Wattpad is a bit of a tech darling as of late. Not only does it have the venture capital crowd on its side, it’s also got Margaret Atwood. In fact, credit where credit’s due, Atwood’s the one who coined the name “what pad,” which inspired WTF pad, whch sounds a lot like making reading and writing social, which is what Wattpad’s supposedly about. Or one of the things Wattpad might be about.
Except nothing about Wattpad, beyond the fact that it seems to have some very solid traffic and useage stats, makes much sense. If you don’t believe me, just go to their site and see if you can figure it out. I can’t and I’ve been dropping in once a year for a while now.
Although he makes a valiant attempt, this interviewer (I believe it’s Michael Healy) seems equally perplexed by Wattpad. It’s almost as if he should have subtitles that read, “I don’t get it.”
In an attempt to get its story across, Wattpad often describes itself as wanting to do for writing what YouTube does for video. But that analogy doesn’t work for me for a number of reasons that I’ll only go into if someone asks.
Publicly at least, the Wattpad business model seems to be if we keep building it and they keep coming, we’ll find a way to monetize it. Think Twitter and Facebook. Fair enough, but we’re all still thinking about Twitter and Facebook, wondering if the former’s even profitable and if the latter’s ever going to live up to the hype.
Wattpad CEO Allen Lau is on the record for being a fan of free and freemium (see video for just one example) and for talking — not all that clearly — about transactional relationships (the old way) versus gifting (the new way). Although at one point in his video interview he seems to advocate the write-for-free, sell-the-t-shirt-and-souvenir-book model, during the question period, he says he doesn’t want to get into the shrinking paper book market. It’s confusing if not contradictory.
For a company that’s all about story sharing, Wattpad either doesn’t have a very good story to tell, or they do but they’re not about to share it, which is kind of strange given that they’re hiring a PR manager when they’re not ready to divulge the plot.
In the past, I’ve called BS on some bizarre internet media companies — including Geosign which may have suckered U.S. venture capitalists out of a large chunk of the $160 million they invested — and I’ve turned out to be right. But I have a tendency to be overly sceptical and not see what I don’t know — like how Google was going to make a profit. Cough, cough.
In the case of Wattpad, I do think there’s a potentially viable business and this quote from the video (approximately 26 minutes in) is a clue, or one clue at least , to what the business model that Lau declines to talk about, might be.
A lot of people believe that on the internet we are going to get rid of all the middle men. I don’t think so. If you look at YouTube they are still a middleman, but the role of the middleman is quite different from the traditional world. (With the old model) the middleman is basically the gatekeeper, they would control the flow from the content creation side to the end user side. But for digital or for internet companies that role is changing. We are no longer the gatekeeper. We are the facilitator.We want to remove and reduce the friction between content creation and content consumption.
Lau also puts a lot of emphasis on being first and how one mega-player often reigns supreme on the internet in industries where competition used to be more vibrant. He cites Amazon and book-selling as an example.
My theory is that Lau wants to turn Wattpad into some kind of publishing marketplace where writers can use the social network as a focus group, get cover art, hire an agent, get publicity, find translators and much more. Wattpad would collect commissions and fees from freemium users all along the publishing chain including present partners like Smashwords and Lulu.
Instead of helping writers monetize, which Lau says he doesn’t want to do, writers would help Wattpad monetize by paying for the freemium services they need. While only a handful are ever likely to break even or break out, they’re the ones who’ll provide the bulk of the revenues.
Wattpad has recently been asking published writers to put previously published works on line for free. Those who give it a whirl, like Jon Evans, have access to information about how readers read that they never had before.
Lau emphasizes the importance of data multiple times throughout the video. He also says on his blog that “the current ebook ecosystem is quite clearly just another bridge product” like Microsft’s Encarta encyclopedia on DVD. “Except for the output, the way ebook is written, edited, published and sold are more or less the same as the old traditional publishing system,” he writes.
That indicates to me that he’s aiming to make Wattpad the new ecosystem. I would be very surprised, however, if Amazon doesn’t understand all this just as well. Not only does Amazon likely have stats on how readers read every single ebook it sells, it’s also got its own publishing house and employs people who understand both traditional and “bridge” publishing models. It’s hard to believe that they wouldn’t understand that “the book” is evolving and that the future will be different.
As for the community aspect, Kindle Direct Publishing could build that out pretty fast and the big social reading sites have strong communities that are older and wiser than Wattpad’s mostly teen audience. They could move into the “new ecosystem” pretty fast if they wanted to.
End of Chapter One. I can now see if anyone’s interested and, if they are, move on to Chapter Two in the Wattpad saga.