IP Laying Golden Eggs, Fast-Growing Webtoon-Web Novel Market

Industries using the intellectual property rights (IP) of webtoons and web novels are thriving. These industries, which grew rapidly through non-face-to-face situations during the COVID-19 pandemic, are currently expanding the market actively, by establishing a pipeline leading to “web novels-webtoons-videos.” Some famous webtoons and web novels have also been reborn through animation and gamification. Thanks to the popularity of these secondary creations, a virtuous cyclical structure is also being prepared in which the influx of readers leads to the popularity of the original works.

The webtoon market began in the early 2000s when comics were provided for free by portal sites, such as Naver and Daum. According to the 2023 Webtoon Survey released by the Ministry of Culture, Sports and Tourism and the Korea Creative Content Agency earlier this year, the total sales of the domestic webtoon industry has grown sharply from \379.9 billion in 2017 to \1.82 trillion in 2022. This is nearly five-fold growth compared to the market in 2018, when the government first started researching the field. In particular, the webtoon market grew 64.6 percent year-by-year from 2020 to 2021, during the COVID-19 pandemic, marking an unprecedented high growth.

As well as webtoons, the web novel market has continued to grow rapidly, attracting attention as a source IP. According to data from the Korea Creative Content Agency in 2019, the size of the domestic web novel market has more than increased by 50 times from \10 billion in 2013 to \500 billion in 2019. In 2020, it had grown to around \600 billion. According to the first survey conducted by the Ministry of Culture, Sports and Tourism and the Korea Publishing Industry Promotion Agency in 2022, the size of the web novel market reached about \1.39 trillion in 2022, up 62 percent from \640 billion in 2020. Two title examples are: ＜Omniscient Reader's Viewpoint>, in which the main character, Kim Dok-ja, is reborn as a hero in a world that has changed according to the story he was reading one day, and ＜Return of the Blossoming Blade>, which depicts the struggle of the legendary unmanned to a child. Each surpassed \10 billion in sales with a single IP.

▲ The Size of Domestic Contents Industries (Source: Korea Creative Content Agency)

Creators' Hardship: Deformed Industrial Structure and Heinous Labor Robbery

Then, how is the situation of creators who produce content? Is the current K-content industry sustainable? While platform companies investing in the webtoon and web novel industries are steadily growing in profits, the pockets of content providers (CPs) such as studios and agencies, as well as writers who create their own creations, are becoming lighter. According to the "2023 Webtoon Writers Survey" by the Korea Creative Content Agency, webtoon artists who have been continuously engaged in their work activities over the past year have earned an average annual income of \98.4 million. The figure is down \20.3 million from the previous year.

The online cartoon production and distribution market, currently has a top-down structure of "platform-producer (CP company)-creator." It is in the order of platforms that do distribution work, CP companies that discover writers and create works by signing production contracts themselves, and writers who create webtoons and web novels. The distribution channel, platform, is located at the top, and CP companies and creators rely on it. Creators sign contracts with CP companies for help outside of work creation activities such as promotions. Although it varies slightly by platform, the settlement rate that the platform returns to creators such as CP and writers, is known to be about 70%. After CP companies and writers share the sales that the platform settles, creator profits decrease significantly.

In addition, the industry practice of MG (minimum guarantee), a profit contract, is making this situation worse. The industry has a unique way of paying profits. Minimum profit guarantee contract is a method in which the artist contracts with the platform or production company to guarantee minimum profit and receives it in advance. If the profit generated after serialization exceeds the MG payment, the platform, the production company, and the artist will distribute it. When the work is successful, MG receives back the amount previously paid to the artist on the platform side. Only after MG repayment is completed, the production company and the artist share the profits. The problem arises when the profit of the creation does not exceed the previously promised minimum profit guarantee. Many writers sign MG contracts, and if they make a profit, the amount of MG must be deducted from the profit, or if they do not produce an expected profit, the artist will bear the damage as 'debt.' In the name of MG, creators are becoming debtors. If unsuccessful, the structure of being in debt is becoming a shackle that suppresses the challenging spirit of creators.

