How Rongshuxia Opened the Era of Web Literature — and How It Fell | 20 Years of Web Literature, Part 1

In the internet's earliest days, Rongshuxia gave China's literary young people what they wanted. But it grew too fast, and paid the price every pioneer pays.

What we call web literature began simply as writing published online. Then came writers the internet discovered. Then content made for online readers alone. And then it turned around and began to reshape literature offline.

Like every part of the real economy the internet has changed, literature has met the same fate.

We are visiting the key figures of these 20 years, one by one, hoping to record this history.

On December 25, 1997, out of a personal love of literature, the Chinese-American Zhu Weilian created a personal homepage called Rongshuxia.

An era belonging to web literature had begun.

One web literature site after another followed. Hongxiu Tianxiang launched in 1999. Huanjian Shumeng launched in 2000. Qidian launched in 2002. Jinjiang Literature City launched in 2003. In 2006, a split at Qidian produced 17K Novel Network. Zongheng Chinese Literature launched in 2008…

After a series of mergers and alliances, China Literature — built around Qidian's founding team — pulled together Qidian, Hongxiu Tianxiang, Rongshuxia, Jinjiang Literature City, Xiaoxiang Academy and other sites, and now holds the largest share of the market. According to the listing prospectus China Literature filed in June this year, the company's total revenue in 2016 was 2.568 billion yuan. Several founders of web literature sites see that listing as the industry's finest hour.

Over 20 years, web literature has seeped into every layer of social life. At the end of 2015, a report by iResearch said that users reaching web literature sites through PCs and through mobile had each passed 140 million. Dong Qun, an editor on the Wolf Warrior films — now China's highest-grossing film series — spent years serializing military fiction on Qidian under the pen name Fenwu Yaoji. And over the past two months, People's Daily has run two commentaries trying to steer where web literature goes next.

But the growth has not been one long triumph. Sun Peng, founder of Hongxiu Tianxiang, thinks web literature has never really counted as a big business. In 2016 the industry's total output was about 4 billion yuan — while even the film industry, long dismissed as all thunder and no rain, took more than 45 billion yuan at the box office in a single year.

Early web literature was personal. Annie Baby wrote about the exhaustion of city life, Murong Xuecun was filed under "cruel youth," and Lu Youqing's Life's Message — A Death Diary (《生命的留言——死亡日记》) recorded life itself. Every author had a different voice. Now that web literature is an industry, genre fiction rules: CEO romance, cultivation fantasy, horror.

Whatever else is true, web literature let a great many writers escape long, repetitive lives and win something — money, fame, or the thing they had been chasing. The first person we visited was Zhu Weilian, the founder of Rongshuxia.

I

"Back then the whole social atmosphere was bright lights and extravagance, and people wanted to make money very badly," Zhu Weilian said of his thinking when he founded Rongshuxia. "But we still needed to leave a little room for the life of the spirit."

That was 1997. China was riding the last wave of people quitting secure jobs to go into business, a rush that began with Deng Xiaoping's Southern Tour talks in early 1992, which put the country back on the path of reform and opening-up. "1993 marked an extremely important watershed in China's economic and cultural transformation, one that announced the full arrival of secularization and commercialization," wrote Xie Jingguo, an assistant professor at Soochow University in Taiwan, "famous multinationals like KFC, McDonald's, Kodak, Sony, Coca-Cola and Pizza Hut put up their advertising signs one after another on the streets of China's major cities."

Zhu Weilian came to China during exactly this period. He was born in California in 1971 to Chinese immigrant parents who ran a local restaurant. In 1994, after graduating from UCLA and spending a year with the Los Angeles Police Department, he decided to come to China and start a business.

The business he chose was advertising. After the founding of the People's Republic, the planned economy allocated every product by state quota. There was no market competition, and so no room for an advertising industry. As commerce slowly revived in the 1990s, companies began to need advertising to sell things. Most of it ran through television, radio, newspapers and magazines. Zhu noticed that direct mail — sending ads straight to the people you wanted to reach — was a business nobody had tried, and founded Lianmei Advertising.

By 1997 Lianmei Advertising was on solid ground, and Zhu sold it for $12.4 million to Omnicom Group, one of the world's four largest advertising conglomerates. In a later interview, Zhu said he had grown tired of advertising and wanted to play at something else. "In life, don't hold yourself back."

