Pop!

Sun, January 13th, 2008 at 12:00am PST

Comic Books
Jorge Khoury, Columnist

Welcome to the first installment of this new column for CBR named POP! The goal is that this feature will be a semi-weekly couch under the sun for us to chat about the interesting people, tall tales, important trivialities and unbelievable experiences that are a little bit of the culture that you and I share. Without a doubt talking about comics will be the centerpiece of our journey - but there's going to be so many other wonderful places and mediums that I hope you'll enjoy, too. Remember, it's us who define what "pop culture" is, not the other way around.

This first selection comes from my "Image Comics: The Road to Independence" from TwoMorrows Books. As I'm the middle of preparing new articles and other distractions, I thought it would be ideal to start with this article that centers on the evolution of the business of comics in the1990s.

Counter Tension

(Or: How We Learned to Stop Worrying and Not Solely Blame Image for the Fall of Comics")

Jim Hanley's Universe in New York City
When Phil Seuling's Seagate Distributing Company created the direct market distribution system in 1972, he probably unknowingly changed the entire economic course of comics for the foreseeable future. By avoiding the traditional newsstand channels (where sellers can return books), he created a system where comics were bought from direct distributors for Marvel, DC, and smaller comic book publishers - this window would allow sellers to get their books earlier than newsstands at competitively discounted rates on a non-returnable basis. The creation of the direct market allowed the rise of devoted comics shops and retailers that would cater to a dedicated readership. Publishers encouraged the growth of the direct market because it was a win-win scenario that not only built customer loyalty, but provided a lucrative new source of business. Throughout the seventies, sales were declining on the newsstands; a new market where books were non-returnable was the future that they were going to pursue to its fullest extent.

The direct market also allowed independent and alternative publishers a chance to gamble on a mechanism with which to keep their readers - books like "Cerebus," "Teenage Mutant Ninja Turtles" and "Bone" would have never found success on newsstands. "What this created was an environment where small publishers could enter the market," said Steve Milo, the founder of American Entertainment (which during the early nineties was the biggest single retailer of comics) and the pioneer of comics retailing online. "They could enter a market on a non-returnable basis, which was a very low risk, and they could be a lot more risky in terms of their offerings. So they didn't have to worry about coming out with mainstream products. They could take more chances. So this really created kind of a creative revolution, and really opened up a lot more opportunities for upcoming talent who previously had really been restricted to just Marvel and DC."

When the media's anticipation of the "Batman" movie began in 1988, there were many prominent comic book distributors (key ones were Diamond, Comics Unlimited, Capital City, and Heroes World) when the boom in comics exploded wide open. In the years prior, major comics publishers had set their sights so strongly on the direct market that they practically allowed their product's presence on convenience, grocery and drug stores to disappear by turning a blind eye to the newsstand market - more than 70% of their revenue coming from just the direct market. Stores dedicated to selling comic books and related paraphernalia began emerging in malls and local neighborhoods all across the country. In the beginning, it was practically a license to print money from an audience of readers and speculators too eager to give it up.

Jim Lee signs at Jim Hanley's
"'Batman' was insane for the comics business," recalls Jim Hanley, the founder of the landmark Jim Hanley's Universe stores in New York. "The people who had the books could just sell anything Batman. That year we had opened up a store in the Staten Island Mall, and it was the perfect year to be in a mall store. We were selling all sorts of Batman merchandise hand over fist, and we were selling all the Batman books. We'd go down to Comics Unlimited, which was our distributor, twice a week to pick stuff up, and we'd say, 'How many 'Dark Knights' do you have?' 'We have four cases.' "Okay, we'll take two.' Or, 'We'll take all four.' They say, 'Can you hold on, just take two, and take more next Wednesday, because we'll have more of them in?' 'Okay, we'll take the other two on Wednesday.' Every time we walked through the door there we took two or three cases of the 'Death of Robin' trade. Marvel seemed to deliberately back off that year. But they saved stuff up, so the beginning of 1990 they put out a bunch of new #1s."

Without a doubt the mass epidemic of speculation took off around this time. "Oh, yeah, there was the undercurrent of that," Steve Geppi, the Founder and President of Diamond Comic Distributors Inc. remembered. "You had what I call the baseball scabs coming over and perpetrating their fraud on the comic industry. The same thing they did with cards that they busted, that they came over here and decided to do with comics; you know, buy cases of them and have people believe that they were going to put their kids through college on cases of recent comics."

