Smartphones may be killing print in China, but they’re revolutionizing literature. Last year, 333 million Chinese read fiction written for their phones and other devices, according to government data. Some is written by hobbyists and some by professionals. Increasingly, though, it’s hard to tell the difference, as China’s “online literature” morphs into a $1.3 billion industry.

Investors have taken note. On Wednesday, China Literature Ltd., the country’s biggest online publisher, will go public in Hong Kong, with a market value expected to exceed $6 billion. Its success should put the rest of the publishing industry on notice that the future of the book is being written in China -- and it looks nothing like the past.

For decades, China’s publishing industry was dominated by government-owned companies that steered clear of subject matter that might cause controversy. Politics was just the most obvious topic. But sex, romance and violence -- the stuff of so much popular entertainment -- were also generally discouraged. Good books still managed to get published, but formal and informal restrictions severely inhibited creative expression.

Then the internet offered a back channel. In the late 1990s, authors began posting serialized novels to online forums and bulletin boards. It was an informal and largely uncensored way to publish, and some of the early books -- especially romances -- became sensations. Among other factors turning these early serials into hits were the online forums themselves. They were the social media of their time, and parallel commentaries and discussions organically sprung up around this new literature, becoming as much a part of the experience of reading as the story itself. In many cases, these commentaries influenced how the authors wrote, and thereby drew in even more readers eager to be a part of the story-making process.

With the rise of social networks and the rapid proliferation of mobile phones in China, online serials became a full-blown phenomenon. In 2011, two well-regarded serials, “Empress in the Palace,” which recounts life in China’s imperial harem, and “Scarlet Heart,” a time-traveling drama, became national hits. Since 2012, the online literature market has been growing by more than 20 percent a year.

For all their popularity, though, the serials didn’t immediately make much money. Some publishers tried paywalls. Others tried selling advertising and accepting micropayments. None were quite successful. In recent years, though, some entrepreneurs have hit on a new way of thinking about serials -- as an entertainment industrial chain that happens to start online.

That chain now includes films, television, games ... and even printed books. In 2015, “The Journey of Flower,” a martial-arts fantasy serial by Fresh Guo Guo, was spun off into a hit video game and online TV series. Another serial, “The Ghouls,” became the ninth highest-grossing film in Chinese history, having been read millions of times online and in print. Since then, storylines from the series have inspired other films and a popular TV mini-series. Zhang Wei, China’s bestselling online author, made $16.8 million in 2015 -- only 2 or 3 percent of which came from people paying directly for his online literature.

Investors are betting on more successes ahead. China’s biggest technology companies -- including Alibaba Group Holding, Baidu and Tencent Holdings -- have all invested in platforms intended to attract talented writers and turn their work into multimedia franchises. Zhang, who started out writing for free online, put it succinctly in an interview last year: “My goal is to make a big franchise like Disney. Disney has a lot of characters whose popularity is reinforced through movies and cartoons.”

China’s entertainment companies are hoping that, sooner or later, someone now writing free stories for smartphones will become the Chinese J.K. Rowling. And with 6.4 million authors and 9.6 million works on offer, China Literature is a good place to start looking. That makes it the rare opportunity to bet on China’s grassroots directly. For authors and investors alike, that’s almost certainly a future bestseller.


By Adam Minter

Adam Minter is a Bloomberg View columnist. -- Ed.


(Bloomberg)