In China, The Digital Content Business is Booming
We Americans aren’t the only ones devouring digital content on our e-readers. China’s digital content industry, like most everything else in China, is growing rapidly.
But readers in China have a slightly different approach to content creation from ours, and I have to admit it’s one I slightly envy. While self-publishing continues to emerge slowly into the popular literary tradition in the West, user-generated content in China enjoys widespread popularity on e-readers and bestseller lists across the country.
China’s Innovative Publishing Model
According to the China Internet Network Information Center (CNNIC), online literature readers in China reached 195 million in 2010, up 32.38 million from the previous year. Since then, public transportation riders have probably noticed the growing number of fellow passengers whose eyes are glued to their digital readers every day.
The growth in digital literature is partly due to the publishing industry’s use of a proven business model. Game and music service providers made fortunes during the early days of widespread internet use in China. They convinved low-end Chinese users to spend 1 Yuan (approximately 16 cents) for a mobile ringtone or 5 Yuan for an hour of gaming, and the revenues added up quickly.
Online literature producers took note, believing that Chinese users would also be willing to pay for literary content. Comparable prices were set, valuing a 100,000-character book at 2-3 Yuan. These bite-sized books fit perfectly into a busy, fragmented life, where reading is likely to take place between subway stops and while waiting in line.
The Rise of C2C Publishing
In China, literature websites are consumer-to-consumer (C2C) digital self-publishing
platforms where registered contributors sell self-written novels directly to readers. These popular websites are attracting 40 percent of China’s Internet users per month.
The so-called “freemium” literary websites publish thousands of web serials from a wide range of genres–everything from historical epics to science fiction. Often, these serials start out free, allowing a reader base to form. When a serial approaches critical mass, the author is invited to become a “VIP,” and readers begin paying for the new installments. The industry is all about entertainment, and writers focus mostly on fiction.
When the companies charge users to read the content, they share the earnings with writers. For example, Kanshu charges 0.03 Yuan per thousand Chinese characters
and gives 0.02 to authors, keeping the remaining 0.01 for themselves. The site has 3 million registered users and 2 thousand registered writers, and it makes millions of RMB each month.
Investors have noticed the rise in user-generated e-books, too. Sequoia Capital China
invested RMB 27 million in Kanshu last year. Kanshu, which means “read books” in Chinese, wasn’t the first company to use the C2C publishing model, though. CMFU, an amateur writers’ union, launched Qiandian in June 2002 and started charging for content in 2003. Qiandian charged up to 0.02 Yuan per thousand characters, allowing writers to keep 50 – 70 percent of total revenues. In October 2004, Shanda Literature acquired Qidian; at the time of acquisition, Qidian reportedly had 10,000 contributors and 14,000 literary works.
And how do these micro e-books stack up to traditional literary works? Two of Qidian’s most successful titles, “Gui Chui Deng” (“Ghosts Blow Out the Light,” published in 2006) and “Xing Chen Bian” (“Legend of Immortal,” published in 2008), were put into print and licensed to film studios. Not too shabby for a peer-to-peer publishing model.
China’s Publishing Industry Dodges The Napster Effect
Perhaps the biggest accomplishment of the C2C publishing industry in China is its
ability to thrive even while readers can access content for free. China has a problem with illegitimate free channels where readers can download content without paying for it–similar to the problem music creators faced during Napster’s heyday.
Although these illegitimate channels are available, Qidian gained RMB 60 million from
paid users in its first year after being acquired by Shanda Literature.
The Future of C2C Publishing
What’s next for the C2C publishing model? This new era of writing and reading has
already affected the very nature of literature. Since so many people read the novels on their mobile phones, the content is much shorter and more concise, and the serial format is becoming especially popular.
According to Publishing Perspectives, Shanda Literature has its sights set on the U.S. market. Would you like to see freemium and C2C literature in the U.S.? Share your opinions in the comments section below.