According to the 2017-2018 China Digital Publishing Industry Annual Report, the overall revenue of the domestic digital publishing industry exceeded 700 billion yuan in 2017, reaching 707.193 billion yuan. Among them, mobile publishing revenue reached 179.63 billion yuan, accounting for 25.4%, second only to Internet advertising revenue. This shows that mobile publishing is still an important development direction of digital publishing and has strong development potential. In addition, in the user statistics of the domestic digital publishing industry, the scale of 2017 reached 1.825 billion people (households/households) (including repeated registration and dusty users, etc.). Compared with 2016, the number of users of Weibo increased by 16.6%, and the number of registered users of original online literature increased by 13.5%.
With the further deepening of China’s digital transformation, the status of mobile publishing as an important development content of digital publishing is increasingly prominent. At the same time, network literature, as the core content of mobile publishing, is becoming more standardized and refined. According to data, China’s online literature market reached 13.02 billion yuan in 2017, up 44.2% from 2016. The number of online literature users reached 378 million, accounting for 48.9 percent of the total number of Internet users.
In September and November 2017, iReader technology and China Literature Group, two giants of online literature platforms, went public in Shanghai and Hong Kong respectively. Among them, The share price of China Literature Group broke 100 in less than half an hour on the first day of trading and closed at HK $102.4 on that day, with a total market value of over HK $90 billion, winning the throne of the most valuable cultural company in China. However, the good times did not last long, The market value of China Literature group soon appeared half, market value is still not over.
This can not help but make people think, what is the rapid development of network literature platform? And what caught the attention of investors? Does this “cut in half” show that there are huge hidden dangers behind the industry? And what’s the secret behind it?
The giant stands erect, the new star rises, the network literature market is full of wings gradually
To reveal the secret behind “cutting in half”, we must first understand the development process of online literature. The early development of Online literature in China can be roughly divided into four periods: the Golden Age from 1998 to 2001, the Silver Age from 2001 to 2003, the Bronze Age from 2003 to 2004, and the Black Iron Age from 2004 to 2005. It is because of these seven years of hard exploration, the network literature market established a preliminary order, but also laid a solid foundation for the development of the network literature platform.
Thus, in 2008, a milestone network literature platform in the history of Chinese network literature — “Grand literature” appeared. Starting from Qidian Chinese website, shanda literature has continuously developed its own literature website, and also acquired a large number of other literature websites such as Xiaoxiang, Hongxiu, Jinjiang, etc., finally making shanda literature in the network literature market share as high as 72%, a moment of infinite scenery, yan pressure qunfang.
However, the development of things cannot escape the truth that “the best must decline”. In 2011, Shanda Literature failed to go public in the US twice. In 2013, the departure of the starting point team headed by Wu Wenhui and the resignation of Hou Xiaoqiang brought a heavy blow to this legendary enterprise. By 2015, its parent company shanda Network had transformed itself into an investment company, and shanda Literature was subsequently sold to Tencent. The proud plum blossom eventually faded from the stage of online literature, joining Tencent Literature to form China Literature, which went public in November 2017, becoming one of the industry’s giants.
And another industry giant palm read technology is completely different from read text group. Ireader technology, also established in 2008, has taken the way of mobile reading since its inception. Moreover, IReader has always been an independent digital reading company, which is the biggest difference between iReader and China Literature group, which has Internet giants as its main participants.
In the first few years, iReader technology focused on its self-developed digital reading APP “iReader”, which has been distributed on Symbian, Microsoft and Android platforms, cultivating a large number of users and standing out among many mobile reading apps, laying a foundation for its future development. In 2012, with the rapid development of smart phones, the market set off a wave of “pay for free”. In order to strive for more users, palm reading platform also adopted a free operation mode. The initial effect is very good, but with the development of the market, the drawbacks after the free wave are increasingly obvious, the development of the industry is facing a crisis.
While other enterprises continue to adhere to the free model, Ireader technology decided to switch to a “fee model.” It is precisely because of this bold transformation that ireader explored a new way of operation, far outperforming other peers, and went public in September 2017, becoming one of the two giants of online literature platform.
In addition, migu Reading and Tianyi Reading, with telecom operators as the main participants, dangdang Reading and JINGdong Reading, with e-commerce as the main participants, also have a large number of users and occupy a place in the online literature platform market. At this point, the development of online literature platform prosperous, a prosperous industry. However, behind the prosperity, the industry is faced with a single profit model, the enterprise is difficult to sustainable development and other problems.
Hidden dangers behind, network literature into IP, also IP defeat
The growth of online reading business, a major source of revenue for online literature platforms, has been slowing in recent years, according to the survey. Industry giant China Literature, for example, saw its online reading business grow 114 percent, 103 percent and 73 percent from 2015 to 2017, respectively. The sudden decrease of the main income limits the development of enterprises, and they have to face up to the drawback of “too single profit model”. The enterprises urgently need to develop new development direction in order to achieve sustainable development.
In this case, copyright operation business is undoubtedly the most suitable. The so-called copyright operation refers to the income generated by reselling the copyright of the work to the content adaptation partner during the term of the agreement, including the cooperation and authorization of film, TV series, network drama, online games and animation production companies. Compared with online reading business, vigorously developing copyright operation business will bring more profits and be more stable. Although the initial investment is large, developing copyright operation business can drive enterprises to establish a benign ecosystem and contribute to sustainable development of enterprises.
