Last week, an anonymous post on Reddit, since deleted, claimed that a current creator contract from WEBTOON’s Originals (paid creator) program included some outrageous conditions, including the option to buy 100% of the IP rights for “a very low fee” and total control of print and other media options. The poster did not identify themselves and did not include any evidence (e.g., text from the contract). As such, it is impossible to treat as a news story rather than just another ugly rumor circulating online. However, the post went viral and set off a mini-firestorm of creators who did go on the record with concerns about the company’s business practices. So what’s going on?
Clarifying WEBTOON’s position. WEBTOON issued a detailed and lengthy response, both asserting its own general business practices and refuting the specific claims made in the post.
For example, the company stated that “WEBTOON offers a range of monetization options for creators. On-platform monetization options include ad-revenue, paid content purchases, Super Likes purchases, and an international localization program to earn money in new regions. WEBTOON ORIGINALS Creators also receive advances to help jump-start production and episodic payments to assist with ongoing production. Off-platform, Creators can earn money from merchandising opportunities, and TV, film, and print publishing deals.”
WEBTOON also drew a distinction between WEBTOON Originals, where creators are paid under contract to deliver content for the platform, similar to traditional publishing, and WEBTOON Canvas, where creators can post their content without restriction, earning compensation from tips, advertising revenue share, and off-platform monetization (Patreon, commissioned artwork, independent deals, etc).
The company’s statement debunked specific claims made in the post, specifically around the option to buy print publishing rights, merchandizing rights, and media deals. WEBTOON characterized its relationship as becoming an “investor” in creator-owned properties, a licensor with a built-in option to represent the creator in merchandizing deals under a “mutual merchandising license agreement,” and a “producer” rather than an “agent” when it comes to media deals. According to the company:
“For print publishing and AV, we have an option to purchase the rights, subject to industry standard compensation terms, where the creator would receive the lionshare of rights fees from any resulting deals. This role is similar to that of a producer, not an agent.
“WEBTOON does not fill the role of an agent. Many creators have their own agents, managers, or legal representation, and WEBTOON works alongside these teams to ensure creators are represented in the contract process.
“When WEBTOON signs an Originals Creator, we become business partners and work together to use our resources to find mutually beneficial opportunities to invest in creators and their work.”
Nevertheless, some creators are dissatisfied. In its original reporting on the story last week, The Beat included several current and former WEBTOON creators expressing some complaints about the company’s evolving operating model. Across the various responses, one of the biggest issues, especially for longtime creators, is that the generous terms the company was offering as it was seeking to establish a bigger presence in the US market in the mid to late 2010s have developed into standardized offerings that demand more from creators, while offering less individual support and attention.
In addition to the quotes offered on The Beat, we know that WEBTOON has lost some creators over the years, notably Leanne Krecic of Let’s Play, who is launching her new series on Manta after making her displeasure with WEBTOON clear.
How widespread is this discontent? Again, there’s a lack of firm evidence. There is also currently another (anonymous) Reddit thread giving a more balanced view of the company’s practices. Because WEBTOON does not disclose how many creators are under Originals contracts in North America, there is no way to know how representative either of these sentiments are in the grand scheme of things.
The elephant in the room. Whether or not WEBTOON is right on the substance of this dispute, I think the reason that the original post got so much traction even without providing any verifiable details is that it touches on real fears that creators have in the current environment.
We know that creators are feeling the contraction of the industry since the pandemic boom. They feel the hot breath of AI threatening their livelihoods as writers and artists. They’re alarmed at the outsized impact of the consolidation of wealth and power in the tech industry. And some have been burned by the unethical business behavior of other publishers or bad actors.
Now they look at a platform like WEBTOON that presents itself as the shining hope of the industry, and has in fact made a lot of progress for the good, and they see it acting like, well, a business, and in certain ways, a business that is putting its own financial priorities ahead of its creators.
As WEBTOON heads toward a rumored IPO later this year, solidifying the role of the platform in the commercialization of new IP and franchises is crucial to proving out the business value of the company to investors. Being part-owner and exclusive producer of all these new entertainment properties, in some cases through its Wattpad WEBTOON Studios, is a significantly more compelling value proposition than simply being the tech platform that distributes the content.
In the long run, creators may benefit from having a well-resourced WEBTOON as a player in the market, but it’s understandable if they don’t want that success coming at the expense of their control over their creations, or changes in the terms that originally made the platform so attractive.
Creators should choose their “partners” well. Platform participation in creator-owned IP is not strictly necessary. The traditional prose publishing industry operates just fine being a production, editorial and distribution resource to writers without seeking to become “investors” or “partners.”. YouTube, as far as I know, does not seek a financial stake in the work of its creators, as long as they abide by the terms of service.
On the flipside, film production companies and comic publishers like DC and Marvel do own the IP, and the role of the creative talent is strictly work for hire, usually at good rates. But they also own the risk. That risk-reward ratio also works the same in the opposite direction for self-publishers, who maximize their personal control by doing all the work themselves.
Hybrid models that call themselves “creator owned” but actually involve some participation by the publisher or platform can be confusing, and in some cases, misleading. Creators rightly wonder what they are giving up when the platform seeks extensive participation in the fruits of their IP. They may experience seemingly-innocent “first refusal” language in contracts as leverage that their “partner” can use to scuttle outside deals and coerce creators to accept print, media or merchandising offers that benefit the platform at their expense. Artists worry when big money has plans for them and their work, and they should worry.
In short, contracts don’t have to be as bad as the anonymous poster on Reddit claimed to still have issues. And it’s not just WEBTOON that creators need to be aware of: it’s any publisher or platform whose business model and value to investors depends on exercising control overpotential franchise content, rather than just being the publisher, distributor or marketplace. WEBTOON is in the spotlight because so much money is potentially on the table in an IPO, enough that the conspiracy-minded might see all this shadow-boxing as a way to get out in front of troublesome issues before that high stakes effort begins. But regardless, it’s a question that creators need to face with eyes open.
Bottom line: contracts are written to benefit the party offering the contract. Creators should read it, or get an expert to read it, so they understand what they are signing. And above all, it’s naïve to be hurt or surprised when the business that is paying for their art acts more like a business than a supportive patron.
The opinions expressed in this column are solely those of the writer, and do not necessarily reflect the views of the editorial staff of ICv2.com.
Rob Salkowitz is the author of Comic-Con and the Business of Pop Culture and an Eisner-Award nominee.
Source: ICV2
