Live streaming E-commerce in China and Its Algorithmic Governance

Live streaming e-commerce is the delivery of e-commerce activities and transactions via a live streaming platform, which involves a space, technology and infrastructure to constitute a cyber environment for streamers to stream and viewers to watch and interact with a streamer (Xu, Wu & Li, 2020:146). Live streaming applications or sites serve as the technical structures that make real-time and interactive communication between streamers and viewers possible (Zou. 2018:807). Recent years have witnessed a dramatic growth of Live streaming e-commerce in China. According to Contaglous's press release, more than 900 live-streaming sites have sprung in China and Alibaba's ecommerce platform, Taobao, boasts 4,000 live streamers, who create 150,000 hours of content on a daily basis. During the annual shopping festival, Singles' Day (11 November) 2019, over 50% of brands on Alibaba-owned retail website Tmall employed livestreaming, generating almost a gross merchandise volume of 20 billion yuan ($2.9 billion). Another press, Innovations That Matters (2020), estimates that in 2021, live streaming will generate more than 500 million sales transactions. The livestreaming market in China is thriving at a surprising speed and has attracted many actors to dive into this blue ocean.

Live streamer, the online salesperson, is undoubtedly the key figure of livestreaming e-commerce. Influencers who have accumulated a considerable number of fans and celebrities who have enjoyed both popularity and reputation possess more advantages in this market. They have greater bargaining power to negotiate with brands for consumers and are independent from MCN agencies. These two groups of streamers have dominated the market. Even though MCN agencies have formed a supply chain to discover and train grassroot live streamers for brands to select, they are only left with a small portion of the market share. The grassroot streamers are situated at the bottom of the food chain in this industry, co-governed and exploited by algorithms. And the other actors, the brands, MCN agencies, and digital marketing agencies are forced by algorithms to exploit the grassroot streamers.

The algorithmic governance of livestreaming e-commerce is close to a governance loop identified by scholars, which includes four stages "collection, processing, utilization, and learning" (e.g., Citron and Pasquale, 2014; Pasquale, 2015; Zarsky, 2013). Specifically, algorithms acquire livestreaming information such as duration of livestreaming, number of viewers, and interaction information such as likes, comments, and forwards. The information will then be processed and learned to allow algorithms automatically decide the visibility of livestreaming channels/rooms and distribute traffic flows within the platform's public area. 

Regardless of the sophisticated computer technologies behind, the logic of algorithmic governance of live streams is rather simple. Algorithms inherent in Taobao decide visibility and allocate traffic flows according to three variables: level of streamers, accomplishment  of official tasks, and quality of content. Level of streamer is evaluated by their duration of livestreaming and performance of professional tasks. Such performance is measured by the number of audiences entering the store, number of items purchased, and volume of transaction generated through the product list in the livestreaming room. Official tasks are assigned to streamers by the e-commerce platform to ensure traffic flow of the platform is well utilized and the livestreaming platform is active. The quality of content is mainly evaluated by its attractiveness that make viewers to stay, buy, and interact with each other in the livestreaming rooms. This observation is consistent with the discoveries of China Potion which conduct deep research on the emerging China technology companies and trends.

References:

Xu, Xiaoyu., Wu, Jen-Her. & Li, Qi. 2020. What drives consumer shopping behavior in live streaming commerce? Journal of Electronic Commerce Research. 21(3), pp. 144-167

Zou, S. 2018. Producing value out of the invaluable: A critical/cultural perspective on the live streaming industry in China. TripleC. 16(2), PP. 805-819.