Acceleration of Copyrightization in Short Drama Platforms: Analysis of the Impact of Content Audit Costs on Platform Profits

China’s short drama industry is undergoing a transition from barbaric growth to standardized development. With stricter regulatory policies and intensified market competition, the platform copyrightization process has accelerated significantly [1]. This trend is mainly reflected in the following aspects:

• Since 2024, the State Administration of Radio and Television and other departments have strengthened special rectification of online micro-short dramas, requiring platforms to establish a sound content audit mechanism
• Unregistered short dramas are not allowed to be launched and disseminated, pushing platforms to increase investment in compliant content

• Leading platforms such as Yuewen Group and Kuaishou are accelerating the layout of high-quality content
• IP operation revenue has become an important growth engine; Yuewen Group’s IP operation revenue increased by 34.2% year-on-year to 3.9912 billion yuan in 2024 [1]

1. Labor Costs
   : Expansion of the audit team size and increased salary expenses for professional auditors
2. Technology Costs
   : Development and deployment of AI audit systems, and iterative optimization of algorithms
3. Compliance Costs
   : Administrative expenses such as version number application and filing management
4. Copyright Procurement Costs
   : Continuous increase in licensing fees for high-quality IPs

According to Yuewen Group’s 2024 financial report data, revenue costs increased by 15.4% year-on-year to 4.1991 billion yuan, mainly due to increased production costs of films and hit dramas [1]. This reflects the overall upward trend of content production and audit costs.

• The rise in content audit costs directly compresses the gross profit margin space of platforms
• Yuewen Group’s operating profit decreased by 6.1% year-on-year to 985.4 million yuan in 2024 [1]
• The proportion of sales and marketing expenses rose from 24.5% to 27.8%, further eroding profits

• Copyrightization helps improve content quality and enhance users’ willingness to pay
• Kuaishou’s adjusted profit in the second quarter of 2025 increased by 19.1% year-on-year to 5.6 billion yuan, showing that large-scale platforms still maintain profit growth [2]
• The application of AI technology can effectively reduce marginal audit costs

• Tools such as Kuaishou Keling AI are applied to content production to reduce production costs
• AI audit systems improve efficiency and reduce reliance on manual labor

• Focus on top hit content to improve return on investment
• Yuewen Group’s short drama hit rate has increased significantly, and the GMV of IP derivatives reached 480 million yuan [1]

• Parallel operation of advertising + paid dual models
• Diversified monetization of IP (derivatives, games, live broadcasts, etc.)

The rise in content audit costs does put pressure on platform profits in the short term, but in the medium and long term, the copyrightization process helps the healthy development of the industry. Platforms with the following advantages will stand out:

• Economies of scale
  : Leading platforms dilute audit costs through scale
• Technical capabilities
  : Application of AI technology reduces marginal costs
• IP reserves
  : Platforms with high-quality IP libraries have more competitive advantages
• Ecological synergy
  : Synergistic effects between content and businesses such as e-commerce and advertising

It is expected that the industry will accelerate integration in the future, small platforms lacking core competitiveness will exit the market, and leading platforms are expected to achieve higher-quality growth in a standardized competitive environment.

[1] Yuewen Group 2024 Annual Results Announcement (https://hk.finance.yahoo.com/news/閱文集團公佈2024年年度業績-083100568.html)

[2] Kuaishou Technology 2025 Q2 and Interim Unaudited Financial Results (https://hk.finance.yahoo.com/news/快手科技發佈2025年第二季度及中期未經審核財務業績並宣派特別肦息-085300484.html)