China’s On­line Read­ing Craze Is So Big It’s Chal­leng­ing Ama­zon’s Kin­dle

ForbesWeekly - - NEWS - BY JINSHAN HONG, FORBES CON­TRIB­U­TOR

To Yuwei Pan, a reg­u­lar fix of Chi­nese nov­els on her smart­phone makes her daily com­mute a plea­sure. But these aren’t just nor­mal sto­ries. Chi­nese e-books are of­ten se­ri­al­ized; read­ers wait for the lat­est chap­ters of a story, much like view­ers catch up with the new­est episodes of Game of Thrones.

They also pro­vide an in­ter­ac­tive read­ing ex­pe­ri­ence, where read­ers and writ­ers can dis­cuss and co-de­velop the plot. “I turn to Kin­dle for se­ri­ous books but I go to Chi­nese on­line lit­er­a­ture for imag­i­na­tion, fun and free­dom,” Pan said.

The 21-year-old stu­dent is one of more than 330 mil­lion read­ers of Chi­nese on­line lit­er­a­ture. Mostly un­der 30, they fa­vor gen­res like fan­tasy, wuxia (sto­ries about he­roes and mar­tial arts), sci­ence fic­tion, mys­tery and ro­mance. And it’s only go­ing to get big­ger—the mar­ket has grown by more than 20% an­nu­ally since 2012 to RMB 9 bil­lion ($1.3 bil­lion), ac­cord­ing to the Pub­lic­ity Depart­ment of the Bei­jing Mu­nic­i­pal Com­mit­tee.

China Lit­er­a­ture, Ten­cent’s sub­sidiary and the coun­try’s largest on­line pub­lish­ing com­pany, re­cently filed to go pub­lic in Hong Kong, aim­ing to raise as much as $800 mil­lion for po­ten­tial ac­qui­si­tions and mo­bile ser­vice ex­pan­sion, Reuters re­ported.

“If the at­tempt suc­ceeds, it will demon­strate in­vestors” con­fi­dence in the on­line pub­lish­ing in­dus­try,” said Huang Guofeng, a se­nior in­ter­ac­tive en­ter­tain­ment an­a­lyst at Analysys, an in­ter­net big data ser­vice provider. “It will turn around the bad im­pres­sion – peo­ple used to be­lieve that on­line lit­er­a­ture was full of piracy and couldn’t gen­er­ate any profit.”

Faster Growth Than Ama­zon

In their ap­pli­ca­tion for an ini­tial pub­lic of­fer­ing (IPO), China Lit­er­a­ture dis­closed rev­enue of RMB 2.6 bil­lion ($384.01 mil­lion), up 59.1% from 2015, a rate of growth more than dou­ble that of Ama­zon, who pos­sess their own e-book plat­form, the Kin­dle Store.

The two giants of the on­line pub­lish­ing busi­ness each have ad­van­tages in cer­tain ar­eas. Ac­cord­ing to its com­pany re­ports, China Lit­er­a­ture has more books than the Kin­dle Store (8.4 mil­lion v. 6.9 mil­lion) but a smaller num­ber of writ­ers (5.3 mil­lion v. 14 mil­lion). The Chi­nese com­pany en­joys a read­er­ship of 175.3 mil­lion, while the to­tal num­ber of Ama­zon ac­count hold­ers is around 304 mil­lion. Ama­zon does not share fig­ures for the num­ber of Kin­dle Store users. China Lit­er­a­ture launched its first e-reader in June at a price sim­i­lar to the Kin­dle Paper­white. How­ever, less than 500 de­vices have been sold, ac­cord­ing to Tmall.com, China’s B2C on­line re­tail site. Most peo­ple use their own smart­phone de­vice.

Dif­fer­ences

Un­like the Kin­dle Store, which is es­sen­tially a plat­form sell­ing dig­i­tal ver­sions of main­stream pa­per books, China Lit­er­a­ture has “ev­ery­thing in the vir­tual sphere,” said Shao Yan­jun, an as­so­ciate pro­fes­sor at Pek­ing Univer­sity’s Chi­nese depart­ment. “It is the habi­tat of pure in­ter­net cul­ture, where writ­ers cre­ate con­tent on­line; plat­forms pub­lish nov­els on­line; fans gather, read and share sto­ries on­line.”

The in­ter­ac­tive ex­pe­ri­ence of China Lit­er­a­ture is another main dif­fer­en­tia­tor—most of its con­tent is se­ri­al­ized, which means writ­ers will of­ten pub­lish work chap­ter by chap­ter, some­times al­ter­ing plot­lines based on sug­ges­tions from users. And it’s the dis­cus­sion fo­rum, which sits along­side the

main story, that Pan en­joys most. She re­mem­bers a time when many fel­low read­ers wanted two main char­ac­ters in a novel to be­come ro­man­ti­cally in­volved. Even­tu­ally the au­thor wrote this into the plot. “Se­ri­al­ized works ban­ish the sense of lone­li­ness,” Pan said. “When read­ing on Kin­dle, you are fac­ing a sin­gle ter­mi­nal; when read­ing Chi­nese on­line nov­els, you are en­gag­ing with a com­mu­nity.”

Pop­u­lar And Prof­itable

Chi­nese on­line lit­er­a­ture has been pop­u­lar for a while but only re­cently did it be­come prof­itable. In the IPO file, China Lit­er­a­ture posted its first net profit of RMB 30.4 mil­lion ($4.49 mil­lion) in 2016, an­nounc­ing that its mon­e­ti­za­tion sys­tem had ma­tured.

It all be­gan in 2003 when Qid­ian.com, a brand un­der China Lit­er­a­ture’s wing to­day, rolled out the coun­try’s first on­line read­ing pay­ment scheme. Un­der the sys­tem, read­ers can pay to be­come VIPs and un­lock the most up-to-date chap­ters. With the profit, China Lit­er­a­ture dis­trib­utes con­sid­er­able con­tri­bu­tion fees to its writ­ers, amount­ing to RMB 1 bil­lion ($147 mil­lion) in 2016, as stated in the IPO doc­u­ment. This pos­i­tively af­fects the qual­ity of writ­ing, said Shao.

The Fu­ture

Chi­nese on­line fan­tasies are also go­ing global. The over­seas mar­ket has mush­roomed since 2015, pri­mar­ily led by two trans­lated sites, Wuxia World and Grav­ity Tales. The num­ber of monthly ac­tive users on these sites has climbed to 4 mil­lion—read­ers are from more than 100 coun­tries, with North Amer­i­cans ac­count­ing for one third of that num­ber, Shao wrote in her re­cent pa­per “China’s On­line Lit­er­a­ture Go­ing Abroad: From the Per­spec­tive of Global Me­dia Rev­o­lu­tion”.

The suc­cess in this area does much to con­trib­ute to the coun­try’s grow­ing self-con­fi­dence abroad, ac­cord­ing to Shao. “Amer­ica has Hol­ly­wood; Japan has an­i­ma­tion; Korea has TV drama. In the fu­ture, China will have on­line lit­er­a­ture.”

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