a pure-play Chinese Internet company in one round – but actually we turned down offers of even higher funding, because this industry is not about raising more money.  We believe that the healthy development of China’s video sharing industry is about providing better services to users, advertisers, and content creators.  This round of funding will allow Tudou to create a business model that lets media-hungry consumers demand their entertainment anytime and anywhere, allows advertisers to target demographics precisely and accurately, and fosters innovative content creators to receive just compensation.

Video sharing has come to a critical junction in its development as an industry.  With this new round of funding, we now have the resources to patiently build up a solid business model and a healthy, viable ecosystem for all of our partners.

Happy 3rd Birthday Tudou, and check out our nominees of our first Tudou Film Festival online, as well as videos of the April 26th party at Moganshan.

Moganshan, at which I was present as a judge (really, just a hander-outer of awards), was a hell of a lot of fun, and thanks to Gary Wang (who’s off soon, with co-founder Marc van der Chijs, to climb Mt. Kilimanjaro!) and Dan Brody (who just completed an half Iron Man triathlon in Hainan) for having me along and for reminding me how I really could be in better shape.

I will, I must add, maintain strict impartiality toward Tudou and the other guys, who I also count as friends.