Webtoon is now a publicly traded company. I spent the weekend reading their 359 page investor document and found eight fascinating things that really shed light on how Webtoon works, how much they pay creators, and how they make their money.
If you’d like to read the investor document for yourself, here it is.
8 fascinating insights from Webtoon’s investor document
1. Webtoons isn’t just one app: it’s a collection of 7 apps
Webtoons is more than a comics app. It’s actually seven really popular comic and short story apps (Weboon, Weboon Korea, Line Manga, Naver Series, eBookJapan, Munpia and Wattpad). And, some of these apps are tailored to a very specific demographic area (Korea and Japan).
2. Readers in Korea, Japan, and other markets behave differently
There is a cultural difference when it comes to readers in Korean, Japanese and other markets
The biggest difference is when you look at how many people in Korea and Japan are willing to pay for comics and how much they are willing to pay.
First, let's look at how many people pay for comics. In Korea 15.5% of all readers pay for comics, while in Japan it's 10.1% and globally only 4.6% of readers pay for comics. That's a 336% (Korea) and 220% (Japan) difference in people’s willingness to pay for comics compared to the rest of the world!
Next, let's look at how much each paying user is paying per month. In Japan, on average, every paying user pays $22.20 every month ($266/yr) 🤯. In Korea it’s $7.90 every month ($94.8/yr). And globally it's $11.50 every month ($138/yr).
Put these two things together and you get a fascinating outcome. While Korea and Japan collectively make up only 27% of Webtoon’s users, together they make up 85% of Webtoon’s total revenue!
3. Webtoons are really hard to make
In the intro, you will see some very impressive numbers including that Webtoons has 55 Million titles on the platform! You might think, wow — that’s a lot of webtoons, but there’s a big asterisk attached to that number.
On page 17, the 55M titles are shown to be broken down into 54.5M web-novels and 450k web-comics. Which means, web-comics make up less than 1% of all the content on the platform!
There are probably several reasons that contribute to this low percentage but the most obvious is that creating a webtoon requires a rare combination of skill, time, and effort. So, if you take one thing away from this post, I hope it is to be kind to your webtoon creators, as they are the exception — literally the 1% of creators.
4. The relationship between content, creators and users
As a business nerd, the coolest part of the document is this diagram.
Webtoon is a multi-app / multi-billion dollar company, but they break down their whole business into one diagram with three things that they have to do well in order to succeed.
1) Content — have quality content on the platform
2) Users — make an engaging app so that people want to spend their time and money
3) Creators — incentivize and empower creators to make more great content.
It’s obvious, but also accurate and well-explained.
5. Payouts to creators
Frustration around creator pay has come up in this subreddit multiple times and coming into reading this document I wanted more clarity on how Webtoon was paying creators. However, I didn’t get that clarity. Webtoon did share some interesting stats on creator pay:
“In the year ended December 31, 2023, the average earnings per professional creator on our platform were $48k, with top 100 creators earning an average of $1 million, and, cumulatively, our creators earned over $2.8 billion between 2017 and 2023.”
At first glance, creators earning an average of $48k a year sounds great. However, there’s two big reasons why that number might not be that great:
1. Original creators are independent contractors, meaning they have to pay all expenses, including hiring any assistants needed to produce the work. This means that they don’t get to take home the full $48k.
2. Since Webtoons have big hits like Lore Olympus and Mafia Nanny etc., whose creators earn much, much, much more than $48k, this will pull an average higher, making it look like most creators earn $48k, while in fact that may not. Therefore, median and not average may be a better way to represent what the typical creator earns.
Let’s do a quick math example to showcase this. For these eight numbers (2, 2, 3, 3, 5, 7, 8, 130), the median is 4, while the average is 20. That’s a big difference that is caused because of the presence of an outlier (130).
In this specific example, average would be a bad way to represent these eight numbers, as seven out of the eight numbers are below the average of 20.
It would have been great if Webtoon also shared the median amount creators earned, as it would give more clarity on what a typical Originals creator would expect to earn (unaffected by top hits). But that data is not in this investor doc and because of that, the most frustrating thing about reading this doc is that I know as much about how Webtoon pays creators as I did when I started reading it.
6. How Webtoon makes money
This topic is much clearer. 4.6% of users pay for content on Webtoon (FastPass, Daily Pass, or pay for content on web-novel apps).
What is surprising is that even though webcomics make up less than 1% of the content on the platform, “web-comics generate the vast majority of revenue on our platform.” (They don’t give an exact number)
They do break down the different streams of revenue they have into Paid Content (80.2%), Ads (11.3%) and IP Adaptations (8.4%).
However, what may be surprising is where they see their future market opportunity.
“We see a market opportunity of approximately $130 billion in Paid Content (7.6%), $680 billion in Advertising (39.8%) and $900 billion in our IP Adaptations businesses (52.6%).”
Meaning they see a much bigger slice of their revenue coming from Ads and IP Adaptations in the future.
So what are IP Adaptations? It's clear that Webtoon sees themselves as a publisher. They are exclusively going after creators who produce content they believe can be big hits across different media formats. They then sign contracts with these creators so they own a part of the IP, and work with these creators to make their content a big hit on multiple formats.
7. Webtoon’s use of AI
Currently, Webtoon uses AI to reduce the workload for their Originals creators. Specifically, they have built two tools:
- Shaper — which helps build 3D character models so that they can change the character’s poses without the need to sketch each pose.
- Constella — converts the 3D character models to 2D characters in the creator’s drawing style.
Webtoon says the goal of these tools is to help creators produce more high quality content, and that they foresee bringing these tools to Canvas creators in the future.
8. Really engaged audience
It’s clear that readers love Webtoon. On average, users use the app almost every day for 30+ minutes a day, and the more months a user uses the app, the more series they read.
It is fascinating that Webtoon compares themselves with Roblox, Netflix and TikTok. But, I think that speaks more to how all big tech companies are competing for our time and attention.
Conclusions
Before you go, I do think it's important to say two things…
Firstly, since Webtoon is now a publicly traded stock, I think it's important to say that my background is not in investing or finance, so don’t make any buying or selling stock decisions based on what I wrote. That would be silly, and you are not a silly person.
And finally, I am the founder of Taddy Ink, which helps webtoon creators distribute their comics to multiple comic apps, so I am a bit biased on this topic. It's also the reason I was willing to take the time to read the whole investor document.
I founded Taddy because I wanted to make things better for creators. Coming from the podcast industry (I previously built Podyssey), I was sad to see that in the webtoon industry, creators don’t own their content or distribution. They rely upon big publishers in order to earn money for their work. I believe this can be changed, which is why I built Taddy Ink.
When you upload your comic to Taddy, it will be published on multiple apps at once. This allows you to not be tied to one comic platform and retain all your creative rights. We also just added a Patreon integration to the app we built (Inkverse), which allows you to create an early-access system, releasing episodes to your patrons before anyone else!
If you’re interested in signing up, head to Taddy Ink — and feel free to jump into our creator Discord to learn more. Stay creative!
Article by: Daniel Mathews
Written on July 2nd, 2024