News Yuewen (Qidian) is being sued for reneging their contract with a Chinese Company

http://v.techweb.com.cn/finance/2017-08-08/2570128.shtml
A rough translation of it courtesy of an anon

600 million yuan Lawsuit Reveals the Hidden Struggles of Yuewen Group’s IPO

Recently, Yuewen Group’s should have had a smooth sailing with their IPO coming soon.

But they had “unpleasant incident” with Migu Reading.

Migu Reading launched a special promotion that allowed their members access to their entire site for just 9.9yuan.

In response, Yuewen Group unilaterally breached their contract as the content provider for Migu Reading and pulled some of their more popular novels from the site.

This greatly dissatisfied Migu Reading’s members and thus Migu Reading sued Yuewen Group for 600 million yuan.

This lawsuit may cause problems for the IPO and more importantly reveals some of the hidden problems that Yuewen Group has in terms of profitability, copyright issues and licensing qualifications, among others.

Content locking strategy Regresses the Industry

During the dispute between Yuewen Group and Migu Reading, Yuewen opted to lock their content down, and not allow Migu Reading’s platform to have updates.

This goes against the general trend of the Internet industry as online, the best and strongest companies insist on an open-content and win-win strategy.

Thus in this era, Yuewen Group’s insistence on locking down their content and their inability to find a win-win situation means they are unable to see the larger picture.

Intellectual Property (IP) should be a multi-platform, unrestrained, and self-growing creature. Yuewen Group’s decision to lock down their content is equivalent to caging the IP as authors become unable to spread their works to a greater audience. This goes against the development needs of IP.

Yuewen Group’s content locking strategy is contrary to good online development, is bad for readers/author relationship and also shows that they’re lacking confidence in their own IPO and are willing to do anything to protect their profits.(edited)
The Industry’s Profit Ceiling

Furthermore, Migu Reading’s 9.9 yuan promotion probably affected Yuewen Group’s income and user numbers.

The reason Yuewen stopped cooperating with Migu Reading was likely because Yuewen’s profits are low to begin with.

However, the impact of this contract breach is probably worse than the original income loss. The 600 million yuan lawsuit may affect both their profit performance for this fiscal period as well as delay their IPO.

Yuewen Group’s financial documents show they lack future growth. Their total revenue in 2016 was 2.6 billion but their net profit was only 30.4million. Their online reading revenue was 77.1% of their total revenue. This means most of their income still comes from their online reading fees. Their net profit is 1.2% of their revenue, which sucks for their investors.

Also, insiders reveal that their online revenue mostly depends on having a large number of high quality copyrighted IP. However, these high quality IP’s contracts will end in two years.

Recently, the value/price of the IP has increased so Yuewen Group will need to pay more if they want to keep them.

Thus, a profit ceiling is evident. Revenues will decline and user conversion rates will also decline when they lose the high quality IP.

A Company That Lacks Proper Licenses

Basically, a lot of subsidiary companies under Yuewen Group don’t have proper licenses and this is an operational problem. The regulation agencies might shut down some of their companies.​

TL;dr

The Yuewen Group is preparing for an IPO and had a copyright and contract conflict with Migu Reading. This incident revealed that Yuewen Group has problems with their business model, and is short-sighted in their closed-content strategy. The lawsuit and lack of proper licenses for their subsidiaries may also cause issues for their IPO.

This is to give some perspective of what you can expect from QI, their parent company, and G̶r̶a̶v̶i̶t̶y̶ Qidian Tales in the future.

 

Ahahahaha
Ahahahahahahaha
Ahahahahahahahahah
AHAHAHAHAHAHAHAHAHAHA
*sigh*

 

Good.

Would love to see where this goes.



Hopefully into the fire

 

600 millions yuan? They should have asked for 1 bil!

 

Looks like I need to *Vroom* *Vroom* Yuewen and co.

 

A leopard can't change its spots

 

Basically, their management operate as if they are still in the brick-&-mortar age instead of the Internet Age. They are idiots and deserve everything that happens to them.

 

Seems like Gravity is being pulled down... the irony.

 

An unexpected attack from the back!

 

To put matters into perspective, 600 million RMB is equal to over 90,000,000 USD. Qidian's parent company is being sued for over 90 million USD.

 

No surprise, I am pretty sure the agreement was not for Migu to pull a Netflix haha. Netflix has horrible profit margins but pay a fortune for their IPs and was forced to create their own content.
Qidian should learn from this and increase their license costs like TV companies do for Netflix.
Oh well, their IPO would have been their saving grace.

 

Isn't this already what happen with WW? Heck, the whole "dual-host" is the same, just a different telling.
And with how Many "Qi" novels being "asked" to take down by QI, isn't it similar?
If they aren't even successful in China, they think International is probably More Stupid to work? I laugh at the irony.
This will make more of those "Qi's supporters" "Wake up" while they still have the chances.

 

Lmfao @@@@@@@@@@@@@
Call it karma?

 

Can't say I feel sorry; I'm kind of happy actually.

 

What an irony...

 

nomnom, these are good.

 

How much 600 m yuan in dollar ?

 

better prepare for those 5 cent army or was it 50?....

 

someone mentioned it being 90 million