The online publishing arm of Chinese internet giant Tencent is facing backlash from its author community over controversial contract revisions which grant the platform unfettered rights to the content it distributes.  

Why it matters: The uproar over e-book publisher China Literature is the latest dispute against Chinese tech giants facing increasing accusations of forcing exploitative rules on its partners by leveraging market monopolies. 

  • The controversy comes on the heels of a major leadership change at China Literature announced on April 27 when the company’s senior founding management team was replaced by executives from Tencent, its largest shareholder.
  • China Literature is the largest player in China’s RMB 20.48 billion (around $2.89 billion) digital reading market with a 25.2% market share in 2019, according to a report from the research institute BigData Research. Second-ranked Ireader holds 20.6% and Alibaba-backed Shuqi followed with 20.4% market share.

Details: Writers contracted to China Literature began to voice their discontent beginning on April 28 about a new contract that began circulating first among writers and then on various Chinese social media platforms.

  • The potential contract included several clauses that were deemed unfavorable or unfair to writers. The most controversial point is the removal of the platform’s paywall for all content on the site in favor of a free content business model that relies on advertisements as its primary revenue source, according to local media reports. The potential move will lower writers’ income, which primarily comes from subscription fees and tips from their readers.
  • Under the revised contract, the authors are required to unconditionally hand over the copyright for all content to the platform, which in turn can license copyright without the authors’ consent.
  • The company confirmed on May 3 that the proposed contract was in fact sent to writers in September, and pledged (in Chinese) to revise the clauses based on user feedback.
  • In the May 3 statement, the company said that paid content is still the foundation of the company, adding that a completely free model is “impossible and unrealistic.”
  • China Literature did not respond to TechNode’s attempts to reach the company for comment.

Context: China Literature, which holds contracts with more than 8 million writers, was founded in 2015 through a merger between Tencent Literature and Cloudary, which Tencent acquired from Shanda.

  • China Literature raised $1.1 billion in a 2017 Hong Kong IPO.
  • In China, an industry chain surrounding online literature intellectual property is taking form. Chinese tech giants Tencent and Alibaba each own their own entertainment ecosystems spanning music, games, TV dramas, and movie production. 

Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.