"I'd more or less made my name already, and made more than ten million dollars," Zhu told QDaily. "But in one life you always have to do something people will remember."

"As for people, I think the spirit is above everything else — at the time I hadn't thought that much about literature in particular." So Zhu founded Rongshuxia and gave it a mission: "Life, Feeling, Reflection." "I think that in the one life a person gets, he should record his life, his feelings, his experiences, turn them into words, so more people can share them and pass them on, and more people can find something that speaks to them."

At first Rongshuxia was only a personal homepage. Zhu had no internet background and understood none of the technology, so he asked a friend to build the site. He wrote a few articles himself and posted them. "Nobody was reading it then — maybe one or two people a day."

In 1997 the internet was still brand new in China. The country had formally connected only in 1994. The China Internet Network Information Center (CNNIC), founded in 1997, reported that same year that fewer than 300,000 computers nationwide were connected to the international internet. The hottest site was Shuimu Tsinghua, a campus BBS inside Tsinghua University. Xici Hutong, Xilu and Tianya — the communities that would later carry BBS culture to a far wider audience — were still two or three years from appearing.

As a personal homepage, Rongshuxia stopped satisfying Zhu almost immediately. Within a month he had a new idea. "Just me, sitting there posting a few pieces of overwrought writing — that was nowhere near enough. That was only my own life, and I had no way to share other people's. What I found more interesting was the multitude: how they live, how they understand the world." Zhu put a submission link on the site; clicking it let users send their writing to Rongshuxia by email.

Technical limits made setting up a personal homepage a nuisance in those days, and no other site on the Chinese internet was taking user submissions this way — so Rongshuxia caught people's attention fast. "Then the numbers started climbing. One day Shanghai Online told me my traffic was too big. Rongshuxia was hosted under Shanghai Online at the time. They said, do you know how many people visit your site in a day? I said I didn't." Zhu supplied the number: unique IP visits had passed 100,000.

Submissions climbed too. Zhu handled the whole process alone — reading, editing, publishing. Some days he read more than 300 pieces by himself. Fixing typos and punctuation was tedious and endless. Worse, unlike a blog or a social network, where posting is instant, Zhu had to push each submission onto the site through a cumbersome FTP system. He was still running his advertising company, and poured nearly all the time left into Rongshuxia.

In a way, Zhu and his Rongshuxia were carrying the literary hopes of a generation. Publishing literature had depended on literary journals and magazines, which held to their own narrow, fixed taste and had little room for anything else. Their cycles were slow: years could pass between submission and publication. And they simply had no capacity. In a country with China's population, the number of young people with literary ambitions was obviously enormous, and the internet could break through what the old channels could hold.

Rongshuxia also offered a relatively pure literary environment. It took only user submissions, and Zhu filtered them against the standard he had set — "Life, Feeling, Reflection" — so next to the big BBSs of the day, which carried every kind of post imaginable, Rongshuxia stood out under the banner of literature. "I didn't advertise, didn't do any marketing. By the time I noticed, Rongshuxia was already a hit."

What stayed with Zhu most was a business trip to London. To keep the site updated, he placed international calls from Britain back to Shanghai to check submissions, edit them and publish them. In one night he spent £7,000 — nearly 100,000 yuan at the exchange rate of the time.

"Money wasn't a big deal for me, because my finances were still very solid then." Even so, Zhu felt he couldn't keep it up. "If it went on like this I'd be letting the readers and the writers down, so I decided I had to set up an editorial department."

II

By now Rongshuxia looked nothing like the personal homepage Zhu had put up. With hundreds of submissions a day and visits in six figures, it had become the most important outpost of web literature in China. Zhu had started it purely out of personal interest, with no plan to make money from it, but with so many people's hopes riding on it he could no longer run it as a hobby. In August 1999, Shanghai Rongshuxia Computer Co., Ltd. was formally established.

Zhu wrote a job posting, put it on the site, and resumes flooded his inbox. "There were hundreds of resumes. So many people wanted to come," he said. "One man wanted to come all the way from Yunnan, telling me the salary didn't matter as long as he got fed." Zhu didn't hire him in the end — he thought the man too impulsive. What mattered most in hiring was whether the applicant understood Rongshuxia's style and what lay underneath it; education and ability came after that. The first round brought in seven or eight editors, who read submissions and then edited and published them.

As time passed, more and more people came looking for Rongshuxia. Zhu remembers interviewing a plainly dressed young woman with two braids, who told him her name was Li Jie.

