We assign editors to cover our branded products largely by content genre. They review newly published literary works of a predetermined maturity and analyze the content quality subjectively based on their own experience and expertise, while referencing user data related to such works, such as number of times the works was archived, reader volume and the number of likes received from readers. Once our editors determine that a new writer has potential, they will work with the writer to improve the quality and relevance of his work for our readers. Depending on a writer ’s potential, he may have either generalist editorial coverage or a dedicated team of editors assigned to him. As part of the editorial process, our editors will continue to provide their own feedback and suggestions as well as collect readers’ feedback over time to provide writers with suggestions on the storyline, language and plot points of their works. To many writers, this is a unique resource enabling them to enhance the literary and commercial value of their works.

Finally, in addition to their roles in fostering organic content creation on our platform, they also curate the content published to readers on our platform and lead our third-party content sourcing efforts to ensure that we have the appropriate breadth of content on our platform.

# Third-Party Content Providers

To complement the original literary works created by our writers, we source high quality content from other online literary platforms. We also source physical book works for e-book conversion and publication on our platform from several leading offline publishers. We select works suitable for conversion based on commercial value for our platform. Our offering of e-books is especially conducive to attracting readers in older age groups who have stronger interest in traditional literature. To obtain the exclusive e-book publishing rights, including the right to debut the e-book version, we may agree to devote more promotional resources and offer higher royalties to the copyright owners.

As of June 30, 2017, we had sourced and published approximately 273 thousand and 137 thousand third-party sourced works and e-book works on our platform.

# Content Screening and Monitoring

We place strong emphasis on content screening and monitoring to ensure that our literary works do not contain any obscene or pornographic content or any information that mayj eopardize the quality of our literary works and that the publication and distribution of our literary content fully comply with the applicable laws and regulations. We require our writers to represent that their content is not plagiarized from others before posting it on our platform and we require writers with whom we sign licensing contracts to indemnify us against any violations by the writers of their contractual obligations. Our online content screening and monitoring procedures include both a proprietary, automated screening system as well as a set of manual review procedures conducted by a dedicated team of reviewers, many of whom are also editors on our platform who are familiar with the content. We regularly communicate with the relevant governmental agencies in China to obtain clear guidance on the relevant laws and regulations to ensure compliance. Our content monitoring staff is provided systematic training in the latest compliance know-how, and we closely supervise the screening and monitoring work performed by our staff. In the event of any allegation raised against us in relation to distribution of any pornographic or obscene content, we will immediately launch an internal investigation to verify if the alleged content indeed contains any pornographic or obscene content.

After the allegation is verified, if the alleged content is from any literary works created by our writers, we will suspend the publication of the involved literary works and ask the writers to amend the content to remove the pornographic or obscene content. We will re-publish the amended literary works only after the pornographic or obscene content is completely removed and the amended literary content has successfully undergone our content screening and monitoring procedures. In severe cases, we will completely remove the entire literary works and will no longer publish them. If the alleged content is made by our readers, we will immediately block or remove the related pornographic or obscene content and, if necessary, prohibit the involved readers from publishing any content in the future.

Automated Content Screening Process. All user-generated literary content and comments are first screened by our automated filtering system, which identifies and flags suspicious content for further action based on a regularly updated repository of keywords, according to the latest laws and regulations in China. For the earlier chapters of new literary works, the content that passes the automated content screening process is reviewed by our content monitoring team before it can be published on our platform. The later chapters of such legitimate literary works are then only subject to the first stage automated content screening process prior to publication on our platform. However, such later chapters are still subject to our manual review process, and will be immediately removed if found to be illegal or pirated at a later stage. All flagged content identified by our first stage automated content screening process is reviewed and confirmed by content monitoring staff before it can be published on our platform. Content that has been rejected or removed by our content screening and monitoring procedures are sent back to the writers, which can be re-submitted after revisions are made to our satisfaction.

Manual Content Monitoring Process. Content that passes the automated screening process is still subject to manual review by our content monitoring team. As of June 30, 2017, our dedicated content monitoring team had over 100 full-time staff members. Our manual screening procedure is multi-layered, with each piece of content subject to review and cross-review by different monitoring staff. We occasionally engage third-party consultants with specialized understanding of the Chinese content regulatory environment to review certain content, if necessary.

If we discover a user who has violated the user agreement, applicable laws and regulations or infringed any third-party rights, including copyrights, we may terminate such user ’s account and block such user ’s future uploads of content to our platform without prior notice. In addition, we promptly remove the relevant content when we are notified or made aware by copyright owners or learn from other sources of copyright infringements by users, such as lists of infringing content that the regulatory authorities publish from time to time. We encourage our users to help us with our content screening and monitoring efforts by offering generous rewards for tips related to potentially illegal, disruptive or pirated content on our platform.

Self-evaluation as required by the Trial Method. We are required to comply with the Trial Method on Evaluation of Social Benefits of Online Literature Publication Service Units (網絡文學出版服務單位社會效益評估試行辦法) (the “Trial Method”) which took effect on July 1, 2017. As advised by our PRC Legal Advisor, we understand that the Trial Method requires self-evaluation reports to be submitted by online literature publication service providers to the local administrative bodies by the end of January of every calendar year and evaluation of the online literature publication service