Why Wattpad is in the first chapter of its success story

The project commenced, for those with an eye for tidy technological succession, the day after Douglas & McIntyre, a bricks-and mortar publisher, filed for bankruptcy.

Since 2006, Toronto-based Wattpad, which facilitates the upload of texts provided by its users, has grown from offering public domain works, to embracing mostly teenage-themed writers, to achieving critical velocity with its highest profile writer yet, the venerable Atwood. Wattpad now boasts more than nine-million users.

Atwood, who received the first Arthur C. Clarke Award in 1987 for “A Handmaid’s Tale”, has a history of embracing new technology as a means of encouraging literacy, and has proved refreshingly open to checking her legend status at the door in dealing with the hordes of teenage zombie/vampire love stories currently populating Wattpad’s site.

The mechanics of publishing a book, even for a decorated author such as Atwood, is changing. Her partnership with Alderman, for example, received partial funding from the Rolex Mentor and Protégé Art Initiative, which fosters collaborations between mentors and younger artists. For Wattpad, The Atwood coup is a morale builder that lends the company credibility, while its financial needs are more than handily taken care of following a $17.3 million dollar investment in June, most of which came from Menlo Park-based Khosla Ventures.

Will the Internet self-publishing model defeat the romantic ideal of moving to a major European capital, hanging out with an exciting demimonde at night while cobbling together a novel that may someday be regarded as a classic by day? It seems plausible, perhaps reasonable, to assume that amongst Wattpad’s 500,000 uploaded stories per month there will remain some literature of lasting value. Granted, you might have to sift through several volumes of mermaid fiction, not to mention tales of the undead penned by the decidedly mortal authors of Wattpad.

______________

This article is brought to you by the Information Technology Group at Heenan Blaikie, delivering strategic legal advice and innovative business solutions to technology-based companies. For more information click here.

___________________

Wattpad is not the first to tackle this tricky space, but its unique brand of literary street cred and ability to attract top level capital means it is almost certainly the best. No peer has inspired people like Fred Wilson from Union Square Ventures, known for investments in Twitter, Foursquare and Tumblr, and John Ruffolo from OMERS Ventures, which has backed Canadian startup royalty Hootsuite and BuildDirect, to take pen to paper and autograph a cheque.

It’s unclear how large, or how profitable a Youtube of e-publishing could ultimately be. A Handmaid’s Tale isn’t “Gangnam Style” and Margaret Atwood isn’t PSY, or Justin Bieber, for that matter.

But Wattpad’s success has made clear that people, young people in particular, are still reading en masse. Figuring out how to profit from those young eyeballs -whether through content partnerships, advertising, or royalty agreements- while keeping its user experience intact is a conundrum that should not be underestimated.

Sure, Wattpad has banked cash that keeps the lights on and the coffee brewing and the servers running. But all money does that. Wattpad, through understanding and partnering with its audience, secured the kind of money that comes with the healthy dividend that is thought leadership. It’s a bonus that virtually ensures that its business will have subsequent chapters.

________________

________________