On January 25, Stephen Park, CEO and co-founder of Asian Boss, revealed in a video that the company is still months from closure.
The South Korean media company produces free videos highlighting Asians' stories to fill social and cultural gaps.
In the video, Stephen revealed that he has so far laid off 40% of his employees and made wage cuts for the remaining employees. They have also moved to a smaller office to extend their lifeline.
To seek help from fans in keeping the company alive, they launched a GoFundMe campaign with a target of $ 700,000.
The funds will provide enough runway for the rest of the year. Stephen also stated that it will give them more time to improve their business model.
So what made this bad cash position?
1. Your videos have been demonetized by YouTube
As mentioned earlier, Asian Boss is a channel that delivers authentic content highlighting sensitive topics across Asia that the mass media may not be reporting on.
Stephen said that producing such content resulted in YouTube demonstrating a lot of their videos. Many may have been deemed inappropriate by YouTube's ad-friendly guidelines.
This has likely affected their chances of monetization through video ads, which can come in many forms. It seems that Asian Boss didn't give monetization any other priority, so losing that source of income didn't help their current situation.
It was my fault as CEO. I focused too much on creating quality content and paid little attention to monetization. Now we face the opportunity to shut down Asian Boss forever.
Stephen Park, CEO and Co-Founder of Asian Boss.
2. You relied too much on funding
Despite the demonstration on YouTube, Asian Boss managed to find investors who believed in their vision. But when the pandemic hit, they led their investors into bankruptcy themselves. As a result, the company is now months away from running out of money.
While funding can be good news, relying on it just to get your surgeries done isn't sustainable. Funding is usually meant to help startups grow quickly and reach a point of profitability.
Therefore, startups need to be careful about relying only on funding as companies cannot stay in business without making a profit. However, media companies in general can struggle to make a profit, but more on that later.
3. You didn't run Asian Boss like a company
You are actively producing several videos a week
After years of crawling out of nowhere and learning how to film from scratch, the company has grown.
They were finally able to report stories from 7 Asian countries to give the audience raw insights into news and cultural trends, and publish multiple videos from different countries each week.
It won't be cheap to run a company with its own teams spread out in different countries, and salaries need to be taken into account. Additionally, the cost of running the business seems to be heavily dependent on its investors, with monetization offering little or no help.
Asian Boss raised over $ 660,000 from fans, but those went to various social causes instead. He admitted that they were so focused on taking care of the less fortunate and creating quality content that he neglected to run his own business.
It's not easy to profit as a media company
Aside from using video ads, there are other ways media companies can make money on YouTube. One of them is through subscription models like offering channel memberships.
Here, members make monthly payments in exchange for special perks that are offered, such as additional behind-the-scenes content provided by Vox.
Vox members can enjoy additional premium content
This provides content creators with a stable, recurring revenue stream that can reduce production costs.
Developers can also sell merchandise such as t-shirts and hoodies on YouTube. It works as a two-pronged approach as it is a form of easy marketing when fans wear it in public. But of course that means that the creators have to spend money to even produce goods.
It's safe to say that when it comes to paying for content only, people accept less because there are plenty of free alternatives. This also applies to off-YouTube content.
To justify a fee, media companies need to ensure that their content is of higher quality and cannot be found anywhere else.
But in order for their content to be monetized, it needs to be seen. As a result, some media companies may spend more of their advertising budget to market their products directly to their customers. Check out the sponsored articles and videos on websites and social media channels.
By seeing content by more people, it leads to higher viewership, which leads to more paying advertisers in the form of affiliate links, sponsored content, and banner or video ads.
Of course, this vicious cycle of advertising is just one of the ways media companies make money. However, there are other ways that have helped achieve profitability.
In November last year it was reported that Media Prima Bhd had a net profit of RM12.43 million. It was for the 3rd quarter that ended September 30, 2020.
However, due to the pandemic, little was earned from advertising. Other sources of income came from smaller owned companies such as the e-commerce CJ Wow Shop.
The Star Media Group Bhd (SMG) achieved a net profit of 26.9 million RM in the 3rd quarter on September 30th.
However, their profitable year was also supported by compensation from a legal dispute amounting to 50.5 million RM. Despite these results, these groups had struggles of their own for years.
Media Prima suffered a net loss of RM 24.16 million in 2019, which resulted in operating costs being reduced by laying off more than 800 employees in June 2020.
In December 2020, after the profitable third quarter, SMG also laid off over 100 employees in a downsizing process.
To further diversify sources of income for years to come, The Star Online has launched a paywall for their articles.
Tech in Asia could finally give bonuses to its employees in 2019 / Image Credit: Tech in Asia
This can be helpful for the group's income, as well as for Singapore's Tech in Asia, which turned in their first profitable year in 2019.
It came 7 years after its chief correspondent and former CEO, Terrence Lee, joined the publication in 2013. It was also after several rough patches that led to layoffs that funding couldn't save.
Every business has its own rough spots and has to go through pivots to get them out. Asian Boss is no different.
While the news is solemn, I hope their crowdfunding program gives Stephen more time to find ways to monetize and rethink their business model and approach as a media company.
The lessons he learned and shared can also be practiced by other media companies that are in a similar battle.
- You can find out more about Asian Boss here.
- You can read about Malaysian startups here.
Featured Image Source: Stephen Park, Asian Boss CEO and Co-Founder