COMICS AND ECONOMICS: PUBLISHING IN A PINCH

[MattBrady]

by Benjamin Ong Pang Kean

What kind of a world do we live in today?

Think about it. Seriously.

Oil and gas prices continue to set records, with oil prices setting record highs, leading to consistent record high prices for gasoline. Analysts from Goldman Sachs recently issued a research report predicting that oil prices are increasingly likely to hit between $150 and $200 a barrel in the next six to 24 months.

Consumers are now shelling out more for goods, services and especially food. According to a report from the Labor Department released on May 14, the Consumer Price Index increased 0.2% in April, strongly suggesting that inflation is on the rise.

However, the Americans are not the only ones feeling the economic pain. On the global front, the United Nations Food and Agriculture Organization reported on May 12 that the production of rice, a staple in the diets of nearly half the world’s population, will skyrocket to record highs in Asia, Africa and Latin America this year. Just think for a second about the pinch on the budgets of millions of Asians and fears of civil unrest that are being raised. In fact, food riots have erupted in recent months in Mexico, Morocco, Mauritania, Senegal, Uzbekistan, Yemen and Guinea.

What do all these mean for the comics industry as a whole? Consumers faced with rising gas and food prices as well as tumbling US house prices are forced to cut back their spending, with sentiment on the economy dropping to recessionary levels. And yes, the comics industry is not spared.

According to projections by The Comics Chronicles’ John Jackson Miller, sales of comics to the direct market by Diamond Comic Distributors in the first quarter of 2008 totaled $98.3 million as compared to $99.3 million in the first quarter of 2007, down 7%.

The US Commerce Department reported on May 13 that retail sales overall fell 0.2% last month. But excluding sales of automobiles, the sales rose by a surprisingly strong 0.5%.

Over in Europe, rising fuel and food prices saw consumers’ budgets being squeezed and retail sales reportedly dropped the most in four years in April. In China, however, retail sales powered ahead in April to 22%, up from March’s 21.5%. It was the fastest rise since the government started gathering monthly data in 1999.

So, how are comic book publishers set up to weather the current storm and basically, the coming economic times?

With us today are Filip Sablik, Publisher, Top Cow Productions, Inc.; Ross Richie, Publisher, BOOM! Studios; Ralph Tedesco, Vice-President, Zenescope Entertainment; Darren G. Davis, President, Bluewater Productions; Mike Kiley, Publisher, TokyoPop Inc.; and Mike Richardson, Founder, President & CEO, Dark Horse for a special Q&A session on “Economics and Comics – Publishing in a Pinch.”

Newsarama: In recent years, household consumption, backed by rising home values, has supported buying habits. But a serious housing slump, rising consumer prices and fears of a worldwide slowdown have interrupted that pattern. That said, how do you foresee consumer spending trends in the next few months?

Filip Sablik: Traditionally people turn to cheaper forms of entertainment during a downturn in the economy, whether it's renting a movie instead of going out to see one or picking up comic books, which are still a relatively cheap form of entertainment. We have a ton of great new material coming up in 2008 and we feel like editorially we're on a high point in the company. I'm optimistic that with a tight controlled publishing line and a high level quality we'll weather any downturn in economy well.

Ross Richie: We really don't foresee a big change in business. I think we've worked really hard to establish a brand name for quality and a really unique editorial eye -- I don't think there was anyone really doing what we were doing in comics before we arrived -- and I think comic book fans love comic books. I know that I often skipped on eating a burger out when times were tight to make sure I could pick up a copy of Nexus or Grendel or American Flagg! back in the day. Our aim is to create classic comics that you can't live without in that vein.

Ralph Tedeso: It's a concern in general when we face the possibility of a recession but this is America and we're an extremely resilient country. I might not agree with everything the Bush administration does but his call for an economic stimulus package seems to be a good idea. At least it's more of a proactive approach to facing a potentially serious problem. But back to the question at hand.

In terms of consumer spending, it's certainly difficult to predict something like that during a recession but comic books are a rather inexpensive form of entertainment in general and I like to think consumers will continue to spend on lower priced entertainment even if we do face an economic downturn.

Darren G. Davis: In the last year we have started doing a lot of work with the library systems. Most of them are picking up graphic novels. So people that want to read books for free they can go there. It really is a great thing that libraries are picking these up. As a kid, I learned how to read well thru comics. We have also offered a couple of 99 cent titles to help out in the comic book market.

