The paid model failed, ByteDance launched two free online literature apps

Why did ByteDance launch two free online writing apps after Tomato Novel? This article will help you find out the reasons. This article is also recommended for companies or individual business owners.

The debate between free and paid online literature that has been going on for several years seems to have been answered by ByteDance. Tech Planet has learned exclusively that after Tomato Novel, ByteDance has launched two free online literature apps, "Danhua Novel" and "Changdu Novel", which focus on free reading.

Figure: Logos of Danhua Novel and Changdu Novel APP

The development companies of the two online literature products are Hubei Furuixing Network Technology Co., Ltd. and Hubei Juherun Network Technology Co., Ltd. According to industrial and commercial information inquiries, both companies are 100% controlled by ByteDance.

It is reported that the two online literature products were launched on major app stores through cold start at the beginning of this year. In less than half a year, both the rankings and download volumes of the two products were high.

According to Qimai data, as of press time, Danhua Novel and Changdu Novel ranked 4th and 9th in the App Store's book category. In terms of downloads, the estimated omni-channel downloads of Danhua Novel and Changdu Novel exceeded 75 million and 48 million times, respectively, showing a rapid momentum.

In addition, Tech Planet also discovered that of the more than ten paid novel products launched by ByteDance since 2021, including Cuiguo Novel and Jiudu Novel, except for "Zuikan Novel", the rest were taken off the shelves between the end of last year and the beginning of this year.

It is not difficult to see that ByteDance’s attempt at paid novels has come to a temporary end, and free online literature will once again become the focus of future business development.

1. ByteDance recreates “Tomato Novel”

Just as Tomato Novel dominated the online literature market, ByteDance launched two free online literature products again, which means that ByteDance is building a multi-matrix free online literature platform to form its own moat. From the product point of view, although Danhua Novel and Changdu Novel are positioned as free online literature platforms, they are slightly different from Tomato Novel. Danhua Novel and Changdu Novel pay more attention to the experience of listening to books, and add short plays, comics and other content, making the entire product more diversified in use.

Take Danhua Novels as an example. The services it provides include online novels, audiobooks, classic novels, knowledge books and comics, etc. All content is free, but you need to watch ads to unlock a better reading and viewing experience.

Among them, audiobooks and short plays are its main important services. The content of the audiobooks is consistent with Tomato novels, and the number of short plays currently exceeds 100.

Figure: The audiobook and short play interface of Danhua Novels

Tech Planet Experience found that although Danhua Novels still adopts the profit model of watching advertisements, there are fewer advertisements whether reading novels, listening to books, or watching dramas, and most of them are fixed-position advertisements, unlike the previous model where you need to watch frequent advertisements to unlock the next chapter.

Although both Danhua Novels and Changdu Novels are free novels, they also have different user positioning. In terms of attracting users, Changdu Novels adopts the online earning and money-spending model commonly used by products in the sinking market. This shows that Changdu Novels pays more attention to the layout of the sinking market.

In order to increase the number of users, both products were promoted, and video advertisements for Danhua Novels and Changdu Novels can be seen on the Douyin app.

In addition, Tech Planet also learned that in addition to the above two products, ByteDance's free online literature product matrix may have other products. Since 2022, ByteDance has continuously acquired and established 19 companies through Beijing Bimo Liuxiang Technology Co., Ltd. (the developer of Hongguo's free short dramas under Tomato Novel), including Hubei Furuixing Network Technology Co., Ltd. and Hubei Juherun Network Technology Co., Ltd., which are behind Danhua Novel and Changdu Novel.

By checking the software copyrights of 19 companies through Qichacha, it can be found that two of these companies completed the registration of a total of 9 novel quick application software in March this year. It is not ruled out that these products may be put into the online literature market at the right time in the future.

2. After trying out paid online literature , is free literature still better ?

In the industry, there has always been a battle between paid and free models in online literature. Players of domestic paid online literature platforms include: China Literature Group, which owns Qidian Reading and QQ Reading; Alibaba's Shuqi, which owns Shuqi Novels and UC Novels; in addition, there is Chinese Online and Baidu's Zongheng Chinese Network.

In addition to the free model, ByteDance has also tried the paid model in an attempt to find new growth points, but the results were not ideal.

In the second half of 2021, ByteDance launched a quick application product called "Jiudu Novels" in the Huawei App Store. It is positioned as a paid novel platform. To read the next chapter of a novel, a certain amount of book coins is required. For this purpose, a "monthly reading" function is also launched, where users can read books for free within a monthly range.

Figure: ByteDance’s collection of paid novel products in Huawei App Store

By 2022, ByteDance's output of paid novel products doubled. As of April of the same year, a total of 14 paid novel products had been launched.

ByteDance has launched a number of novel products in succession, hoping to open up the paid novel market in a short period of time. Paid novels have two advantages. First, they can bring users a better reading experience. Second, they can bring considerable profits to the platform and authors. Since the domestic paid novel industry has been in place for many years, a suitable payment environment has been cultivated, and the willingness of individual users to pay is also increasing.