As new readers and fortune-hunters entered the marketplace, they gravitated heavily to the emerging art talent coming from Marvel. "Oh, absolutely," commented Chuck Rozanski, the owner of Mile High Comics and a prominent figure amongst comics retailers. "They had a huge fan base, and that's why they were able to step so successfully away from Marvel and to strike out on their own. See, part of that came from Marvel's philosophy, and Terry Stewart's philosophy, of making stars. And so Marvel in effect created the notoriety of these guys by really, really pushing their star power and using that to sell books, but then in the end it came back and really did bite them in the tail. I think to this day it's the philosophy of Marvel to downplay individual creators and to really emphasize the team effort and the editors and so on. Marvel to this day doesn't send people out that much on a promotional tour. You almost never see them set up at conventions in any real substantive way. They are trying to keep their creators very much under their thumb."

Since comics publishing was ruled by Marvel and DC, Terry Stewart probably imagined that Lee, Liefeld and McFarlane didn't really pose any real threat to him after their impromptu meeting in 1991. He likely thought that they'd change their minds and keep in line. At the time, there weren't many options; most major artists that went independent would come back to Marvel or DC with their tail between their legs. A key in Image's success was not only that the top artists banded together, but for the first time the retailers showed an abundance of confidence in showing their support by ordering Image books with little worries. Milo said, "I really thought Image was going to be extremely successful because I really felt that they were really tied down by Marvel. There was definitely a Marvel method back in that time, and I think from a creativity standpoint, this was the way to go... I think 'Youngblood' #1 we sold 40,000 copies, and I think 'Spawn' #1 we had 50,000, and 'WildC.A.T.s' was probably right at the 30,000 to 40,000 range. 'WildC.A.T.s' came out a little later. They started to dilute themselves, so the initial ones had the bigger runs because there weren't as many of them at that point."

"They were good for the industry!" Geppi confirms. "Their timing was good. It was an innovative time. And I think they made their mark, and I think they learned a few lessons along the way, and guys like Todd and Jim Lee really maintained a good business sense and made some good moves for themselves when they saw that it wasn't sustainable... It was somewhat of a Renaissance. You might even, with due respect, compare it to Marvel in 1962. All of a sudden the market got shaken up. New things were happening. There could be an independent title that would sell huge quantities, and that was very, very... it was great exposure for the industry. Like I said, the downside was when it collapsed because it wasn't built on solid ground, but the quality titles stayed, and the quality creators stayed. And I think it expanded the market. I'm sure Marvel and DC weren't happy about it at the time. Particularly Marvel, because Todd had defected, and he was doing 'Spider-Man.' But he leveraged his popularity on 'Spider-Man,' and his newfound fame, into a platform for Image Comics. And Rob was doing his thing, and Marc, and all those guys... the cumulative value of their individual talent was very powerful. Individually some of them were very powerful, but it really took them all together to get the kind of attention that they got."

After the departure of the Image creators, Marvel continued to expand their line - but with all of their star writers and artists working at Image and other comic companies, the company saturated the market with sub-par talent and novelty gimmicks to pump up their stock, wallets and shareholders. To regain the consumerism spotlight of the era, DC left their conservative role and got aggressive by playing with stunts like breaking Batman's back and killing Superman in huge multi-issue storylines. Although both events succeeded in their objective in generating enormous sales, print runs and media coverage - the market was beginning to show signs that speculators were starting to get weary after so many events and books from the entire industry, that they stopped buying comics by the pallets. So when did it all finally come crashing down? Was there one book in particular that began the downfall for dealers everywhere?

A line of fans wait outside Jim Hanley's to meet their favorite comic creator.
"I can even give you the date: it's April 25, 1993," answered Chuck Rozanski, "That was the day that 'Return of Superman' shipped. I mean, I'm still here. That you're even asking me did I over-order on these books, these books were the kiss of death. Anybody who over-ordered on those saw their investment wiped out because in effect you were making an investment where you were paying $1.00, $1.10 a book for books that, a year later, on a wholesale basis, were worth a nickel, if that. So when you have a 95% loss in an investment that you make in almost any business - I mean, forget about comic books, I mean any business - if you invest in something and you lose 95% of your investment in a year, you're screwed. And so the whole reason that I'm here talking to you right now is because we did require our customers to pay us in advance. We didn't accept orders from people unless we had a credit card on file, and that's what saved us. Because when people were bailing out of books, yeah, we ate some, there were always people whose credit cards went dead or whatever. There's always ways that people can get around that. But it wasn't as bad by any means as it was for other people. In the summer of 1993, we had our Megastore that was right down from the Image headquarters, in Anaheim. And I would go to the Image offices, and things just completely imploded. Because we would have an Image book that was selling 200 copies, and then the next month it would sell 130, so we would cut back to 130, and then the next month it would sell 65, so we'd cut it back to 65, and then the next month it would sell 35. When the bottom fell out, it fell out really quickly. It was literally June, July, August, September, October of 1993, things fell apart unbelievably quickly."

