In China, online literature an industry in flux

(ECNS) -- China's online literature industry has stepped into the best of times and the worst of times, says the Southern Metropolis Weekly.

The number of Internet users in China increased rapidly to 564 million by the end of 2012, resulting in a surge of online literature sites in the last decade.

Cloudary Corporation, the largest online community-driven literary platform in China, epitomizes the state of the industry. Having exuded an aura of wealth and success over the years, it is nevertheless struggling with negative profit growth and dissension among its senior management.

The digital and technological landscape has changed greatly since the first wave of online authors appeared, and readers in China now tend to access novels more frequently through smartphones and tablets rather than desktops.

Cloudary's goal has been to tap the creative and entrepreneurial aspirations of Chinese writers and readers by publishing literary content and spreading it to the greater online community.

The company generates most of its online revenue from charging reader fees for viewer-paid content, as well as publishing marketable writers who can generate revenue through spin-off television, film and video-game deals.

Its six original literature websites provide the latest editions of about 30,000 serials to more than 200 million readers daily, creating opportunities for authors to achieve fame and fortune.

"Ku lou jing ling"(skull elf) is the pen name of an online writer under contract to Cloudary who has benefited from the online literature explosion. In the past ten years, he has earned 17 million yuan (2.74 million US dollars) from about 18 million words.

"Ku lou jing ling" also earns income from companies that have adapted his literary works for online games.

The writer ranked third on the 2012 list of people to become billionaires through online writing. Since its inception, Cloudary has hosted over 1.3 million authors, and had displayed 5.2 million literary works by 2011.

But not all writers are so lucky. In order to achieve success, authors, who often post and write simultaneously, must learn to gauge reader feedback and shift plots as they go.

"You shou"(right hand) is the pen name of a female writer whose contract with Cloudary will expire in a year. "I'm in the middle of the writing hierarchy, faced with dozens of bestselling authors whose yearly incomes reach one million yuan," says Youshou, who has put more effort into publishing her works offline by selling them to TV producers.

Less than one-third of all contract writers will survive, according to Cloudary. The gap between the wealthiest writers and the masses who can barely make a living through writing is huge, says Hou Xiaoqiang, the company's CEO.

"Many of them have abandoned online writing, because they don't see a bright future for the industry any more," he adds.

Anni Baobei, the pen name of one of China's bestselling authors, says online writing has become too massive a market. In the 1990s, she explains, authors who posted their works online were passionately serious about their craft.

But now, "vanity publishing" is rife and anyone can try their hand at online writing. "The internet has become too popularized," she says.

The sheer quantity and speed of online literature means that much will be forgettable dross, The Economist has reported.

Within Cloudary, growing disagreements about the future of the industry led to the resignations of several senior employees in April, including Wu Wenhui and Luo Wen, co-founders of the literature site Qidian, one of six websites operated by Cloudary.

Luo has since plotted a career outside the online literature industry. He says the company in the past three years saw its profits stagnate despite online reader numbers increasing rapidly.

Luo estimates that the overall output value of the industry is less than one billion yuan, and that "the market is saturated," citing the ambitions of Tencent and Baidu.

Wu Wenhui had insisted that Cloudary should focus on establishing a full industry chain rather than original content, which clashed with the company's CEO.

Meanwhile, an industry source has said that Wu has received financial backing from Tencent, and that his team will provide content for the "Man" channel of Tencent's QQ Book Channel.