But if we're to believe the numbers put out by Shanda Literature's head, Hou Xiaoquiang, at the Frankfurt Book Fair last fall, things are even tougher for authors in China than they are in the west.
"Hou said Shanda shares 20 to 50 per cent of the income with authors and now has more than 100
authors who have earned more than 100,000 yuan (14,700 dollars) from
their writing so far," Earth Times reported.
That's right, only about 100 of this new breed of Chinese authors have earned more than $14,700!
Another source of good information on the evolution of the Chinese eliterature market is Shanda's most recent annual report. The company has to declare foreseeable possible problems in its businesses. These risk disclosures always shade apocalyptic, but they nearly always provide an eye-opening overview of the way a business works. Here are the relevant literature snippets.
Shanda Literature faces the risks of uncertainties regarding the growth of the online literature
industry and market acceptance.
Shanda Literature operates an online-reading website where users can read literature published
on the Internet. The online literature business is a relatively new and evolving industry and
concept. Shanda Literature is dependent on authors using its various online platforms, as opposed
to the traditional paperback format, to publish their literary works. As
works online represents a new means of reading literary works, Shanda Literature cannot be certain
that its users will prefer to read literary works online as opposed to the traditional paperback form.
In addition, Shanda Literature cannot be certain that the authors will prefer to publish their
literary works online on one of its literature platforms, as opposed to in paperback form. The
failure of authors to publish, and its users to read, literary works online will likely adversely
affect Shanda Literature's business and prospects.
Shanda Literature's business is dependent on its authors.
The literary works published on Shanda Literature's online literature platforms are written by
independent authors, including a small percentage of whom are responsible for a substantial amount
of its revenues. Most of these authors are not bound by exclusivity restrictions. Shanda
Literature has also recently begun contracting with popular offline authors to produce online
content. If Shanda Literature is unable to retain its most popular authors or if those authors or
its offline authors do not produce content that is appealing to its users, the revenues and
profitability of Shanda Literature could by materially and adversely affected.
Pirated versions of copyrighted content on Shanda Literature may be viewable through other
Pirated copies of literature works that are licensed to Shanda Literature are often posted on
third-party websites. Unauthorized and pirated copies of Shanda Literature's content may reduce the
revenue it generates. Shanda Literature has taken, and will continue to take, a variety of actions
to combat piracy. For example, in March 2010, Shanda Literature filed a copyright infringement case
against Baidu, alleging that pirated copies of five of its novels could be viewed through links in
Baidu search results and on a Baidu message board service. There can be no
assurance that Shanda Literature's efforts to enforce its rights and protect its intellectual
property will be successful in preventing content piracy. Furthermore, litigation in China is
generally expensive and time consuming and the amount of damage rewards are low in comparison to
those in the United States and other developed countries.
Shanda Literature's contracts with China's telecommunications operators
or the policies of the telecommunications operators could harm its
Shanda Literature has begun to offer wireless value-added services ("WVAS") which allow its
users to read literature it publishes over mobile networks. Shanda Literature's WVAS business is
subject to the risk that (i) it may not be able to successfully negotiate favorable terms with the
three principal telecommunications operators in China, China Mobile Communications Corporation, or
China Mobile, China United Telecommunications Corporation, or China Unicom, and China
Telecommunications Corporation, or China Telecom (together, the "telecommunications operators") and
their provincial affiliates, (ii) the MIIT or the telecommunications operators may unilaterally
change their policies and/or the enforcement of their current policies or (iii) the
telecommunication operators may impose higher service or network fees on it, any of which could
have a material and adverse effect on Shanda Literature's revenues and profitability.