"'93 was when things went really bad," Jim Hanley echoed. "April of '93 was when the 'Return of Superman' came out, the white-bagged issue. We knew that you can't get lighting in your bottle again and again. But we still got stuck with them. We just didn't get stuck with them the way a lot of other people did. But we had over-ordered so far across the board at that point that... In December of '92, we were rolling in money. In December of '92 we paid out $30,000 in Christmas bonuses to our staff. $30,000. And we still had a 30% pretax profit. These are numbers which don't register with you because you don't deal with this stuff, but these are numbers that, like, I tell this to other retailers. First of all, the idea of $30,000 out in Christmas bonuses is unfathomable, and the idea that after that you have a 30% pretax profit? I mean, these guys are lucky to get a 10%

pretax profit. But it was just so insane, it was like we were selling so many comics we couldn't ramp up expenses fast enough to make it unprofitable. Yeah, some customers left (by 1993), but it was mostly that customers stopped buying crazy amounts of stuff."

DC apparently began to understand the extent of damage the market was withstanding; it felt like they slowed down with publicity stunts and gimmick covers after Superman's resurrection. Meanwhile, Image tried to lessen their biggest problem: late books. "Right," Rozanski said, "because in those days we had no return privileges for books that were late shipping, and the Image books were what prompted that policy to change, where Diamond and Capital and the other distributors that were still around at that point, did start to enforce on the publishers that they were going to have to make books that were late after a certain amount of time returnable. I was at a couple of distributor meetings, the Diamond meeting I remember in particular, where there was a near-riot among the retailers because they were so angry because they were stuck with all these late-shipping books that they didn't want anymore. It killed them. It put them out of business."

One of American Entertainment's full page ads, a regular sight inside Marvel comic books in the early '90s.
But for all the faults of DC, Image, Valiant and other Johnny-come-lately comic companies, Marvel's management helped more than any entity to bury the comics market. In a dying industry, they continued to cater to the lowest common denominator and pump more "collectibles" and insignificant comics than anyone. When they felt that the comics market started to turn to mere bones, they began to buy trading card companies by overpaying for them in market value - in the hope of combining and cornering the hype in the collector's market in trading cards and comics. Desperation would lead them to purchase Heroes World Distribution so that Marvel could keep every nickel by distributing their own comics and avoid any middleman. This moment changed the way that comics were to be distributed into stores for the future. With Marvel going exclusive as their own representative, retailers and distributors had to react quickly if they were going to survive in this arena.

"Nobody was happy about that, I guess," Steve Geppi recalled about the Marvel/Heroes World era, "Especially the way it was communicated, or it wasn't communicated. We found out kind of covertly. But that said, you could argue that in my particular case, although I would have not planned on it, it worked out, because their mistake led to a lot of other things happening that led to our position today... they had no capability. With due respect to Ivan Snyder (head of Heroes World), who was a friend of mine, there was a double mistake that Marvel made. Number one, if they were going to buy a distributor, they bought the wrong one. Mainly because, no disrespect to Ivan, he was a very good, small, regional distributor, but the capabilities you need to do it nationally, they didn't have that infrastructure. And then secondly, when they announced they were only going to carry their own product and nobody else's, it was a mistake, because even all of Marvel's volume isn't enough to justify a nationwide distributor."

In the midst of Heroes World, Steve Milo and various other retailers were approached by Marvel to buy excess inventory. He would win the lot and create Marvel Mart ads to sell these goods. He was able to see the extent of Marvel's disorganization. Steve related, "The unfortunate component was the fact that it really destroyed the distribution market. But we weren't a distributor, so it wasn't as big an issue. I mean, Marvel Mart was kind of silly. They just were never set up to do consumer retail sales, and they knew that. Marvel literally lost control of their inventory. They literally didn't know what they had or didn't have, and we bought, for pennies on the dollars, 300 trailer-loads sight unseen of Marvel inventory. We literally bought 300 tractor-trailer-loads of Marvel product. Heroes World was just a little distributor, and was never set up to do national distribution, and they lost control of their inventory, and they just had inventory everywhere. And basically, they literally sold us stuff sight unseen. They had no idea what was in it. No idea."

