The $400 million fiction giant Wattpad desires to become your literary agent as they have done for many others in the past. In 2013, Anna Todd changed her whole life by using Wattpad. It look less than an hour for the Army wife and part-time babysitter to create a first chapter of After, in which she wrote purely on her cellphone. Her erotic tale is about Tessa and Hardin – a wholesome college freshman and a tattooed bad boy. Todd posted the first chapter to Wattpad, one of the world’s largest destinations for online reading and writing and it has since been read more than 1.5 billion times on the fiction giant Wattpad.
Anna Todd’s book became a bestseller book series and sold 11 million copies after Wattpad brokered a mid-six-figure for Todd with Simon & Schuster. Todd fully acknowledges and credits Wattpad for getting her foot in the door.
“If I had sent After to any publisher, there’s no way they would have even read it,” says Todd.
Wattpad also got paid for its work, taking nearly 15 percent of Todd’s book earnings, which is about what a typical literary agent would charge, according to Forbes. The company is also a producer of the After movie that started production back in June.
“We had built the audience for the writers, the platform for them to share their stories,” says Wattpad cofounder Allen Lau, 50. “But we did have the idea, ‘Hey, we have millions of stories already. Perhaps we can expand that.’”
Wattpad contains more than 4 million writers, who post an average of 300,000 pieces a day. The company has 65 million active users who spend 383 million hours a month on its site and its mobile app reading pieces such as “Brave,” a yarn about the Harry Potter character Neville Longbottom, and “Taking Selfies and Overthrowing the Patriarchy With Kim Kardashian.”
The company collects an estimated $19 million in revenue, primarily from ads on its site and from stories sponsored by companies like Unilever who want to advertise alongside a specific writer or genre. Nearly all of its writers are unpaid, although several hundred make money from ad-sharing revenue. 200 of those also earn from writing sponsored content and inking publishing deals with Wattpad. The company has 130 employees and the Toronto offices, but aside from that, it has few costs beyond bandwidth. The model “is a great way to seek talent without having to pay huge amounts for it,” says Lorraine Shanley, a publishing industry consultant.
“It’s possible that if [a studio] wanted to reach a teen, young adult, female demographic, someone might look at Wattpad, but they’re only one place to go for content that targets that demo,” says digital media consultant Bill Rosenblatt, a Forbes.com contributor.