Fans call him the “Schumacher of Cyber Literature”. He writes at least 10,000 characters a day and says he'll earn more than 2.5 million Yuan this year (£220,000). Zhang Wei is more famous through his online name, though: the "Third Master of the Tangs". Millions of Internet users are familiar with his work. Tens of thousands of them pay cash through their mobile phones so that they can be the first to read his latest fantasy novel.

Business has been so good, in fact, that Zhang, 29, has quit his job to take his hobby full time. As one of the top-selling authors for a site called qidian.com, he is part of a "cyber literature" storm which has been sweeping China. In an era when the print world is lamenting its own destruction (the publishing industry is slashing and cutting its staff, smaller publishers are closing, bookstores are sending an increasing percentage of books as “returns,” heavy discounting is becoming the norm and the reading population is changing) China is now home to one of the globe's boldest digital ventures.

In February 2004, Zhang started posting his first fantasy novel Son of Light on the cyber-literature site Hjsm.net. It became an online sensation and brought him to the attention of a publishing phenomenon called Shanda Literature (owners of qidian.com). “I always had a passion for fantasy novels,” said Zhang. His books such as Crazy God and the King God of Death feature heroes who live on alien planets and save their world through the use of magic and superpowers.

“Shanda has made it possible for me to become a professional writer,” Zhang said. “It would have been difficult with the traditional print publishing.” He tests his stories by posting them first online to gauge reader reaction before committing them to print and produces about one new series (consisting of several books) per year.

Fame & Fortune

Shanda Literature – part of Shanda Interactive, one of China's largest games and entertainment companies, based in Shanghai – has more than 800,000 writers seeking fame and fortune like Zhang, and at least four million readers who pay to read fiction by chapter installments read online by logging onto qidian.com or, typically, downloaded ("via a software solution") onto their mobile phones. There are ranking systems, by clicks, and editors recommend daily choices. The platform averages around 400 million page views daily, the company claims, and updates 50 million Chinese characters each day. In Mandarin, Shanda means “grand and big” and in September it recorded its first ever top-10 Chinese bestseller. It now controls over 90 percent of China's online-reading market.

According to CEO Hou Xiaoquiang, 34, a former literature student who previously worked for one of China's biggest internet portals, Shanda's relationship with wireless company China Mobile has been key to its success. China Mobile has 600 million customers and collects micropayments from those reading Shanda's novels, typically 2 to 3 yuan cents per 1,000 words. "Some of the novels are free to read. For certain popular titles, the first few chapters are also free to read, and if readers really like the story, they have to pay to read the rest of the story by chapters," said Hou. "About 62 percent of the registered readers of the three websites spend an average of 60 minutes online reading novels daily."

Hou added that Shanda shares between 20 to 50 per cent of that income with authors (the most popular receive book publishing contracts but have to sign over all rights) and now has more than 100 writers who have earned over 100,000 yuan (£8,875) each from their writing so far. Shanda's three websites (the company was formed in summer 2008 from the merger of three previously-purchased digital publishers) publishes the writing direct, without editing.

The company has put some 1,500 books into print, and according to Hou, approximately 90 of the top 100 most popular Chinese books searched by readers on Chinese Google and Baidu (another popular search engine) are from the Shanda websites. “Our literary sites have brought together the most talented writers in Chinese online literature,” boasts Hou, who sites Zhang Wei as one example.

Horror, Sci-Fi big hits

Reading online novels is one of the major things that Chinese like to do when they surf the Net, according to a survey by iResearch, an online research company. In China, there are now more than 10,000 websites that provide original reading services. Much of the work is genre novels, though – fantasy and horror, sci-fi – and unlike Zhang Wei, few of the writers make a full-time living from it. Several have admitted they write content simply for money and not literary merit.

According to Hou Xiaoquiang, though, the publishing industry in China is now "very active" after being opened up to competition (it was previously state-owned). "Meanwhile, digital publishing is the industry trend. We think there will be more convergence of both online and offline publishing," he said.

Meanwhile, Shanda confirms that it has set up an "overseas expansion strategy", primarily focused on expatriate Chinese communities for the moment. It also has a new E-Reader device in development.

Experts Unsure

Dr Samantha Rayner, Senior Lecturer in Publishing at Anglia Ruskin University, said that Western publishers had much to learn from Shanda's "radical model." However, not everyone is convinced this offers a commercial future for writers. Director of Britain's leading independent literary agency, United Agent's Robert Kirby, said: "Shanda focuses on genre material which, as you know, is not short of millions of would-be authors worldwide – as my in-tray attests. Whilst it may be democratic, isn't it ultimately vanity publishing? Millions of words, hundreds of thousands of books available, each with a handful of readers?"

Alastair Williams, Managing Director of Summersdale, an independent publisher with a strong record of e-publishing, backed up this view. "Everyone wants to publish, especially the young. Just look at blogs. This is all fine, but there's no editing. Shanda is a novelty. There's a huge amount of content already out there: we have over 120,000 physical books published each year in Britain. Do we need any more content?"

This story was commissioned for WIRED UK magazine © 2010