Mike Kiley: Although we enjoy the financial section of the Sunday [edition of the] NY Times and the entirety of the WSJ, we are storytellers and not economists. We’re just trying to what we always do: make great manga!

Mike Richardson: Obviously, the economy has looked better than it does right now. Dark Horse, like every other business, will be watching what happens in the coming months, as consumer spending will inevitably tighten up a bit. We've been through tough times before, however, and we will do whatever needs to be done in order to stay profitable.

NRAMA: How affected were you guys by the unexpected softer retail sales in December – or were you?

FS: We actually posted some really nice numbers on the debut of The Darkness series with issue #1, sold out of Madame Mirage #3 soon after it came out, and had to go to another printing of the Wanted trade paperback due to the rapid sales. So we actually closed out the year on a relative high note! We do see a dip in initial orders from retailers for items shipping in the 1st couple of months of 2008, but that's pretty typical any year since retailers are ordering before they know what they're holiday season will be like.

RR: We did not see that. And many of the retailers we have recently spoken to, like Atom! at Brave New World in Newhall, CA and James Sime at the Isotope, report quite the opposite, they had big Decembers that bleed over and saw big Januaries and forward into the year.

RT: To be honest, it was one of our better months as a company. That has a lot to do with the fact that we're somewhat new in the industry so our sales have been increasing rather steadily over the course of the last 24 months. 2007 was a really good year for us as a growing company but certainly we want to continue to increase our sales and start reaching those Dark Horse, Image and Dynamite numbers eventually.

DGD: We are currently selling ads in the books and trying not to depend 100% on the sales of the book to have them do well. The indie market is really in a slump, but I think with the quality of the books that Devil's Due, Ape and BOOM! Studios are putting out, the rise for the sales will get better.

MK: Less affected than we thought we’d be. We have great fans who are very loyal readers… and we thank them every day.

MR: We had one of the best months in our history, so I guess the question is not applicable to us.

NRAMA: Is your company bracing itself for what many are seeing as an impending recession?

FS: We're maintaining a very controlled publishing line and will continue to do that. We're a boutique publisher and we only put out about 4-5 titles a month plus 1-2 trade collections. We'll continue to focus on making those books the best we can, shipping on time in 2008, and work to grow our numbers within those titles. We're seeing solid growth in the book market over the last year and we'll continue to focus on developing our business there. We'll also continue to look into new methods of delivery and venues to get our books into potential fans' hands. We're in a position where we're planning well into the future (we already have publishing plans through part of 2009) but a small enough company to where we can adjust quickly to changes in the market.

RR: I personally do not believe the recession is here, and just saw a report on the news from the leading analyst at Goldman-Sachs who said that their company does not project that there will be one at all. The economy is softening, but Sachs doesn't see it becoming an actual recession.

I really don't believe in a conservative fiscal or editorial policy for running a publishing business. What drives us is the excitement and love for comics to do things that haven't been done before and to get better at the things we're currently doing. We've got to be passionate, not fearful, to build a company that works.

Our roll-out of The Godfather shows that, and we have a number of projects in the offing that are in that vein that are exciting, ground-breaking, and new along those lines. If we were worried about how the books would perform, the best way to counter-act that is to make something so good a consumer will buy it no matter what, and to generate an event (like The Godfather) that's so awesome it attracts attention and readership.

(Newsarama note: Since this interview was conducted, Boom!’s The Godfather launch has been delayed)

RT: I think we're just being a little more conservative in the expansion of our company, however as I mentioned already, I really do believe lower priced forms of entertainment such as comics and games and even movies won't see their numbers dip too much. People still need an escape, they need some form of entertainment during the great times and the rough ones. I think it's more worrisome when your talking about spending hundreds or thousands of dollars on vacations or high priced electronics and such rather than a few bucks on a comic book or a movie. Of course as a company you need to think 'how will I stand out over the tons of other titles out there?' but that's always the case for us whether we're in an economic recession or not.

DGD: We really are trying to think outside the box. We have done a couple DVD deals with SONY and BCI Entertainment to get our comics on some of their titles. We also are working with WOWIO for people to be able to download back issues of our books for free. As I mentioned we are also doing promotions and ads with companies. My background is in ad sales for the studios and I know how important this is to keep the books doing well. We will always focus #1 on quality - that is what we do best.

