Executive Summary:
Webtoon is a platform on which independent artists can create and share comic-style creations called webtoons.
Webtoon makes money by selling digital coins, via merchandise sales, licensing fees, and advertising on its platform. The platform operates under a freemium model.
How Webtoon Works
Webtoon is a platform on which independent artists can create and share their comic-style creations.
The concept of webtoons originated in South Korea and simply stands for online comics or webcomics.
One key differentiator of webtoons is the way readers consume the content. Instead of switching from one page to another, they scroll up and down – just like on Facebook’s newsfeed.
And Webtoon itself is a platform that simply aggregates that content. Said content is created and published by independent artists.
Webtoon hosts content in a variety of categories including comedy, drama, action, horror, superhero, thriller, and more.
In the past, the platform has also worked together with other comic powerhouses such as Marvel and DC or celebrities like music group BTS.
Due to the overarching success of Webtoon and the genre as a whole, some of its comics have even been turned into movies, TV shows, and games.
Webtoon can be accessed by visiting its website or downloading its Android and iOS mobile apps. Consuming the content via mobile devices is normally how readers access webtoons.
Detailing the Founding Story of Webtoon
Webtoon, headquartered in Seongnam, South Korea, was founded within Naver by employee JunKoo Kim.
However, before going into how the firm got started, let’s first take a look at the history of webtoons as a whole.
In the late 1990s, the Korean government evaporated the local comic industry essentially overnight. It went on to censor many titles that it deemed harmful influences to the public.
Additionally, the bursting of the dot-com bubble and thus worldwide recession gave remaining comic publishers the rest.
However, the proliferation of the internet, for the first time in history, enabled regular people to become publishers of their own and not rely on expensive printing and distribution channels.
Coincidentally, it would be an American company that would go on to revitalize the struggling comic industry. Back in 2000, Lycos, one of the first search engines ever created, launched a so-called Manwha Bang section.
That part of the website featured what would be considered the first iterations of today’s webtoons. Competing sites like Yahoo would soon follow suit with content on their own.
Meanwhile, independent artists like Kang Full would go on to publish webtoons on their own websites as well. However, it took the involvement of two Korean internet powerhouses to finally get webtoons to the masses.
Korean web portal Daum created its own webtoon service back in 2003, prompting artists like Kang Full to publish their work there as well. And its rampant success didn’t go unnoticed by competitors.
One of those competing platforms was Naver, which is often referred to as the Yahoo of South Korea and is primarily known for its LINE messaging platform.
Around the time of the Daum launch, rumors began to emerge that Naver was working on a similar platform. This ultimately prompted JunKoo Kim, an avid webtoons enthusiast, to apply for a position at the company that was yet to be created.
In a 2017 interview with AllTechAsia, he reminisced about his motivations for joining Naver:
“A lot of people asked me to start a business with them, however, I never really thought of founding a startup outside of Naver. This is because there is a huge difference in terms of how big the company can become when one individual starts the company with few resources and when one launches it inside an already-established company like Naver. Especially, when you want the business to scale or expand to global markets, you need a great deal of resources and personnel.”
So, in 2004, Kim and Naver finally launched their own webtoons platform. During the first few years of operation, Naver’s Webtoon solely focused on establishing itself in South Korea.
Interestingly, webtoons as a whole would soon hit the Korean zeitgeist. In 2006, albeit with little commercial success, two popular webtoons named “Dasepo Girls” and “APT” (created by Kang Full) were turned into movies.
However, what ultimately changed the game was the rise of smartphones. South Korea, vis-a-vis Samsung, certainly had a front-row seat to the ensuing mobile revolution. Smartphones turned out to be the perfect format to consume webtoons, which only accelerated their popularity.
As a result of their ever-increasing popularity, Naver finally decided to take them global. In July 2014, it announced that what was then called LINE Webtoon would be launched in the United States. At the time, over 6 million people were already accessing the platform every month.
