Monopoly without market, subsidies without subscribers: Guo Quanzhong on state media

Media scholar and former state-run news group executive explains the enormous challenges confronting China's mainstream media

The buzzword in China’s state media industry now is 系统性变革 systemic transformation, a full year after the word was included in the Resolution of the 3rd Plenum of the 20th Central Committee of the Communist Party of China on further deepening reform comprehensively to advance Chinese modernization

We will improve the spokesperson system, develop content production and communication mechanisms as well as assessment systems for all forms of media, and promote a systemic transformation in mainstream media.

Why is a systemic transformation necessary? Because the situation is dire.

Listen to Guo Quanzhong, Professor at the School of Journalism & Communication, Minzu University of China and formerly Board Secretary and Director of the Investment Advisory Department at China Press and Publishing Media Group, and Deputy Director of the Strategic Operations Department at Nanfang Media Group in Guangdong Province.

Guo has launched a brisk WeChat series skewering the transformation of China’s mainstream outlets—state-owned newspapers and broadcasters under various tiers of government—which, for all their privileges in licences and fiscal subsidies, command scant loyalty. Meanwhile, platforms such as WeChat, Weibo, and Douyin have become the country’s most popular and lucrative purveyors of information.

The culprit, he argues, is both institutional constraint and the internet’s steady gravitational pull. Audiences have migrated to platforms; the platforms, not news outlets, own the users’ loyalty. Advertising, in turn, follows distribution rather than reportage.

He also punctures a cherished newsroom conceit: content is a necessity, but news is not. News is a narrow, perishable slice of content, whereas entertainment, knowledge, and services are what he believes win wallets. Add overstaffed newsrooms, thin reporting, and low technical capacity, and the mainstream media’s business model collapses.

Below are selections from Guo’s series of short posts on his personal WeChat account, 全中看传媒.

—Yuxuan Jia

主流媒体系统性变革系列谈

Series on the Systemic Transformation of Mainstream Media

主流媒体系统性变革系列谈之7:用户连接失效

No. 7 The Failure of User Connection

The primary reason mainstream media have fallen into systemic difficulty is the failure of user connection. It is no exaggeration to say that mainstream media today lack a sizeable user base and have effectively been abandoned by their audiences.

1. Mainstream media have neither users nor audiences

The traditional audience base that mainstream media relied upon for survival has completely migrated to the internet, resulting in a near-total loss of traditional readership and viewership. In other words, the once-loyal groups of readers, viewers, and listeners have now fully transitioned to digital platforms.

The concept of the “user” is a personalised and data-driven notion, formed through technologies such as big data and artificial intelligence. Internet platforms, leveraging strong technological capacity and sophisticated user operation mechanisms, have acquired hundreds of millions of users.

In contrast, most mainstream media lack platforms that enable user accumulation and retention, and are unwilling to invest substantial resources in user operations. As a result, their user bases are tiny compared with those of internet platforms, and a significant proportion of their mobile apps have effectively become “zombie” apps.

While internet platforms make heavy investments in user operations, mainstream media typically suffer from three deficiencies: a lack of funds, a lack of understanding, and a lack of resolve.

2. Followers of mainstream media on internet platforms belong to the platforms, not to the mainstream media themselves

Today, many mainstream media accounts boast tens of millions or even hundreds of millions of followers on various internet platforms, and some mistakenly believe that these followers constitute their own users. This is a fundamental misconception.

There is a substantial difference between followers and users. Internet platforms possess multidimensional user data, enabling them to build precise user profiles, provide targeted product and service recommendations, and thereby achieve commercial monetisation.

Mainstream media, on the other hand, can only access limited, aggregate-level information such as follower counts, gender ratios, or geographic distributions. Some may also collect device information, but these are insufficient for building effective individual profiles or realising meaningful commercial value.

While it is both useful and necessary for mainstream media to leverage internet platforms to expand their reach, it is unrealistic to expect such external dependence to enable a reconstruction of their own business or profit models.

3. Mainstream media lack effective platforms for retaining and engaging users

Although many mainstream media frequently emphasise being “user-centred,” in practice they fall short in several key areas: first, they lack a deep understanding of what a “user” truly is; second, their technical platforms and mobile applications have weak user retention capabilities; and third, they lack both the operational expertise and financial investment necessary for effective user management and engagement.

