Wednesday, November 4, 2009

Shanda Literature - An interesting business model for more than 800 000 authors

Shanda Literature, a subsidiary of Shanda Interactive Entertainment known for its online games, is an online publishing company based in Shanghai, with a very interesting business model.

More than 800 000 amateur authors have been providing around 50 million Chinese characters daily, to Shanda’s literature portals with around 500 million page views daily. Any writer can register with Shanda and post their works on any of its sites. Content is made available as Internet literature, mobile literature, traditional print, and Shanda has also its own E-Reader in development. Most known portals are Qidian, Jinjiang and Hongxiu, targeting different groups of readers with different types of content. Shanda Literature’s original online literature site Qidian has released more than 600 000 online novels.

Revenues are generated from micro transactions, advertising and for non-professional writers copyrights are acquired and licensed to other publishers, mobile, gaming, TV and film industries, with the great majority being from micro transactions. Readers can read the first half of a book for free and then, if they like the book, pay about 2-3 cents per 1000 characters, for the rest of the book. The total cost is about one-tenth of the paperback price to read a book online.

Revenues from micro transactions are shared 50/50 with the authors “that’s why writers in China can make a fortune” says Zhou Hongli, Chief Copyright Officer in the first video below.

The company that was founded in 2007 controls over 90% of China’s online-reading market, and generated $15 million in 2008 from a total readership of 25 million, and is still growing at 10 million new readers per year. It has received awards such as “China’s most promising enterprise”, “One of the ten best Internet brand names of China” and “China’s cutting edge media by Forbes”.

See the last 2 minutes in the video below:

Interview with Hou Xiaoquiang, CEO Shanda Literature. (noisy)

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