One of the keys to Webtoon’s rapid rise in popularity was the launch of the Challenge League months later (in November). The contest allowed creators to become official LINE Webtoon artists while being able to win up to $30,000 in grant money.
The international expansion went into full steam by 2015. Webtoon managed to release content in partnership with Marvel creator Stan Lee, YouTube personality and IPSY creator Michelle Phan, and even franchises like Star Wars.
To continue accelerating its growth, Naver partnered up with Softbank in November 2016 and launched a $43 million fund to invest in startups that have synergies with Webtoon.
Six months later, as a result of Webtoon’s success, Naver decided to spin out Webtoon into its own separate entity dubbed Naver Webtoon. Fast forward to the end of 2019 and Webtoon already boasted 580,000 amateur artists and 1,600 professional cartoonists on the platform.
The Covid pandemic became an even greater headwind, adding millions of users to the platform. Reporters in Korea even began to speculate that Webtoon could go public and raise a whopping $400 million in the process.
Instead, Webtoon made another splashy announcement. In January 2021, it purchased the social storytelling platform Wattpad for $600 million. The combined platforms would count a global user base of over 160 million people.
Meanwhile, more and more webtoon art would be turned into live-action TV shows and movies on platforms like Netflix and Disney+. Netflix, with its hyperlocal approach to content and seemingly endless budget, released webtoon-based shows such as All of Us Are Dead or Hellbound, among others.
To take advantage of all of those content opportunities, it opened a new division called Wattpad Webtoon Studios, which would translate the platform’s content into other formats. Apart from movies and TV shows, that also entailed comic books and games, among others.
Said division also inked more partnerships with media conglomerates. In December 2021, for example, it announced a deal with ViacomCBS International Studios to develop a slate of original series based on content from both Wattpad and Webtoon.
Simultaneously, it established a new European division in March 2022, which celebrated the launch of content in markets such as France and Germany. Seasoned media execs like David Madden, a former AMC and Fox TV Studios president, also decided to join the company.
Webtoon continued to go from strength to strength, which allowed it to introduce a new product back in October 2022. Dubbed Yonder, the app would only feature content from premium creators.
Today, Webtoon employs around 1,000 people across a variety of continents. Over 100 million people access the platform on a monthly basis.
How Does Webtoon Make Money?
Webtoon makes money by selling digital coins, via merchandise sales, licensing fees, and advertising on its platform.
The platform essentially operates on a freemium model. This means that Webtoon can be accessed free of charge. If users want to access premium features or content, they may need to pay for it.
One of the greatest advantages of the freemium model is that it helps accelerate user growth (because they don’t have to pay).
Point in case, when Webtoon entered the United States back in 2014, it had around 10 million monthly site visitors – a number that has since swelled to over 100 million.
The vast number of readers then prompts more creators to join, which improves the overall experience since better content is being published. It simply becomes harder for creators to stand out, which means that they have to up their game.
That world-class content can then be monetized in a variety of different ways. The shows that you see on Netflix, HBO, and other streaming services are just the tip of the iceberg (more on that in the coming chapters).
Artists then receive a portion of the income that Webtoon generates via the below revenue streams. They, furthermore, retain 100 percent of the intellectual property (IP).
For simplicity’s sake, we will exclude revenue from its other products and sister companies, namely Yonder and Wattpad.
So, without further ado, let’s take a closer look at each of those revenue streams in the section below.
Advertising
Likely one of the biggest sources of revenue is the advertising that Webtoon runs on its website and mobile app.
As stated above, over 100 million people are now accessing Webtoon every month. According to Similarweb, it’s one of the world’s 700 biggest websites (excluding app traffic, which should make up the majority of its visitors).
All of this is to say that these are a lot of eyeballs. And those eyeballs are likely super engaged, meaning they will consume multiple stories every time they log on.
That, in turn, means that Webtoon can serve more ad impressions, which therefore maximizes its revenue.
Interestingly, Webtoon does not run ads between pages and only shows them at the end of a story – at least on the browser version.
Another source of ad revenue is Webtoon’s YouTube channel, which has amassed over 775 million views.