The root cause of mainstream media’s deep crisis lies in the failure of user connection, and the fundamental solution lies in rebuilding that connection. To accomplish this, mainstream media must first understand the true nature of the “user” and recognise their conceptual blind spots—avoiding the trap of being like Lord Ye, who professed to love dragons but feared them in reality, don’t just adopt the look/stance of transformation without substance.

主流媒体系统性变革系列谈之8:商业模式和盈利模式坍塌

No. 8 The Collapse of Business and Profit Models

At present, the collapse of business and profit models in China’s mainstream media has become an undeniable fact. However, there has long been debate over its causes. Some attribute it to external environmental factors, others to institutional constraints, but in recent years, the explanation that has gained the widest acceptance is that of internet disruption.

1. Neither the “external environment” nor the “institutional constraint” fully accounts for the collapse

In the United States, newspaper advertising revenue began to experience a precipitous decline in 2008, while in China, newspaper and magazine advertising revenue started its own cliff-like fall around 2012. At that time, there were three main explanations for the sharp decline: the external environment, the institutional constraint, and the internet disruption.

The external environment explanation attributed the decline to the global financial crisis that hit developed Western economies in 2008, suggesting that both Western and Chinese media industries suffered from deteriorating macroeconomic conditions. However, this argument fails to explain why internet advertising revenue was soaring during the same period. If the root cause were the external economic environment, then internet advertising would have suffered equally.

The institutional constraint explanation argues that the state-owned structure of China’s mainstream media created built-in limitations. Yet this theory cannot explain why mainstream media in Western developed countries, which operate under fully market-based systems, also experienced a dramatic revenue collapse.

By contrast, the internet disruption explanation offers a far more comprehensive explanation. It accounts for both the decline of traditional mainstream media and the simultaneous rise of internet-based media. Had traditional mainstream outlets at the time recognised the internet’s destructive impact on the traditional media order and taken decisive steps toward a full-scale digital transformation, perhaps the outcome would not have been so severe as it is today!

2. The once-effective “secondary sales” business model has completely collapsed

In the past, mainstream media relied on a “secondary sales” business model. The first sale involved selling content to audiences, while simultaneously serving a communication function; The second sale involved selling that communication function to advertisers.

However, as audiences fully migrated to the internet, mainstream media lost their position as the primary gateway for information consumption, and their communication function was almost entirely stripped away. Consequently, advertising revenue plummeted, and the once-successful “secondary sales” model completely collapsed.

In summary, the business and profit models of China’s mainstream media have collapsed beyond repair, and the fundamental cause of this collapse lies in the disruptive impact of the internet.

主流媒体系统性变革系列谈之9:收入断崖式下滑

No. 9 The Cliff-Like Decline in Revenue

Since 2012, advertising revenue for China’s mainstream media, including newspapers and magazines, has experienced a precipitous decline, and in subsequent years, broadcasting and television have followed the same downward trajectory. According to data published by the Finance Department of the National Radio and Television Administration (NRTA), in 2023, China’s radio advertising revenue reached 6.731 billion yuan, a year-on-year decrease of 8.70%, while television advertising revenue stood at 51.635 billion yuan, down 6.67% from the previous year.

The data for 2024 has not been officially released, and it is reasonable to infer that the numbers were likely too discouraging to publish! Meanwhile, data from the State Administration for Market Regulation (SAMR) show that in 2024, China’s internet advertising revenue reached 891.91 billion yuan, up 24.0% year-on-year, accounting for 86.5% of total media advertising revenue across all platforms.

1. The value of traditional scarce resources has been fully diluted, leading to a cliff-like decline in income

The fundamental development model of China’s mainstream media has long been one of “resource-based development.” In other words, these outlets have relied on their institutional advantages to obtain scarce resources as a way to offset the internal constraints of the state-owned system. These resources mainly include publication licenses, book numbers (ISBNs), and broadcast channel frequencies, which are monopolised by the state and allocated to mainstream media organisations at various administrative levels through administrative approval.

However, the advent of the internet completely shattered this monopoly, resulting in the devaluation and eventual obsolescence of these once-scarce resources. Consequently, the revenue derived from them has experienced a steep decline.

