Authors may lament the uncertainties of the digital age as many turn to online marketplaces to distribute their works with no promises of fame or fortune. But when authors are guaranteed a cut in their own book sales, they tend to work harder and become more creative, according to a study of China’s e-book market.
According to a study by Harvard Business School professor Feng Zhu, new regulations have rocked the e-book landscape in China, increasing competition and causing authors to work harder. Book deals that give authors a share of the sales, rather than just paying them through a flat fee, also push them to produce more interesting content.
The results could prompt publishers to consider changing their compensation structure to reward authors for originality. Beyond the publication, the study sheds light on effective ways to tie pay to performance to encourage workers to be creative.
“It turns out that these gig workers, on average, are very susceptible to competition,” says Zhu, who co-authored the upcoming article Competition, Contracts, and Creativity: Evidence from Novel Writing in a Platform Market in Management magazine with Yanhui Science was written by Wu from the University of Hong Kong. “That’s good because we want people to be more competitive and produce better and more creative content.”
A novel approach
The researchers examined more than 10,000 novels published on one of China’s most popular book writing platforms between 2013 and 2015. In China, e-publishing platforms have grown into a multi-billion dollar industry, attracting more than 1 million authors and over 300 million readers. Authors tend to produce commercially popular fare such as B. Romance novels, mysteries, detective novels and books about science fiction and martial arts.
Some novelists are paid a fixed price, much like Charles Dickens was paid for each installment of The Pickwick Papers in the 18th century. In this model, authors receive the same compensation for their books, regardless of how popular the books become.
In other cases, authors get a percentage of the revenue they generate from platforms, like JK Rowling with the Harry Potter series that made her a multi-millionaire.
In China, some authors have gotten rich from platform revenue-sharing schemes, but the reality is that the market is highly competitive and less than 10 percent of books generate enough income for an author to live on.
The salary structure plays a role
Zhu and Wu tracked e-novel popularity based on reader clicks and purchases, and measured an author’s productivity based on the number of times an author updated a book series each month. Creativity was measured by monitoring nearly 1 million reader ratings, using partially supervised machine learning, in addition to searching for keywords such as “original”, “creative”, “surprisingly clever”, “innovative” and “unexpected”.
The researchers discovered that authors who received a fixed price for their work did not appear to alter their productivity as competition increased, while authors who received a cut not only produced more but were also more likely to write creatively than those who paid a fixed price .
“This shows that most of the positive profit from the competition comes from authors who have entered into revenue-sharing deals. If we use the revenue-sharing contract in the gig economy, then we shouldn’t worry about lack of creativity,” says Zhu. “And we shouldn’t worry about gig workers giving up because of more competition.”
However, since a fixed-price arrangement favors the publishing platform, the site tended to promote these books more aggressively, and in turn, flat-rate books received more views.
The message, Zhu says, is simple: “The contractual arrangement changes the incentives for both the freelancers and the platform, and platform promotion can play a key role in driving the commercial success of a complementary product.”
Advice for creative gatekeepers
The most important implication of the research might be for the powerful platforms that act as gatekeepers to the creative content we consume: without an incentive structure that allows content providers to reap the rewards for their efforts, workers may have little incentive to to increase the quantity or novelty of what they create.
And if platforms choose to maximize their own profits by opting for a fixed-price rewards system and cutting workers, they could end up stifling creativity. Zhu says this finding could also be applied to environments outside of creative production.
For his next study, Zhu wants to examine how freelancers choose between contracts.
“It will be interesting to see how that experience affects the types of contracts they choose as they gain some experience as gig workers,” he says.
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