It is reported that iRead’s revenue from copyright operations accounted for only 2.20% of its total revenue in 2017, while China Literature’s revenue from copyright operations reached 366 million yuan during the same period, up 48% year-on-year and accounting for 8.93% of its total revenue. It can be seen from the data that China Literature Group is superior in copyright operation, and it is well known in the industry that China Literature Group not only has a large number of online literature platforms, but also provides excellent quality works, which is its natural advantage. However, although China Literature has the largest IP library in China, its development of copyright operation business is not smooth, and even the whole industry is facing no small problem in this direction.
First of all, in the process of IP development, it relies heavily on market demand recognition and is heavily affected by policy. When market demand changes or policy changes, its flow will be greatly reduced, unable to play its due value. Such as “through”, “rebirth”, “overhead” and other themes were banned after shooting, once hot through the novel or no one, or was changed beyond recognition of self-damage signs.
Secondly, the industry as a whole in the IP development mode of the deficiency. So far, China Literature’s achievements in the content operation business rely on the head IP. At the same time, by comparing the proportion of copyright operation business and online reading business in the total revenue of China Literature Group, we find that this group with a large amount of IP wealth still stays in the stage of IP output so far. The same situation is common in the industry, how to change the WAY IP development is another big problem facing the industry.
Finally, due to the crazy and blind pursuit of IP in the current market, enterprises often extract IP resources in a short period of time without proper cultivation after obtaining resources. This approach is no different from killing the goose that lays the golden egg. Not only does it not get the expected results, but it consumes a high-quality IP, such as Choose the Day, The Phoenix Cage, etc. However, good IP is limited. When the high quality IP is almost consumed, the network literature platform will have insufficient sustainability, and the industry will face disaster. Therefore, how to make better use of the HANDS of IP resources, has become an urgent problem for the whole industry.
In addition, in copyright and industry talent structure, there are no small problems. The conflict between copyrighted articles and pirated articles on the Internet, the conflict between producers and authors in IP dramas, and between authors and authors, has exposed the unresolved copyright protection problems in this industry. In terms of the composition of talents in the industry, the new development direction needs different talents. The original marketing and copyright cooperation teams formed by the transformation of the early editing and operation staff of the website can no longer meet the future development of the industry.
To sum up, the upstream content companies are not connected with the downstream operation market, and the industry is not in a good position to explore new business models. How to obtain more profits is another big challenge after the “free wave”, and how to solve it?
Winter has arrived, how to tide over the difficulties of online literature platform?
In October, China Literature announced the completion of its acquisition of new Beauty Media, the producer of Ruyizhuan. However, China Literature’s share price has fallen since the acquisition. Meanwhile, another giant in the industry, IReader Technology, has seen relatively stable development, but its market value is still far from China Literature, whose shares have plummeted. The development dilemma faced by the two industry giants has made investors begin to notice the hidden dangers behind the industry. So how can companies solve these problems? How should online literature platform develop in the future? In this regard, combined with IP development in the industry profit model, the author has the following suggestions:
First, in IP cultivation, enterprises should include content producers.
The development of online literature platform mainly depends on content, which is the core of the development of the whole industry. So it’s important for content companies to continue to export influential IPS. The original authors of network literature are the source power of the whole content industry chain, so it is particularly important to include these content producers in the process of IP cultivation. In this case, the company can tie the author in, and the author works with the content company from the early days of IP incubation. The author who is responsible for the creation shall coordinate with the requirements of the adaptation of films, games and other films in the later period and adjust the trend of the whole work according to the changes of the market. The IP cultivated in this way not only has excellent quality, but also reduces the development cost of the “great god” works, and can provide more suggestions to the growing new authors to help them grow, and cultivate new “great god” for the enterprise.
Second, the industry should step up the upgrading of team talent structure.
While the development of the Internet promotes the rapid development of original literature, the problem of content homogenization is also increasingly obvious, which requires network operators to further strengthen the control of content on the platform. Moreover, in this ERA of IP development, the requirements for editors and operators have increased to have the ability to discover works with prominent IP value and explore the potential value of IP. At this time, the market needs compound copyright broker talents who understand content, operation, marketing, management, law and other aspects of knowledge. Only such talents can cultivate more high-quality works for enterprises, better transform IP into copyright derivatives, create greater profits and attract more capital.
Third, the industry should complete the leap from “IP output” to “IP linkage”.
Cooperative development is an important means of value chain extension, break the trade barriers, open content cooperation, joint industry upstream and downstream, let more professional enterprise involved in the development value link, complement each other, at some point in the creation of new competitive advantage, forming brand set scale effect, the landmark of the enterprise is the Disney and diffuse.
Taking Disney as an example, the company made its fortune from animated films and developed other branch industries from this source. When the company reached a certain stage of development, it began to build a brand new and three-dimensional industrial chain layout, with mutual benefit and mutual assistance between lines, and built a huge kingdom. Associate with domestic enterprises, occupy the leading position within the industry and palm reading, reading can be on the platform operation, content creation, copyright protection Shared communication with other companies, break the barrier of the price, open content cooperation, complete from pure “IP output” to “IP linkage” across, benign competition of the led industry development.
In general, after the initial explosive growth of online literature platforms, the market has become saturated. In addition, there are many problems behind the industry, and the future development faces great challenges. The industry is in urgent need of reform. However, opportunities and challenges coexist, with high risks and high returns. I look forward to the development of Online literature platforms in China in the future!
Article/Liu Kuang public number, ID: Liukuang110, this article first kuang Venture capital network