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While a rich body of literature in television and film studies and media policy studies has tended to focus on the media activities in the formal sector, we know much less about informal media activities, their influence on state policies, as well as the dynamics between the formal and the informal sectors. This article examines these issues with reference to a particularly revealing period following a large-scale government crackdown on peer-to-peer video-sharing sites in China in 2008. By analysing the aim and consequences of the state action, we point to the counter-productive effects in terms of cultural loss and the resurgence of offline piracy; we show the positive impact on forcing the informal into the formal sector, and pressuring the latter to innovate. Meanwhile, increasing rapprochement between professional and user-created content is leading to a new relationship between formal and informal sectors. This case demonstrates the importance of considering the dynamic relationship between the two sectors. It also offers compelling evidence of the role of the informal sector in engendering state action, which in turn impacts on the co-evolution of formal and informal sectors.

Emerging as a non-commercial, grassroots alternative to the state-controlled publishing businesses, online literature in China has formalised based on the freemium business model and with the influx of capital. However, little is known about the informality in the formal market and their mutually shaping relationship. This article approaches online literature production in China as case study of the interconnection and interactions between the formal and informal in the wider context of the creative labour debate. It begins with an analysis of the inception of online literature in the context of Chinese literary system before unpacking the formalisation process. It then examines precarity associated with the informal labour, particularly the augmented precarity under the sway of capital. Then, it focuses on surrogate writing as a new form of informality arising from the formalised market, reveals the formality therein and its economic and socio-cultural implications including its impact on the formal market.

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This article looks at a Chinese Web 2.0 original literature site, Qidian, in order to show the co-evolution of market and non-market initiatives. The analytic framework of social network markets (Potts et al., 2008) is employed to analyse the motivations of publishing original literature works online and to understand the support mechanisms of the site, which encourage readers’ willingness to pay for user-generated content. The co-existence of socio-cultural and commercial economies and their impact on the successful business model of the site are illustrated in this case. This article extends the concept of social network markets by proposing the existence of a ripple effect of social network markets through convergence between fixed and mobile internet, between traditional and internet publishing, and between publishing and other cultural industries. It also examines the side effects of social network markets, and the role of market and non-market strategies in addressing the issues.