MK: Recessions are, alas, totally outside our control – believe me, we checked into it! We will stay close to the ground and listen to what our customers are telling us before doing anything… other than working on great manga, of course!

MR: Certainly we will be forced to take a harder look at some of the books we publish that are marginally profitable. You'll probably see fewer new series and we'll take a hard look at the size of our line.

Related:

Comics and Economics: Talking Shop

Newsarama Note: At the request of IDW, Andrew Harris' comments have been removed, as he no longer works for the company.

[Ken B.]

Blimey, we're all doomed! Let's all be the Sentry and curl up into a ball in space for some reason!

This article felt weaker than the one posted yesterday, as the interviewer (Blimey!) tried to set up this whole economic collapse, and the people interviewed pretty much replied with

a) we don't know yet because the timeframe for publishing is different
b) we actually had a decent quarter,
c) we'll just use common business sense as to what can and can't be published successfully.

Originally Posted by mattbrady

(Newsarama note: Since this interview was conducted, Boom!’s The Godfather launch has been delayed)

ahahahaha....

Blimey!

[Doctor_Chronos]

Yeah, it's called short term thinking. We did ok last quarter so we'll be fine 10 years from now by doing the same exact thing we did last quarter for the next 10 years. They didn't really say that but none of them talked about real change for the long term.

And I disagree with a couple of them up there that said comics are an inexpensive form of entertainment. They really aren't If you take the price vs value gained comparison to other forms of entertainment, they are one of the most expensive forms out there.

[Doctor_Chronos]

Huh. I just noticed that no one from Marvel or DC was part of the interview. Saving that for later or did they choose not to participate? They are both part (and cause?) of the problem and will have to be the leaders in any change (or staying the course)

[qnetter]

According to projections by The Comics Chronicles’ John Jackson Miller, sales of comics to the direct market by Diamond Comic Distributors in the first quarter of 2008 totaled $98.3 million as compared to $99.3 million in the first quarter of 2007, down 7%.

A drop from $99.3M to $98.3M is not 7%. It is a little over 1%. This is elementary-school math.

[Frankfurt]

I really don't like those softball interviews, where every answer sounds like a press release.

[grphxkindaguy]

Originally Posted by Frankfurt

I really don't like those softball interviews, where every answer sounds like a press release.

Welcome to the real world!

expect those kinds of answers when you interview corporate shills/representatives...

[BlueThunderArmy]

Originally Posted by Doctor_Chronos

And I disagree with a couple of them up there that said comics are an inexpensive form of entertainment. They really aren't If you take the price vs value gained comparison to other forms of entertainment, they are one of the most expensive forms out there.

I was thinking something similar. Your use of the jargon "value gained" suggests to me you've read a study that quantifies "value," which I would hold with some skepticism. But if we're talking about price per hour of entertainment, comics are certainly very expensive. If a $3 comic takes 15 minutes to read, that's $12/hr of reading. Of course, duration will vary with reader and material, but compare that to the "expensive" treat of moviegoing ($12 in New York for 2-3 hours of entertainment) and comics don't fare so well. Then there are video games—$50-60 (plus cost of a console) for 20-70 or more hours of entertainment, and that's about the best deal going. Or, you know, you can get a paperback novel for $10-15 and that can be good for around 20 hours of reading, give or take (a lot).

Here, though, we've got to come back to value. Comics are expensive, but they're worth it to me.

[ubuking]

Originally Posted by Ken B.

Blimey, we're all doomed! Let's all be the Sentry and curl up into a ball in space for some reason!

This article felt weaker than the one posted yesterday, as the interviewer (Blimey!) tried to set up this whole economic collapse, and the people interviewed pretty much replied with

a) we don't know yet because the timeframe for publishing is different
b) we actually had a decent quarter,
c) we'll just use common business sense as to what can and can't be published successfully.

I totally agree. Things may not be at a braking point yet, something that was also clear (besides the concerns) from the last article, but it is REALLY SCARY for me to realize how out of touch they are from the reality that is expressed from the retailers and the readers. If things go wrong, they'll be the last to find out, and a solution can be found, they may be too late in adopting it, leaving the retailers out to dry.
My respects to all you retailers out there!

