Official Statement Regarding Creator Revenue Share

Hello.

This statement is issued by Lezhin Entertainment, the operator of Lezhin Comics.

Over the past four years, we have worked with 670 creators, with over 480 making their professional debut on Lezhin Comics. While we have always tried to create a stable work environment for our creators and reinvest in their comics, we did not handle everything as smoothly as possible.

Recently, allegations have been raised in Korea that Lezhin Comics has not provided fair payment to its creators. We would like to issue this statement to clarify these claims and dispel rumors.

  1. Were payments for Lezhin Comics’ international (China) revenues processed transparently? Why are these allegations being raised?

We are at fault. Lezhin began releasing comics in China through local agencies in 2014 (Lezhin Comics itself does not have a platform in China). Due to a series of internal delays, 8 creators were not paid until the fall of 2017.

We apologized numerous times to the 8 creators involved, for not communicating such internal situations beforehand, especially considering the importance of revenue payments to the creators. We finalized the detailed revenue reports internally and processed all payments for revenues generated in China this fall.

Learning from our early mistakes, we have entered into agreements directly with local Chinese platforms. We are processing creator revenue payments without delay. All creators whose comics are being distributed in China have been paid in accordance with their contracts.

  1. Are payments for creators’ revenues generated in Korea, Japan, and the US being paid properly?

Yes. Lezhin Comics is operating its service directly in Korea, Japan, and the US. All creator revenues have been paid properly.

Lezhin Comics creator revenues in Korea, Japan, and the US are all shared based on the Coin price readers purchase to read our comics. Initially, creator contracts for Japan and the US were based on retail price (a fixed percentage of actual sales). Currently, we are entering into contracts where revenue shares are based on fixed Coin prices. This would prevent creators from being paid less during Coin discounts and promotions.

Comic revenue generated from promotional Coins in the form of free Coins or Bonus Coins (such as Coinback events) are also included in creators’ revenue share. Although Lezhin Comics does not gain any profit from such promotional Coins, we pay the portion of creators’ revenue shares at our own expense.

  1. Has Lezhin Comics changed its revenue share policy to take advantage of its creators?

This is not true. Rather, we pay a minimum guarantee (MG) to our creators every month while their comic is being published. Our MG policy ensures that creators earn a living even if their comics do not perform well.

The purpose of this policy is to reinforce our company philosophy that “creators need to be able to tell the stories they want if we are to have diverse content. This is absolutely necessary to provide readers with a regular supply of high-quality content.”

We share all revenues for comics, regardless of how much sales a comic generates. Even if a creator’s revenue share is lower than the MG, we guarantee a minimum monthly income. This MG was increased the summer of 2015 for new creator contracts.

However, the Coin price basis for revenue share remains 70 won (approximately 0.06 USD) for existing contracts signed in early 2013, while the Coin price basis for revenue share was adjusted to 50 won (approximately 0.05 USD) for contracts signed from the summer of 2015. This policy change was to ensure that we can offer more creators a higher MG.

After increasing the MG, Lezhin Comics has incurred an additional expense of over 100 million won (approximately 90,909 USD) per month. This was in the interest of improving the creative environment for as many creators as possible, not to reap more corporate profits.

  1. Is it true that Lezhin Comics enforces a penalty to creators for late submissions and missed deadlines?

This is true. Every creator contract signed with Lezhin Comics since its launch has included a clause for late submissions and missed deadlines.

Lezhin Comics has grown both quantitatively and qualitatively, together with its creators since its inception as a paid comic platform in Korea in June 2013.

The company did not enforce this policy for over 2 years. Lezhin Comics first began enforcing this clause in August of 2015, when the increasing number of late submissions and missed deadlines started to affect overall operations.

However, we understand that creators may experience personal issues leading to late submissions and missed deadlines. Problems can also arise during the process of uploading the comics. Taking such considerations into account, each artist was allowed up to one late submission or missed deadline every month without incurring any penalties.

We also provide creators with a mutually agreeable and commensurate compensation for any errors made by the company. Of course, we plan to continue such remedies in the future.

Lezhin Comics has continually progressed and evolved, together with our creators. We are in the process of adapting and taking complementary measures to enhance our service.

In this vein, we believe that compensation for deferment should not be enforced unilaterally. The policy should be supplemented and improved. Additionally, numerous departments have been reviewing creators’ feedback on how to improve the compensation for deferment policy.

As a result, we have decided to abolish this policy in February 2018, under mutual agreement with our creators.

However, due to the policy being a legal clause defined in the creators’ contracts, a separate process of drafting amendments to the creator contract is required.

Additionally, we need to update the current system and make improvements, such as changing deadlines and clearly defining grace periods for making edits to submitted comics to prevent errors that may occur in the absence of compensation for deferment.

Since this process requires amendments to the contracts, we need to reach a consensus with our creators. We will respect individual creators’ decisions while proceeding with this process and provide detailed status updates to our creators.

  1. Closing Remarks

Lezhin Comics pioneered the “wait to read for free, pay to read now” service in Korea. Our belief has been that if a dedicated, paid comic platform were to contribute to creators’ economic and social stability, their creative work environment would become more stable. This would contribute to the proliferation of more diverse and high-quality comics. Consequently, readers would see the value in such comics and willingly pay to read them.

Lezhin Comics has worked with 670 creators over the last four years. More than 480 of these creators made their professional debut on Lezhin Comics. Purely working on the merit of each comic, we never discriminated between creators’ backgrounds, education, age, gender, or professional track record.

Due to such efforts, we were able to showcase a comic that earned more than 150 million won (approximately 136,136 USD) in monthly revenue share. We showcased a debuting creator’s work that gained worldwide recognition. We fostered an environment where creators could work on the stories they wanted to tell by guaranteeing a monthly minimum income during the serialization of their comic.

We will continue our efforts to provide a better service under the belief that the only way to guarantee Lezhin Comics’ future is to create a stable work environment for creators and to reinvest in comics.

 

Thank you.

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