Chen Wanning was knocking around the Tianya community then, and had written a book called Innumerable Intimate Contacts (《无数次亲密接触》) in imitation of Pizi Cai's wildly popular First Intimate Contact. He came to Zhu too. "He said he'd lost tens of thousands of dollars trading futures, was flat broke, and wanted a proper job," Zhu recalled.

Lu Jinbo — who was likewise spurred by Pizi Cai to write Love Lost in Cyberspace (《迷失在网络中的爱情》) — joined at Zhu's invitation. Zhu rented him a villa on Beijing West Road and gave him two round-trip plane tickets to Beijing a month.

All of them became famous later. Li Jie is better known by her pen name, Annie Baby; Farewell, Vivian (《告别薇安》) and August Unfading (《八月未央》) made her famous overnight for their fine-grained portraits of the urban mind. Chen Wanning is Ning Caishen; after leaving Rongshuxia he became a screenwriter, and My Own Swordsman and Longmen Escort Agency (《龙门镖局》) are both his.

Lu Jinbo stayed at Rongshuxia a long time before moving into publishing. In 2016, Guomai Culture, the company he founded, closed an 85 million yuan Series B round; it is one of the hottest private publishing houses in China today.

At Rongshuxia, Lu Jinbo was editor-in-chief and Ning Caishen was chief operating officer. With Zhu, and with the already famous writer Chen Cun, whom Zhu had met at a gathering, they made up the management team. Li Jie started as an ordinary editor, but Zhu later put her in charge of an "Annie Baby Studio," where she led six people making an e-magazine out of Rongshuxia's writing.

With a team in place, Rongshuxia grew faster still. By October 2005 it had 4.5 million registered users, some 5,000 submissions a day, and more than 3 million pieces in its archive. Within two years it had become a company of more than 200 people, with branch offices in Beijing, Guangzhou, Chongqing and elsewhere.

For a while, from the outside, Rongshuxia looked unstoppable.

III

As a business, Rongshuxia had by now become a machine for burning money. "I decided to throw in 1 million yuan a year for this — but I was actually spending 1 million a month." Zhu did the sums: fixed costs alone — salaries, rent, utilities, bandwidth — ran past 10 million yuan a year, and that was only to keep the company running. "There were plenty of other places that needed money."

By today's standards, going from nothing to 200-plus people in a year may not sound fast. But around 2000, for a company with no profit model in a market where money was hard to raise, that pace was close to suicide.

Zhu thinks of Rongshuxia's growth as a car: once the wheels are turning there is no stopping. In theory, after hiring those first seven or eight editors, Rongshuxia could have braked — given Zhu's own wealth, keeping a site like that alive would have been no trouble at all.

Part of the reason he didn't, Zhu puts down to his character. "[If Rongshuxia] stayed at the cost of seven or eight people forever, that would have been too easy for me. But once I chose to grow it, I wanted to grow it into the biggest space, the biggest scale. Either don't do it, or do it as well as it can be done. Caution isn't in my nature."

He also points to what other people expected. "As more and more people joined us, obviously they didn't want to just guard this one tree — they wanted something bigger." Though, Zhu added, "in the end I decided everything myself. For Rongshuxia to become a world-class company it had to go public. That was still my ultimate goal."

The goal was large; the execution left plenty to argue with. Rongshuxia became known for spending freely. Its Beijing office was in Kerry Centre, Zhu recalled, and its Guangzhou and Chongqing offices in the Metropolitan — "all five-star office buildings." And by some accounts, in the years when Rongshuxia made no money, Zhu couldn't be bothered to sign off on anything under 5,000 yuan. With the proceeds from selling his advertising company behind him, he did not seem to mind spending.

Against that, a public report from 2001 quoted Zhu claiming monthly revenue of 4 million yuan — while Zhu told QDaily that Rongshuxia's real monthly revenue then was perhaps tens of thousands of yuan, maybe a little over 100,000. "Co-publishing, print publishing, radio partnerships, brand partnerships — we tried every way of making money we could think of, and none of it made money."

Publishing was still the main source. Rongshuxia signed its authors and paid them for their work, which gave it the rights; it then worked with traditional publishers and took a share of the print revenue. On average a book brought in only tens of thousands of yuan.