[Nat Gertler]

Originally Posted by BlueThunderArmy

If a $3 comic takes 15 minutes to read, that's $12/hr of reading. Of course, duration will vary with reader and material, but compare that to the "expensive" treat of moviegoing ($12 in New York for 2-3 hours of entertainment) and comics don't fare so well.

Until you really like the story, so you want to read it again, and the comic is free... but the movie must be paid for again. And you want to share it with your girlfriend or wife; the comic is now free, but the movie you have to pay for again. And you have a kid... the movie is another $9, or a babysitter adds $30 to your filmgoing, but the comic you can read around them. And if you get thirsty while being entertained, at home the soda is a quarter, at the movies, $5.
And then, when times get tight, you can sell the comic... yes, probably for only a small fraction of what you paid for it, but have you ever tried to sell you experience of having been to a movie?

[Bevbos]

The article falls a little flat for me without either of the big two involved, and the answers also seemed to be spin, for the most part, which I don't blame the persons involved for putting forth, but it can't really pass as a sober assessment of the market chances of comic book publishers in our current environment.

[Doctor_Chronos]

Originally Posted by Nat Gertler

Until you really like the story, so you want to read it again, and the comic is free... but the movie must be paid for again. And you want to share it with your girlfriend or wife; the comic is now free, but the movie you have to pay for again. And you have a kid... the movie is another $9, or a babysitter adds $30 to your filmgoing, but the comic you can read around them. And if you get thirsty while being entertained, at home the soda is a quarter, at the movies, $5.
And then, when times get tight, you can sell the comic... yes, probably for only a small fraction of what you paid for it, but have you ever tried to sell you experience of having been to a movie?

What about books, video/computer games, DVDs, or music CDs then? You are trying to compare an experience or service "product" to a tangible physical product which really doesn't work for the reasons you pointed out above.

Plus you included the intangible costs of going to the movies, such as food and drink and the babysitter, but not those of owning a comic. Bags, boards, boxes, forced to rent or buy a larger apartment or house to store the things or having to rent a climate controlled storage space at $70 a month or something. None of which you have to spend for the movies.

[BlueThunderArmy]

Originally Posted by Nat Gertler

Until you really like the story, so you want to read it again, and the comic is free... but the movie must be paid for again. And you want to share it with your girlfriend or wife; the comic is now free, but the movie you have to pay for again. And you have a kid... the movie is another $9, or a babysitter adds $30 to your filmgoing, but the comic you can read around them. And if you get thirsty while being entertained, at home the soda is a quarter, at the movies, $5.
And then, when times get tight, you can sell the comic... yes, probably for only a small fraction of what you paid for it, but have you ever tried to sell you experience of having been to a movie?

Good points. Obviously there's more to consider than just $/time. But I'd still say that, as fun times go, comics aren't necessarily among the cheapest. And, to follow one or more series from month to month can have things adding up further. If my wife and I go see Iron Man, that's $24; if I want to read Iron Man for a year, that's $36. It's a totally different, not really comparable experience (and, as I can see even at a glance, full of logical fallacies) but my original point was just responding to the assertion that comics are cheap. The price of one comic isn't very much, given, but it is a hobby that can suck up a ton of money if you let it. And I'm guessing anyone who pays enough attention to comics to read comic news sites will have experienced this, to a greater or lesser degree, first hand.

[Doctor_Chronos]

Originally Posted by BlueThunderArmy

I was thinking something similar. Your use of the jargon "value gained" suggests to me you've read a study that quantifies "value," which I would hold with some skepticism. But if we're talking about price per hour of entertainment, comics are certainly very expensive. If a $3 comic takes 15 minutes to read, that's $12/hr of reading. Of course, duration will vary with reader and material, but compare that to the "expensive" treat of moviegoing ($12 in New York for 2-3 hours of entertainment) and comics don't fare so well. Then there are video games—$50-60 (plus cost of a console) for 20-70 or more hours of entertainment, and that's about the best deal going. Or, you know, you can get a paperback novel for $10-15 and that can be good for around 20 hours of reading, give or take (a lot).

Here, though, we've got to come back to value. Comics are expensive, but they're worth it to me.

I've never read such a thing and I would probable fall asleep if I tried I'm not sure where I got the value gained term from, but I meant what you detailed as money spent per hour.

