Chen Xiaochun's livestream sales flop! Appearance fee as high as 500,000 yuan, sales only 5,000 yuan.

Compiled from The Paper
 
Signed a live streaming promotion contract worth 510,000 yuan, arranged for Jordan Chan and influencers to promote together, but only 5,000 yuan in sales after three streams. The merchant sued the media company responsible for the live promotion.

 
 

Case review
In October 2020, a merchant signed a "Double 11 Matrix Live Streaming Promotion Agreement" with a media company. The agreement stipulated that from November 1 to November 11, 2020, the media company would provide 16 live streaming sales promotion events, with 10 executed by influencers with over 10 million total followers and 6 by other celebrity streamers on their internet live rooms. After receiving a promotion service fee of 515,000 yuan, the media company proposed changing the original 16-stream hosts to actual arrangements of celebrity Jordan Chan plus three influencers, and agreed to reduce the service fee by 100,000 yuan, to which the merchant did not give a clear response. On the afternoon of November 5, due to the product link not being uploaded, Jordan Chan's stream lasted only a few minutes before the merchant's products were taken down. Later, the media company arranged for Jordan Chan's assistant to do a make-up stream. After these four streams, the merchant's product sales were only over 5,000 yuan. The merchant sued the media company, and the Guangzhou Intermediate People's Court ruled in the second instance that the media company should return over 410,000 yuan in service fees to the merchant.

 

 
[1] Court Opinion
After the second instance trial, the Guangzhou Intermediate People's Court held that the "Double 11 Live Streaming Change Notice" changed the original contract's 16 streamers to 3 internet celebrities and Jordan Chan, but also stated that other contract terms remained unchanged. That is, the "Double 11 Live Streaming Change Notice" only reduced the number of streamers to be involved, but did not change the number of live streaming sessions from 16 to 4.
 
The court determined that since the "Double 11 Live Streaming Change Notice" only reduced the number of streamers to be involved, with other contract terms unchanged, the ROI guarantee agreed in the original contract should naturally continue to apply. Second, according to the ROI guarantee in the contract, the minimum guaranteed live streaming sales were over 1 million yuan, but the actual sales after the live stream were only 5,000 yuan. Continuing to perform the contract by having the media company make up 3 sessions clearly could no longer achieve the contract's purpose. Therefore, the massager company's request to no longer require make-up sessions and to demand a refund was reasonable, and the Guangzhou Intermediate People's Court supported it.

The Guangzhou Intermediate People's Court's final judgment held that the massager company's request for a refund based on the proportion of unstreamed sessions was reasonable, meaning the media company should refund a total of 418,437.5 yuan (515,000 yuan * 13/16) to the massager company.

 
 

 
Civil Code of the People's Republic of China
[6] Article 509
The parties shall fully perform their obligations in accordance with the agreement.
 
[6] Article 543
The parties may modify the contract upon mutual agreement.
 
Article 563: Under any of the following circumstances, a party may rescind the contract:
(4) If one party delays performance of its obligations or commits other breaches that frustrate the purpose of the contract;
 
 
[1] The author's perspective
From this case, the media company did not negotiate the changes with the merchant, so it cannot be presumed that the merchant agreed to only four live streams. The media company claimed that the voluntarily reduced 100,000 yuan was the result of reducing the number of live streams, but the reduction in amount was severely disproportionate to the reduction in streams. Therefore, the media company's change from 16 to 4 live streams has no legal effect on the merchant and constitutes a breach of contract.
 
Furthermore, during Chen Xiaochun's live stream, the product was removed due to a link issue, which can be considered a live-streaming accident. Subsequently, the media company arranged for Chen Xiaochun's assistant to do a replacement broadcast. The media company's use of an assistant instead of Chen Xiaochun clearly deviated from the agreement, and the assistant's streaming effect could not equal Chen Xiaochun's, failing to meet the agreed influencer traffic requirements. Thus, both Chen Xiaochun's live stream and the assistant's replacement broadcast should be deemed unsuccessful. According to the contract, the media company was obligated to arrange 16 streams, but only 3 were successfully conducted, constituting a serious breach.
 
It is evident that in such influencer-driven sales contracts, certain items require special agreement, such as the influencer, number of streams, platform, method, and timing. The contract should also specify the goals or effects to be achieved during the live streams. During contract performance, one party's communication should be promptly and clearly responded to by the other party to avoid misunderstandings.