2. Advertising follows the distribution channel, not the content

Many mainstream media professionals still fail to grasp the fundamental relationship between advertising, content, and distribution channels. Some still harbour the illusion that producing high-quality journalism can help them win back advertising revenue, without realising a simple truth: advertising follows the distribution channel, not the content.

In the past, mainstream media profited immensely from advertising because they not only produced content but also controlled distribution channels, achieving a dual monopoly. With the rise of the internet, however, content and channels became separated. Mainstream media still produce content (mainly news), but the channels are now dominated by internet platforms, which have consequently absorbed the majority of advertising revenue.

3. Mainstream media are now largely kept afloat by government subsidies

According to the NRTA Finance Department’s report, in 2023, China’s total traditional broadcasting and television advertising revenue stood at 58.366 billion yuan, while fiscal subsidies amounted to 99.854 billion yuan. In 2024, fiscal subsidies still reached 99.671 billion yuan. Without such subsidies, most broadcasting and television outlets nationwide would struggle to survive.

Similarly, China’s newspaper and magazine sectors are now largely sustained by Party newspapers and journals, whose primary income derives from administrative subscriptions—essentially a disguised form of fiscal subsidy.

In short, the internet has eroded the value of the scarce resources that once underpinned the financial strength of China’s mainstream media, leading to a drastic revenue collapse. Today, the vast majority of mainstream media are essentially kept afloat by fiscal subsidies from different levels of government!

主流媒体系统性变革系列谈之10：体制机制不兼容

No. 10 Institutional Incompatibility

As wholly state-owned entities, mainstream media in China operate under a model of “public institutions managed with enterprise-like mechanisms.” At the same time, they carry strong ideological attributes. These characteristics give them a triple identity as state agencies, public institutions, and enterprises. This hybrid institutional structure has made it difficult for mainstream media to achieve full market-oriented transformation, let alone build genuinely market-driven internet media platforms. The media reform practices of the 21st century have already provided ample evidence of this incompatibility.

1. Purely market-oriented internet media require a privately led institutional and operational mechanism

The development of a truly market-oriented internet media enterprise requires several key conditions. First, a founding team with a very strong sense of innovation and willingness to take risks. Second, a highly effective incentive and constraint mechanism that provides strong motivation. Third, a rapid and flexible decision-making process. Fourth, a well-functioning investment and financing system capable of mobilising large-scale capital quickly. And finally, a fully market-oriented operational system. Such institutional and organisational arrangements can only be realised under private ownership.

2. The state-owned system and mechanisms are incompatible with purely market-oriented internet media

First, internet media require substantial capital inflows to sustain rapid expansion. However, mainstream media find it extremely difficult to raise funds, particularly from private investors. Second, their decision-making processes are lengthy and inefficient. By the time a decision is finalised, external market conditions may have already changed dramatically. Third, they operate with limited autonomy. Fourth, the current total wage cap system prevents them from offering competitive salaries to attract the high-end technical talent needed for digital transformation. Fifth, leadership teams often lack sufficient incentives; their innovation awareness is weak, while risk aversion is strong.

Because mainstream media are embedded in a state-owned institutional framework and have strong ideological attributes, they face extreme difficulty entering the high-risk, fully market-driven internet media sector effectively. This explains why, despite establishing their own internet platforms early on, after more than two decades of development, mainstream media remain vastly outscaled by purely market-driven internet giants！

主流媒体系统性变革系列谈之11：人才能力结构化不匹配

No. 11 The Structural Mismatch in Talent and Capabilities

Talent is the key support for the systemic transformation of mainstream media, but today’s mainstream media not only suffer from overstaffing, their talent and capability structures are also misaligned with the requirements of systemic reform！

1. Severe overstaffing in mainstream media, with the least capable staff entrenched in bottom-tier editorial and reporting posts

Judged against both the publicity needs of Party committees and governments and actual market demand, it is no longer feasible to sustain the vast number of mainstream media outlets and their massive workforces nationwide. Overstaffing has become a serious problem. From a business operations standpoint, if mainstream media were benchmarked against internet-based outlets, headcount could be reduced by at least one-third and even by half, with competitiveness likely to improve after such streamlining.