Income from ad revenue, at least on the website and app, is then partially shared with the creators on the platform. Creators who reach 1,000 subscribers and 40,000 monthly pageviews are thus eligible to receive 50 percent of the ad revenue that their stories generate.
Consequently, this incentivizes said creators to create the best content possible because they will be able to gather more eyeballs.
And more world-class content then attracts more users which then again prompts more creators to join the platform. The increase in great content then adds other monetization opportunities, for example being able to license content for live-action adoption.
Localization is another key factor, which has also driven growth for juggernauts like Netflix. Webtoon, for example, has set up dedicated teams in a variety of European countries to tailor its content for those markets.
Webtoon’s business model is thus predicated on increasing the eyeballs its content attracts.
Coins
As stated above, content on Webtoon can be accessed at no cost to the user. However, if they want to access certain content earlier, they can do so via an offering called Fast Pass.
Episodes that potentially release earlier feature a Fast Pass icon. In order to subscribe to Fast Pass, users need to purchase digital coins.
This is how much the coins cost:
- 10 coins for $0.99
- 50 coins for $4.99
- 100 coins for $9.99
- 300 coins for $29.99
- 50 coins for $49.99
A Fast Pass normally is around 5 coins. However, the price ultimately depends on the series. Users can also purchase a Daily Pass, normally 3 coins, for early access to episodes (and not the whole series).
The creators then receive a significant portion of the revenue that the coins generate. While Webtoon is not disclosing how much artists are paid, it is likely dependent on the popularity of the creator.
Licensing Fees
Webtoon also generates income from licensing the content on its platform to other media companies.
In essence, the company gets paid a fixed fee whenever one of its stories gets translated into a TV show, movie, game, toy, and anything in between.
Additionally, Webtoon receives incentive-based compensation, meaning the more eyeballs or sales that licensed content generates, the more is paid on top of the fixed fee.
Once again, the creator will receive a portion of the licensing revenue that Webtoon generates. Moreover, they continue to own 100 percent of the content rights.
Technically, this means a creator could go out on his or her own and pitch said content to potential partners. In reality, this is far too complex for a one-man show.
Webtoon, therefore, decided to launch a dedicated studio in partnership with its sister company Wattpad. Said production company will develop the script, pitch it to partners, and at times even develop the content itself.
The creator not only benefits from having all the legwork done by Webtoon but can also take advantage of the firm’s increased negotiation power.
After all, it’s in their best interest to get off-platform content developed anyways since it significantly raises the profile of the creator and their content.
Merchandise
Another, likely significant, source of revenue is the merchandise that Webtoon sells online via its own store and on platforms like Etsy.
Webtoon mostly sells clothing, such as pants or t-shirts, via the store. Said clothing is then featuring prints from some of its most popular content.
Yet again, it can be expected that artists receive a portion of the sales that Webtoon generates from the merchandise.
After all, the company paid out $27 million to artists on its platform from 2020 to late 2022. This figure is likely to increase as Webtoon is introducing features such as tipping.
By the way, another huge benefit to offering your own merch is the fact that it acts as a quasi-free marketing channel. As more and more people are wearing those clothes, they are likelier to bring on new users or eyeballs to its live-action content.
This then leads to a so-called flywheel effect, meaning the users themselves are the ones who bring on new members through word-of-mouth who then become advocates themselves… and so forth.
Who Is the Highest-Paid Webtoon Artist?
Unfortunately, Webtoon does currently not disclose who the highest-paid artists on its platform are. However, that doesn’t mean creators aren’t making bank.
In July 2022, the firm announced that creators on its platform have received $27 million from Webtoon since the beginning of 2020.
Furthermore, during an interview with Forbes, CEO and founder Kim detailed that some of its most successful creators in Korea are making anywhere between $225,000 and $250,000 a year.
Generally speaking, one can probably assume that the creators of the most popular webtoons, such as Lore Olympus or True Beauty, are raking in the most cash as well – especially if their creations have been brought to the big screens.