Not only was Heroes World a logistical nightmare, but in the heat of business other comic publishers chose their allegiances with a distributor for standing up to Marvel in the new marketplace. In doing so, they empowered Diamond Comics by making them the only major distributor of comics. "It was very important," Geppi stressed, "because once we got DC, it sent a message that we were the likely survivor, because arguably whoever lost Marvel and DC would really have trouble. And to Capital's credit, they stayed afloat for another year. But Image was another linchpin for us, because when we got Image, you could argue when we got DC and Image, it made it easy for Dark Horse and all these other people to come aboard for us, because they didn't want to be on a sinking ship whereas it was perceived. Whether that ship would have sunk or not, you don't know, but I do believe they thought, 'Diamond's now got all of DC, Diamond's now got all of Image. I'd better get with them or I'm going to be sailing on a ship that has no future.'"

Retailers like Jim Hanley saw the strengthening role of Diamond's position with great concern. "I thought at the time it was the biggest mistake that DC ever made," Hanley said, "essentially putting all the other distributors out of business in order to annoy Marvel. And the reason they did it was because they were so terrified of Marvel's, and especially [owner Ron] Perelman's, disruptive effect on the industry that they believed Marvel's buying Heroes World was going to put them at a terrible disadvantage. Capital wouldn't have gone out of business. All the other distributors would have gone out of business, but there would have been an alternative. Marvel only lasted a year-and-a-half or two years out of Diamond. And when they went back to Diamond, they went cap in hand and made a deal that was much worse than the deal they could have made because they just had to get back into Diamond because they had to shut down Heroes World."

Todd McFarlane at his store.
By December of 1994, "Marvelution" was announced as a new publishing plan that instead became the first round of massive firings within the company. A year later, "Marvelcution" cleaned out their offices with another wave of firings (this time with security guards present at the exits). More gradual downsizing would continue into the new millennium. Marvel spent over $350 million in overvalued trading card companies like Fleer and SkyBox International - not to mention pouring hundreds of millions buying Italian sticker manufacture Panini, children magazine publisher Welsh and Malibu Comics to diversify and create corporate synergy in the doomed collectible market. It would take years for the company and the rest of the industry to slowly recover from the bankruptcy that the Ron Perelman era of Marvel caused. In the end, all we have is a glut of worthless comics because Marvel focused on the buck rather than the books. With that attitude, bankruptcy became inevitable for Marvel.

"We called that period the Period of the Suit," Chuck Rozanski uttered. "Because that's when all these jackass pieces of sh*t people came in, and they all started wearing suits and strutting around and acting like they knew their ass from a hole in the ground, when in point of fact they didn't know anything about comics at all, and they were basically just parasites. But they came in and, boy, did they know how to run these card companies, and they knew how to do speculative books and eighteen different variant covers and all that kind of crap, but these people didn't know... they had no care for what was going on whatsoever. If the industry came, went, or died, they didn't care. They were strictly in it for the money. And they were just scum. I mean, all up and down the equation. And you can start with Ron Perelman, (who) would have been the head jerk, and then follow the chain from there. But you could go to San Diego and you'd have all these guys walking around with their little locking briefcases and their three-piece suits. It all just made me want to gag. It was just a terrible period in the comics industry, because you had all these people thinking that they could ride this horse to riches. And they didn't care if they rode it to death as long as they got their money out of it."

In the end, everyone was to blame for fueling the greed that occurred in the nineties: the comic book companies, the speculators, the readers, the retailers, the talent, the editors and anyone who forgot that comics were meant to be read and enjoyed. There's plenty of blame to go around. Although the marketplace is no longer this enormous entity, everyone seemed to learn something from it. The few retailers in today's market are more knowledgeable about their consumers and their methods for ordering books. Later, creators and editors began to focus more on their stories and craft than gimmicks and events. Comic readers learned to use their financial voice by backing off books that weren't up to par as the speculators fled the marketplace. Today's new breeds of readers are discovering comics and graphic novels via bookstores and the Internet. Yet, the more things change, the more they seem to stay the same. Alternative and variant covers have slowly started to enter the mainstream market again. There's also an abundance of late books from Marvel and DC over the last two years that are beginning to concern today's readers. Let's hope that none of us have forgotten our history lessons.

(Special thanks for Jim Hanley's Universe providing some atmosphere with the great photos of their store.)

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