Rongshuxia produced a great many web-literature authors, but most of their influence stopped at the edge of the internet; when the work faced the test of print, sales were usually ordinary. Part of the reason was that few people were online at all, so a big event on the internet might amount to nothing in the wider country. And the kind of web literature Rongshuxia stood for still asked something of its readers, compared with the CEO romances and fantasy novels popular today. "Ordinary literature — Chinese people read far too little of it. This is a country that doesn't love reading," Zhu said.

Another thing that still rankles is how backward payment was. To pay its authors, Rongshuxia's accountant had to go to the post office and spend a whole day filling out remittance slips one at a time.

Rongshuxia once tried e-books, priced at one to two yuan each. Zhu believes it was the absence of a payment method that killed them. If payment had kept pace, he thinks, annual revenue could have reached tens of millions. "Rongshuxia would have already ruled the whole field — none of what came later would have happened."

In fact the small payments Zhu was imagining wouldn't arrive until around 2003 — first online banking and phone top-ups, then game cards and virtual currency, and finally, today, WeChat and Alipay. Rongshuxia's e-books came too early.

To solve the money problem, Zhu tried to raise funding. But China then had nothing like today's abundant capital, no real primary market to raise from. Several dollar-denominated VC firms showed interest in Rongshuxia; its lack of a profit model made them hesitate.

"There was no way to make money out of this. A lot of people told me I should have built an auction site, like EBay," Zhu recalled. "A lot of VCs summed our model up as Online Literature, but Literature is something you just can't monetize."

Publishing was also a sensitive industry in China — under the Catalogue for the Guidance of Foreign Investment Industries, editing and publishing books, newspapers and periodicals, along with online publishing services, all sat on the list of industries closed to foreign investment — and that affected Rongshuxia's talks with several interested groups and funds.

"Pioneers pay a price." That is how Zhu sums up everything Rongshuxia tried commercially. "Maybe that's just Rongshuxia's fate."

IV

With Rongshuxia's cash flow liable to snap at any moment, Zhu says he was anxious, though not that anxious, because from the start he had lined up a way out for Rongshuxia — which was also a way out for himself. "My own money could carry it, but it would be exhausting, and it would hurt my other companies."

That attitude had less of an entrepreneur's hot blood in it, and looked a good deal like the shrewdness of a man cashing out at the right moment. Zhu has his own account. "This is a responsible attitude. I couldn't let my own limited finances, or limits on my own growth, drag all of Rongshuxia down. I couldn't accept Rongshuxia collapsing and all those people's writing simply ceasing to exist — that was my biggest worry. I couldn't carry that risk."

In 2001, through Lu Jinbo, Rongshuxia made contact with the Bertelsmann Group. Bertelsmann, based in Germany, is the world's largest publishing and media group, with assets including Penguin Random House and the music-rights company BMG; its total revenue reached 16.9 billion euros in 2016.

Bertelsmann had entered China in 1995, selling books through a book club. At its peak it had 1.5 million members in China and annual revenue of 150 million yuan. Since foreign companies couldn't publish books in China directly, Bertelsmann approached Rongshuxia hoping to trade publishing resources. The two agreed on two things: Rongshuxia's books would be sold through Bertelsmann's book club, and Bertelsmann would put its name on the web literature contest Rongshuxia ran.

By Zhu's account, while the two were talking, Bertelsmann also proposed that they merge. In February 2002 Bertelsmann announced it was acquiring Rongshuxia. Neither side gave a price, but later reports put it at $10 million.

Looking back, Zhu believes the deal, forced on him by circumstance, "didn't hurt anyone — it just burned a lot of my money… For me the biggest assurance was that they promised Rongshuxia's basic mission and principles wouldn't change, its basic tone wouldn't change, and not one person would be let go — everyone willing to move over, they'd take."

After the merger Zhu stepped out of Rongshuxia's daily operations. Apart from occasionally logging in to see how the site looked, he never again involved himself in any company connected to it.

Bertelsmann itself, though, was already sliding. Around 2002, e-commerce sites like Dangdang and Joyo seized a large share of the book market with price wars. Bertelsmann's mail-order catalog couldn't compete with online channels, and the strict rules of a multinational left it without control over its own prices.

Its offline bookstores ran into trouble at the same time: rents kept rising while fewer and fewer people bought books. In 2006, Bertelsmann closed more than ten chain bookstores in Beijing and Hangzhou one after another. In 2008 it announced the closure of 36 outlets across 18 cities. Less than a month later the Bertelsmann book club stopped operating and left China.