[razorwing77]

I'd be more worried if I were these guys. If Marvel and DC increase their cover price, a lot of readers are going to have to cut back. Speaking personally, it's books from these companies that are going to be the first ones to come off my list. I'm a lifelong Marvel fan, and come what may, I'll always buy at least some Marvel books as long as I can afford to buy comics and they are still being published. I can't say the same for Zenoscope Entertainment, for example.

I imagine I'm not the only one more loyal to one of the Big Two than a newer company I occasionally buy one or two books from.

[BoosterGold-]

One question to any retailers out there,

Do you advocate you customers READING the comics at the shop before they buy it?

I have seen many posters on this board express that the book is paid for and their LCBS lets them read it at the store so - this is okay , with the current economic climate do you advocate undercutting your own business be letting certain customers take advantage of your product without paying for it.

( This isn't just a glance through the issue to see 1 or 2 oages or to see the art, I am talking about reading the comic at the store because they can't afford the title, down like the storyline and can't be bothered to buy it or for any other reason.)

Do you let product be handle this way and how so?

And more importantly how do the smaller press publishers feel about this practice? Do you feel it cuts into your bottom line? or do you feel your books have been paid for but you lost a "paying customer" because they took advantage of the product.?

With time tight like this how close to the edge can you be to publishing a title before it become a financial loss?



-Michael C

[Impulse725]

Originally Posted by Nat Gertler

Until you really like the story, so you want to read it again, and the comic is free... but the movie must be paid for again. And you want to share it with your girlfriend or wife; the comic is now free, but the movie you have to pay for again. And you have a kid... the movie is another $9, or a babysitter adds $30 to your filmgoing, but the comic you can read around them. And if you get thirsty while being entertained, at home the soda is a quarter, at the movies, $5.
And then, when times get tight, you can sell the comic... yes, probably for only a small fraction of what you paid for it, but have you ever tried to sell you experience of having been to a movie?

Of course, even if you looked at a movie on dvd, a movie would still be cheaper per hour. And how many times are you going to reread that comic? Granted, I do reread mine quite a bit, but over the course of years. I don't think you can really say comics are cheap entertainment because they can be experiences again, as most forms of entertainment can.

[BlueThunderArmy]

Originally Posted by Doctor_Chronos

I've never read such a thing and I would probable fall asleep if I tried I'm not sure where I got the value gained term from, but I meant what you detailed as money spent per hour.

Ha. Maybe "study" was overstating it, but I was thinking you probably got the term from some Very Important Source, possibly not directly related to comics.

I am a bit familiar with the term "value-added" or added value, but hadn't heard of it as something you could plug into an equation. I'll be quiet now.

[cmachler]

Originally Posted by BoosterGold-

One question to any retailers out there,

Do you advocate you customers READING the comics at the shop before they buy it?

When I owned/ran my store, we had a clearly posted no reading policy. Browsing and sampling were ok, in fact we encouraged those acts, but we didn't want you parking yourself in the corner and reading. We hardly ever needed to enforce the policy though. In the year I was there, I think I personally only told three people to stop reading.

Plus, we were on very good terms with our customers, and 99% of them weren't the kind of people who would take advantage of our generosity by reading and not purchasing. And it was actually fairly common for some of our better customers to read comics up by the cash register and then break into lively discussions with us. And the cool part is those discussions were always civil and friendly, so other people in the store felt comfortable joining in.

So like I said, the policy was really only there in case we needed to enforce it. Most of the timely, everyone was very respectful and didn't take advantage of our friendly nature. it worked so well that I'm positive I would implement the same policy regardless of the economic climate.

[BoosterGold-]

Originally Posted by cmachler

When I owned/ran my store, we had a clearly posted no reading policy. Browsing and sampling were ok, in fact we encouraged those acts, but we didn't want you parking yourself in the corner and reading. We hardly ever needed to enforce the policy though. In the year I was there, I think I personally only told three people to stop reading.

Plus, we were on very good terms with our customers, and 99% of them weren't the kind of people who would take advantage of our generosity by reading and not purchasing. And it was actually fairly common for some of our better customers to read comics up by the cash register and then break into lively discussions with us. And the cool part is those discussions were always civil and friendly, so other people in the store felt comfortable joining in.