From an employment perspective, mainstream media, especially its editorial and reporting posts, have to a certain extent served as a reservoir for surplus labour. In the absence of effective exit mechanisms within the public institution system, and given the lack of performance incentives (“whether you work hard or not makes no difference”; “the more you do, the more mistakes you make”), severe overstaffing has been the inevitable result. Meanwhile, the most capable employees leave for government agencies or the private sector in search of better opportunities, while the least capable remain trapped at the bottom of the organisation.

From a national investment perspective, mainstream media, beyond their access to monopolised and scarce resources, receive substantial fiscal subsidies each year. In 2024 alone, broadcasting and television media at all administrative levels in China received 99.671 billion yuan [14 billion U.S. dollars] in fiscal subsidies. Yet across-the-board subsidies do not address the root causes. There is an urgent need for supply-side reform to ensure that scarce fiscal resources are deployed where they can generate the greatest impact!

2. The existing talent structure of mainstream media no longer meets the needs of systemic transformation.

Undoubtedly, the majority of employees in mainstream media are competent. However, most developed their skills in the traditional media era. In today’s era of the internet and artificial intelligence, a significant proportion now have skill structures that are no longer aligned with the demands of this new era. This structural mismatch in talent makes it difficult for mainstream media to support their transformation into the internet era.

The talent mismatch in mainstream media is mainly reflected in the following aspects. First, internet media are essentially technology companies that rely heavily on technical talent and strong technological capabilities. Mainstream media, by contrast, are traditional news organisations that not only lack sufficient technical personnel but also technological competence.

Second, employees in internet media typically display a strong internet mindset and high digital fluency, whereas most mainstream media staff come from traditional backgrounds and lack sufficient understanding, awareness, and competence in this domain.

Third, internet media face fierce competition that demands continuous innovation; mainstream media, particularly those in the state system, face little effective competition, fostering a widespread “lying flat” mentality.

Finally, internet media depend on ecosystem-based operations that require new products, new services, and user engagement, while mainstream media suffer a severe shortage of professionals capable of managing such operations!

主流媒体系统性变革系列谈之12：新闻能否再造商业模式与盈利模式？

No. 12 Can News Rebuild Its Business and Profit Model?

During the systemic transformation of mainstream media, many people advocate the principle of “content is king,” believing that news production can serve as the foundation for rebuilding business and profit models. However, this notion is destined to fail for several simple reasons. First, news is not the entirety of content but only a small subset of it. Second, news is not a necessity, whereas content in general is. Third, mainstream media lack strong capabilities in producing hard news.

1. Content is a necessity, but news is only a small subset of content

“Content” is an all-encompassing concept that satisfies the diverse needs of users, encompassing both essential and non-essential demands. It includes entertainment content, knowledge-based content, and commercial or service-oriented information that provides direct value to users. In this broad content ecosystem, news is merely a small subset.

The simplest criterion for determining whether something is a “necessity” is whether users are willing to pay for it. Content, undeniably, is a necessity. From paid memberships of general entertainment platforms such as Tencent Video, iQIYI, Youku-Tudou, Mango TV, and Tencent Music, to knowledge-based paid services such as CNKI and Dedao, and to subscription-based business media like Caixin, which provide direct commercial value to users. All these examples demonstrate that users are indeed willing to pay for content.

2. News is not a necessity, and it is difficult for Chinese news outlets to adopt subscription models

China’s news industry began experimenting with paywall models long ago, learning from foreign media practices. However, at present, only a few outlets have managed to sustain this model, such as Mango TV, Caixin, and Southern Weekly. Among them, Mango TV has over 70 million active paid subscribers, but its core offerings are general entertainment content, not strictly news. Caixin employs a hard paywall, while Southern Weekly uses a soft paywall approach.

In the course of digital transformation, it is virtually impossible for news organisations to compete with internet platforms in terms of traffic. In theory, the subscription model offers a viable path forward. But in practice, only a few outlets like Caixin and Southern Weekly have succeeded. The reasons are clear. First, most domestic news organisations lack the capacity to produce high-quality, original journalism. Second, news itself is not a necessity; as a perishable commodity, it rarely provides users with sustained or in-depth value, leaving them unwilling to pay. Third, weak copyright protection and the high degree of content homogeneity further erode users’ willingness to subscribe. Finally, simple factual or current-affairs news is not protected under China’s Copyright Law.

In summary, news is not a necessity. Therefore, if mainstream media hope to rebuild viable business and profit models, they must seek alternative pathways beyond news production!

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