HOLYWATER’s $70M ARR Romance Media Empire: AI at Its Core, but Not Everyone’s Convinced
The Ukrainian startup HOLYWATER has reshaped romance fiction into a multimedia franchise generating $70 million in annual recurring revenue. Their approach combines AI with human creativity to build personalised storytelling experiences for over 32 million users. Yet, the rise of AI in fiction raises serious questions about authorship, ethics, and the future of creative control.
How HOLYWATER Builds Multimedia Franchises from Books
HOLYWATER's growth has been anything but slow. They started with interactive stories and expanded into multiple platforms:
- My Passion: A mobile ebook app focused on romance, offering offline reading, custom fonts, dark mode, and daily rewards. This app alone generates $26 million annually.
- My Fantasy: An interactive storytelling platform where users influence storylines and customise characters, blending reading with gaming.
- My Drama: A vertical video streaming app delivering short-form series (5-7 minutes each) with AI-powered chatbots that let viewers interact with characters. It attracts about 20 million monthly users, generating over €12 million monthly revenue.
- My Muse: An AI toolset helping users create short video series, audiobooks, and interactive stories using models like Midjourney and Runway, ensuring character consistency.
- My Imagination: An AI companion platform for real-time conversations and video calls with AI-generated characters.
These platforms share data with HOLYWATER’s large language models (LLMs) to identify popular content and trends. Authors can extend their work across formats: from ebooks to audiobooks to AI-driven vertical series and interactive AI characters. Around 30-40% of ebooks become audiobooks, and 35% turn into scripts for My Drama annually.
Authors vs. AI: Copyright and Ethical Concerns
Many authors have discovered their works were used without consent to train AI models. Notably, author LA Witt, who has written over 187 books, found that more than 100 of her titles had been used in datasets like Book3 without permission. This raises major intellectual property (IP) concerns in the publishing industry.
A recent court ruling found that training AI on copyrighted works may fall under transformative fair use, but the debate over permissions and royalties continues. HOLYWATER opts for open-source AI models such as LLaMA and Stable Diffusion to maintain transparency and avoid closed-source issues.
Protecting IP and Maintaining Author Control
Existing publishing contracts often grant publishers lifetime rights across all formats, but AI introduces new challenges. Some publishers are adding clauses to exclude AI use, while others have not. Authors worry about losing control, especially regarding audio rights, as AI voices threaten narrator roles.
HOLYWATER stands out by ensuring authors retain IP ownership. Co-CEO Anatolii Kasianov explains that agreements—exclusive or non-exclusive—are tailored per project, with royalties continuing even if AI generates derivative works. For example, if AI created new books in a style similar to a popular series, the original author should still receive compensation.
One success story: The author of a romance titled “Beauty and the Beast” licensed her book non-exclusively to HOLYWATER. After co-producing a vertical series with an investment of about $120,000, the project performed well, leading her to consider an exclusive collaboration.
NaNoWriMo’s AI Statement and Its Fallout
NaNoWriMo’s decision to neither explicitly support nor condemn AI writing sparked controversy. Their statement highlighted inclusivity, noting that some writers might need AI tools due to disabilities or other challenges. However, backlash from writers and sponsors led to board resignations and the eventual closure of NaNoWriMo after 25 years.
Author LA Witt, who began her career with NaNoWriMo, critiques this shift by emphasising the importance of the writing process itself. For her, the act of writing daily is foundational, and removing that creative struggle defeats the purpose.
The Emotional Core of Fiction: Can AI Replace It?
Witt argues that AI lacks the ability to generate the emotional nuance that human writers bring. She shares an example of a scene involving a hockey player’s guilt—an emotional detail that emerged only through her creative process. AI, she says, simply "fills pages" without that depth.
Although Kasianov encourages authors to use AI as a supportive tool to overcome writer’s block and speed up workflows, Witt’s prolific output demonstrates that efficiency can be achieved without AI intervention.
Should Writers Disclose AI Use?
Transparency is vital. Witt insists that authors should disclose AI involvement, at least on the copyright page. Due to lack of disclosure by some, many authors now include “No AI was used” notes. Readers, particularly in romance, often reject AI-generated content and narrations, seeing it as a betrayal of the emotional connection between author, narrator, and audience.
The core issue extends beyond IP—it's about trust and authenticity between authors, platforms, and readers.
While HOLYWATER’s AI-powered model and Witt’s traditional approach differ fundamentally, both represent paths that will shape the future of writing, each on their own terms.
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