So like I said, the policy was really only there in case we needed to enforce it. Most of the timely, everyone was very respectful and didn't take advantage of our friendly nature. it worked so well that I'm positive I would implement the same policy regardless of the economic climate.

I was just wondering because i see more and more the attitude that it okay for the consumer to the "read/Steal" the product "because my local shop shop owner let's me" ,
"I didn't like the first 3 parts of the story so i am not paying for the 4th , but i'll read it anyway in the shop."

Do you or did you find that the price points led people to believe they were entiled to do such in the cases that applied when you had to tell them that it was not cool to read the whole comic?

The attitude of some of this board feel that as long as the retailer has paid for it, that they are not stealing /robbing from the creators and publishers that make the product.

How do others feel?

-Michael C

[Mercer]

Originally Posted by ubuking

I totally agree. Things may not be at a braking point yet, something that was also clear (besides the concerns) from the last article, but it is REALLY SCARY for me to realize how out of touch they are from the reality that is expressed from the retailers and the readers. If things go wrong, they'll be the last to find out, and a solution can be found, they may be too late in adopting it, leaving the retailers out to dry.
My respects to all you retailers out there!

Originally Posted by BlueThunderArmy

I was thinking something similar. Your use of the jargon "value gained" suggests to me you've read a study that quantifies "value," which I would hold with some skepticism. But if we're talking about price per hour of entertainment, comics are certainly very expensive. If a $3 comic takes 15 minutes to read, that's $12/hr of reading. Of course, duration will vary with reader and material, but compare that to the "expensive" treat of moviegoing ($12 in New York for 2-3 hours of entertainment) and comics don't fare so well. Then there are video games—$50-60 (plus cost of a console) for 20-70 or more hours of entertainment, and that's about the best deal going. Or, you know, you can get a paperback novel for $10-15 and that can be good for around 20 hours of reading, give or take (a lot).

See, this economic problem is making the future of print comics a bit bleak. We're talking a massive increase in fuel costs, which is going to necessarily increase the price of an already expensive hobby. I mean, for Odin's sake, $3.00 for a 15 minute read is simply more than most people are willing to pay, and that's without them going out of their way to find a store that sells these things. God knows I don't want to the present model to change (one of my best friends is my local store owner), but I don't see how the current American model is going to survive in its present form.

[Mercer]

Originally Posted by BoosterGold-

The attitude of some of this board feel that as long as the retailer has paid for it, that they are not stealing /robbing from the creators and publishers that make the product.

How do others feel?

-Michael C

I think it's BS, being that it could be viewed as stealing from the store, and at the very least is pretty frickin' rude.

Just my 2 cents

[Doctor_Chronos]

I think the attitude of some readers that think it is ok, is that they are already spending $50 or whatever a week at the place, so throw me a bone and let me read one or two.

Back when I worked at an LCS in the late 90's that was ok with us.

We had one or two guys that never bought anything and thought it was ok to stand in the store for an hour reading whatever they wanted. After a couple times we banned them from the store and threatened to call the cops if they didn't leave when told to.

[razorwing77]

Originally Posted by Mercer

I think it's BS, being that it could be viewed as stealing from the store, and at the very least is pretty frickin' rude.

Just my 2 cents

It is rude. Not just to the store owner, but the customers as well. A guy/girl planted in front of the rack reading is simply in the way.

[Nat Gertler]

In the end, precise dollar-per-hour analysis misses that that's not how people are making the decisions. They're not saying "I need five pounds of entertainment, how much will that cost me?" You can't pay me $12 to sit through a movie that I don't want to see. That's not to say that there's no price resistance, but people's desires are not as malleable as all that. (I will note, however, that bags and boards ain't really needed to be enjoying comics.)

As for whether these price increases will particularly hurt the second-tier companies, there's another way to look at it besides the big two sopping up all the money. The smaller publishers have actually been holding their prices largely steady relative to inflation over the years, and the big two are catching up.Nexus #1 was $1.50 in May of 1983 when Avengers was 60 cents. Now, Nexus is $2.99 per issue, and the Mighty Avengers is $2.99. Suddenly, for the new person browsing the rack, the Marvel and DC books aren't the more affordable ones -- in fact, if the new reader is aware that they're just getting a chapter of some big Secret Invasion thing, they may look much more expensive.