What is more serious is the inhumane working environment of the creators. The horrendous labor intensity of webtoon artists has been constantly questioned. According to the Ministry of Culture, Sports and Tourism, webtoon artists spent an average of 9.9 hours per day in creative activities in 2023, 5.8 days per week. The heinous schedule, in which they spend all their time on work except for eight hours of sleeping during six days a week, reminds them of factory workers in the industrial era. Although this is a serious violation of labor laws, webtoon/web novelists who post their works on the platform are not recognized as workers under the labor laws because they are considered "freelancers" and "private businesses." The reality is that even government protection is difficult for current creators.

War on the Internet: Illegal Distribution Issues and Lack of Cultural Diversity Awareness

Meanwhile, the platform industry is struggling to sternly respond to the damage caused by viewing works for free through illegal platforms. The quality management of the work provided is also the responsibility of the platform. Also, companies aiming for a global platform to advance overseas should respond quickly to the controversy over hate expression and similarity through monitoring of works.

According to the "2023 Webtoon Business Survey" published by the Korea Creative Content Agency, "illegal copying sites" accounted for the largest portion with 74.5 percent due to difficulties in promoting the webtoon business. In addition, according to data released by Kang Yoo-jung of the Democratic Party of Korea, a member of this year's Culture, Sports and Tourism Committee, the number of users of illegal webtoons and web novels sites reached about 260 million a month. The distribution volume amounts to a whopping 2.25 billion views. ‘Newtokki’, the most widely known illegal webtoon site, had 130 million visitors a month, and about 1.15 billion views of webtoons were leaked from this site. In the case of web novels and other publications, 13,817 cases were detected in Korea and 81 cases abroad in 2022, but as of August this year, 32,115 cases were found in Korea and 67,39 cases abroad. To avoid detection, illegal sites that appear frequently have been cleverly avoiding crackdowns by placing servers overseas or changing domains.

▲ The Shift of Illegal Content Media Websites (Source: Korea Copyright Protection Agency)

Naver and Kakao platforms, which are the pillars of Korean webtoons, have not let go of the situation. Naver is focusing on minimizing secondary damage by blocking illegal copying in advance. Rather than finding works that have already been illegally shared, the company aims to delay the time when they are shared as illegal sites as much as possible. Since 2017, the company has been operating a technology to identify and block illegal leakage by inserting user identification information that is invisible to webtoons through its own research and development "Toon-Radar" system. Kakao is focusing on discovering operators of illegal sites. Deletion of illegal materials is important, but it is necessary to close the sites in order to break the vicious cycle of illegal distribution, which is constantly spreading, even after deletion. Kakao, which established the global task force (currently P.CoK.) in 2021 and deployed its dedicated personnel, deleted and blocked 270 million cases of illegal distribution of webtoons and web novels in the first half of this year alone.

Platforms are also struggling to be faithful to the role of filtering their works. Episode 125, which was released as a preview by Naver Webtoon “Get Schooled” in September last year, sparked controversy over the use of racial caricatures and derogatory expressions. The episode contained racist content and a scene of abusive language use to African-American mixed-heritage boys. The problematic episode was first released in Korea, but before it was officially released in North America, illegal translation spread abroad, sparking controversy. Although the problematic part was corrected later, both the use of racist terms and the development of story which mixed-heritage characters using reverse racism were criticized for being inappropriate. In the end, Naver Webtoon suspended the “Get Schooled” service on domestic and foreign platforms, and decided to take a long-term leave of absence after deleting the corresponding episode in Korea.

▲ The 125th episode of 'Get Schooled' that sparked controversy about racial discrimination (Source: Naver Webtoon)

Need for Improvement, According to the Pace of Growth

In order for the rapidly growing webtoon and web novel market to develop in the future, it is necessary to fundamentally review the current growth method. To succeed in the global market with webtoons and web novels, an environment in which high quality content can be continuously produced must first be established. In addition to the content, other exhibition methods and platforms must be prepared to support individual and prospective creators, so that they can make various attempts. Laws and systems that enable the protection of works on the platform as well as the guarantee of the artist's labor rights, and social attention are needed accordingly. It is urgent to reorganize the industrial structure in which platforms, producers, and creators can coexist professionally, and in a social structure that is conducive in supporting the prohibition of obtaining illegal materials.

By Kim So-ha, reporter  lucky.river16@gmail.com

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