As the internet has flourished, the job of the humble writer has become that much harder as the market has become flooded by professionals and hobbyists alike. Research from Harvard Business School highlights how motivational it is for book authors when they’re offered a guaranteed cut of any sales of their book.

The focus of the study is the Chinese e-book marketplace, where the researchers compare the motivation of authors who are offered a flat fee versus those offered a share of sales. The results suggest that writers are extremely motivated and influenced by the kind of commercial contracts they work under.

“It turns out, on average, these gig workers are very responsive to competition,” the researchers explain. “That’s good because we want people to have a more competitive spirit and produce better and more creative content.”

Creative output

The researchers analyzed around 10,000 new novels that were launched in China between 2013 and 2015. The e-publishing market has boomed in China in recent years, with over a million authors vying for the attention of over 300 million readers.

Authors typically try to produce content that is commercially popular, with novels on romance, crime, and mysteries particularly common. Some authors are paid a fixed price, which obviously means the popularity of the book is less important to their income than for those authors who are paid a percentage of the revenue they generate.

Suffice to say, in such a competitive market, the number of blockbusters is relatively small, and data from the research showed that less than 10% of authors generate enough income to live on.

Pay for performance

The researchers tracked not only the popularity of each e-novel, both in terms of click-throughs and eventual purchases, but also the productivity of the author in terms of how often they updated their book series each month. They then assessed the creativity of each author by analyzing the reviews they received for their work, with the algorithm the team developed for the task on the hunt for the use of words such as “original” and “unexpected” in the review.

The results revealed that as competition intensified, those authors on fixed price deals didn’t really change their output at all. This was not the case for those on more performance-related terms, who were found to increase their creativity in the face of increased competition.

“This shows that most of the positive gain from competition comes from authors who were on revenue-sharing contracts. If we use the revenue-sharing contract in the gig economy, then we shouldn’t be worried about a lack of creativity,” the researchers explain. “And we shouldn’t be worried about gig workers giving up because of more competition.”

Mixed incentives

This is where problems emerge, however, as the fixed-price model clearly favors the publishing platforms themselves, who stand to gain a larger slice of the pie when a book sells well, so are more inclined to promote them aggressively.

“The contractual agreement changes the incentives for both the freelancers and the platform, and platform promotion can play a key role in driving the commercial success of a complementary product,” the researchers explain.

So somehow the platforms need to come up with a commercial arrangement that both incentivizes authors to produce their best work while also proving commercially valuable for themselves.