However, since the second half of last year, these paid novel products of ByteDance have been removed from the shelves and shut down one after another. The only one left on the shelves is "The Best Novel", but it has a rating of only 1.8 points and has not been updated for nearly 4 months.

Tech Planet also found in the comments of this product that many users complained that its charging model was expensive and the experience was not good. For example, one netizen said that one chapter cost more than one yuan, and another netizen said that half of the chapter was incomplete and could not be connected to the next chapter.

It can be seen from this that ByteDance has not found a suitable business and service model in its trial of paid novels, and has instead continued to increase its investment in free online novels.

Industry analysts believe that the leading players in domestic paid online literature platforms have established their presence early and have deep moats. ByteDance has no advantage in this regard, and adopting a free model is a differentiated competitive strategy.

Xiao Hai, a former editor of Tomato Novel, told Tech Planet that ByteDance has its own considerations for increasing its investment in free online novels. From the perspective of user acquisition, the free model lowers the threshold for reading and can attract a wider user group. Among the vast amount of Internet content, free novels are more likely to attract new users to try, quickly accumulate a huge user base, and thus increase the influence and popularity of the platform. As ByteDance's short dramas, audiobooks, comics and other businesses continue to grow, it is difficult for the Tomato Novel channel alone to support so many content ecosystems. It is time to create multiple products to expand channels and expand new users.

He also added that the differentiated development of these free novels by ByteDance will help ByteDance build a diversified content ecosystem in the content industry, attracting many authors to participate in creation, enriching the types and themes of novels, and meeting the diverse needs of different users.

It is worth noting that ByteDance’s free content business is gradually expanding, not limited to online novels, but also includes short dramas, comics, audiobooks, etc., which have also fully embraced the free model.

In fact, the free model is really good. From the perspective of profitability, the free model has given ByteDance considerable returns. According to a report by Late Post in May 2023, the revenue of Tomato Novel has exceeded 10 billion yuan, which is basically advertising revenue. If Danhua Novel and Changdu Novel can also reach the level of Tomato Novel, they will be two other tens of billions of products.

3. Beyond online content , ByteDance’s new attempts

Nowadays, online literature is no longer a simple battle between free and paid models. IP refinement and short dramas have become the focus of the industry layout.

China Literature, a leading paid online literature platform, has been developing high-quality IP through its Qidian Reading and QQ Reading platforms. Recently, China Literature has also entered the interactive short drama industry. The interactive short drama "The Bourne Legacy" jointly produced by China Literature, Huying Technology, Shanghai Film Yuan and Shanghai Film Production released its latest trailer and announced that it will be launched on Steam and WeChat Mini Program platforms on July 18.

The pain point of free online literature is that it is not easy to incubate top IPs, but ByteDance is making changes. In recent years, ByteDance has proposed a strategy of IP refinement. According to official data, as of November 2023, the copyright of 75 novels derived from the Tomato Novel IP has been sold, and 18 works are being developed into animations. It is expected that more than 10 works will be launched in 2024.

Tomato Novel also replicated its successful operating model to the short drama market.

This year, Douyin cooperated with Tomato Novel to jointly launch the "Tomato IP Adaptation Cooperation", providing creators with high-quality Tomato Novel IP and encouraging users to adapt IP into high-quality short dramas.

In addition, ByteDance also launched the first short drama platform "Hongguo Free Short Drama" APP. According to the "2024 China Mobile Internet Spring Report" released by QuestMobile, among the top ten mobile video APPs with the longest usage time in March, Hongguo Free Short Drama under Tomato Novel ranked third.

Whether it is Tomato Novel, Egg Flower Novel, or Changdu Novel, they can no longer be simply classified as free online literature platforms, because their businesses have extended to content tracks such as comics, audio, and music. They have also created two major brands, Tomato Animation and Tomato Film and Television, to build a more comprehensive content ecosystem.

In addition, Tomato Novel is also actively developing offline business. In January this year, at the Beijing Book Ordering Fair, which is mainly for paper books, this digital reading platform signed cooperation agreements with more than 30 publishing units including Xinhua Wenxuan Publishing and Media Co., Ltd., People's Posts and Telecommunications Publishing House, People's Literature Publishing House, and Zhonghua Book Company at the 2024 Publishing Integration Development Conference. The platform will adopt an operating model in which the copyright holder will receive 100% of the profit and the platform will not participate in the profit sharing. In addition, it will also provide hundreds of millions of resources to subsidize good books.

Tech Planet discovered that Tomato Novels also cooperated with the National Bookstore. The National Bookstore located in the 1733 commercial space in Beijing has added the Tomato logo. In addition to selling novels and books, the store also sells models, creative paintings and other products.

Caption: Bookstore in Beijing 1733 Commercial Space

It is foreseeable that competition in the online literature industry will be more comprehensive in the future, and the competition over business models will seem to become less important.

Author: Chen Qiaohui

WeChat public account: Tech Planet (WeChat ID: tech618)