Rongshuxia, which had never made money, was sold by Bertelsmann in 2006 to Huanle Media for $5 million. Huanle had launched a popular variety show, Joy Mobilization (《欢乐总动员》), back in 1999, and at the time it, Enlight Media, Paige Taihe and Tanglong were known together as the "Four Princes" of private media. By buying Rongshuxia, Huanle Media hoped to turn its novels and essays into films and television series.

It is hard to say Huanle Media took Rongshuxia seriously: by 2009 the site was unreachable for half a month. After the press reported it, a Huanle Media representative said the site was down because it was switching hosting providers, "but now we're back up."

Huanle Media didn't keep Rongshuxia either. In 2009, Shanda Literature — which already owned Qidian, Hongxiu Tianxiang and other web literature sites — bought it. Three years later Zhang Enchao, who had become Rongshuxia's general manager, wrote about what he found: "When we took it over, Rongshuxia had already been stalled for a while, interest was low, daily page views were under 10,000, its key authors had nearly all left. The onetime overlord of literature was an empty shell."

Zhang tried to revive it with a run of nostalgia-themed marketing, but the market had changed too much. Above all, the kind of online fiction Rongshuxia stood for had given way to romance, fantasy and the supernatural — more entertaining, with higher click counts and far more commercial potential. Hongxiu Tianxiang had once been closer to Rongshuxia, but after weighing its options it committed to romance and swept the other genres off its site.

Rongshuxia was far behind and had no strength left to chase the trend, and Shanda Literature already had Qidian and Hongxiu Tianxiang in the house — getting them to compete with each other internally was obviously not easy. Today Rongshuxia is a symbol, set on an altar for people to remember or look up to, while most young people only stare blankly and ask one another: what is Rongshuxia?

V

Rongshuxia has fallen. It went from Zhu Weilian's hands to Bertelsmann, then to Huanle Media, and finally was packaged up by Shanda Literature and sold to Tencent. In today's web literature market there is not much room left for it.

But open the site now and the homepage will still tell you it holds 120,000 full-length novels and 2.17 million short stories. That was what Huanle Media and Shanda were after when they bought it. Huanle Media wanted to turn the novels into films or television; Shanda's original idea was to turn them into games.

Nobody said "IP" back then, but that was the business both Huanle Media and Shanda had in mind. The pity is that neither 2006 nor 2009 was the film and television industry's best moment, so the adaptations crawled. Shanda was thinking about making a Ghost Blows Out the Light film in 2007; the movie didn't reach cinemas until 2015.

What Bertelsmann valued in Rongshuxia was its users. In 2002 you could arguably say Rongshuxia had gathered most of the literary readers in China, and as Bertelsmann moved its book club online, those users would have been the best possible base. But Bertelsmann's offline catalog and bookstore business were too large and too slow, and it never made good use of the members Rongshuxia had assembled.

As Rongshuxia changed hands again and again, Zhu repeatedly said he wanted to buy it back. There were reports that if he couldn't, he would build a new Rongshuxia himself. This time he told QDaily he never had any such plan — the press had misread him.

Asked for Rongshuxia's finest hour, Zhu points to 1999 and its first web literature contest. He put in more than 100,000 yuan of his own money, and the art director, Chen Cun, used his standing to bring in Wang Anyi, Jia Pingwa, Yu Hua, A Cheng and Wang Shuo. The awards ceremony was held at the Shanghai Centre Theatre on Nanjing West Road, with more than a thousand people packed into the hall — a grand occasion.

After leaving Rongshuxia, Zhu joined Shanda and then Tianlian Century. In 2007 he founded an online gaming company, Baoyu Entertainment. His latest title is founder of Kangaroo King, a meal-replacement brand. His most recent Weibo post shares the account "Kangaroo King Light Fasting Companion" and reads: "Over the past three sessions we've helped more than a thousand people improve their health and shed fat. The fourth session, 'Fourteen Days to Discover a Better You,' officially begins on August 9, and I'll again be serving as headmaster, with you the whole way."

Rongshuxia, for Zhu, was one stage of a life: over is over.

"After all, before I turned 30 I sold two companies — one to the world's largest advertising group, the other to the world's largest publishing group. The first made a great deal of money, the second not much. But in one life you don't get a second chance to do that."