Tilting at Windmills

Thu, July 14th, 2011 at 11:58pm PDT

Comic Books
Brian Hibbs, Staff Writer
31

So, if you'll recall, I've spent the last couple of months discussing how I think that overproduction is harming the Direct Market. I discussed both the way that the fundamental math of the DM has become inverted, as well as how this has probably lead the DM to be incapable of properly capitalizing on bold publishing moves, whether because of lacking will or lacking treasure.

There's one more portion of the market to consider, and that's the backlist side of the equation. In my opinion, backlist works very differently from frontlist periodicals.

Let's back up a step, and remind you how the periodicals work: all comics material in the DM is sold on a non-returnable basis. The usual way to consider your success or failure in selling periodicals is by looking at your sell-through percentage -- you break-even on your investment somewhere at or around 70% sell-through, you're probably not particularly profitable until somewhere around 90% sell-through. The DM was really designed around the concept of selling a lot of copies of a relatively few number of titles, but over the last years we've largely inverted that economic basis, much to the ill for the market.

Backlist works pretty differently than periodicals. With periodicals, there is always another issue coming out, and that's why we think in terms of sell-through -- you need to sell your copies before they inevitably come off the rack somewhere between sixty days and six-months later. The largest single number of copies you are likely to sell of a periodical is usually in the first week, and certainly in the first month. Periodicals are a (relatively!) inexpensive way to sample work, and generally sell to a dramatically large audience -- probably at least 10:1 for most Big Two superhero comics. For example, the #4 book on the May '11 list is the HC collection of issues #13-16 of "Batman & Robin." It sells 4586 copies. The lowest selling of those four issues was just over 80k copies -- that's about an 18:1 ratio.

Backlist is then primarily concerned with "turns," the number of times in a year you can sell an item. While the math on selling periodicals is about moving large numbers of relatively inexpensive items, with backlist it is reversed. For most stores the most common number of copies on hand of any given book format item is one copy, and many "new" backlist items are brought in that quantity as well. There are certainly exceptions: Comix Experience stocks "Walking Dead "TPs, for example, five copies deep, but most books simply don't sell fast enough to require deeper stock.

(You can see this is generally true for the overall market by looking at the top TP lists each month -- you can find a master listing of charts going back several years here -- and you can see that it barely takes 1000 copies bought to make it into the Top 100 best-sellers each month. It's not even rare that the #1 book makes it there with barely 5000 copies sold -- that's for brand-new books! While we don't really have any firm figures on the number of stores that order any TP backlist product, my guess is it is in the 1500 store range.)

When you stock backlist books, you're generally stocking for "Just In Time Ordering." As an example, I've sold, on average, 6.3 copies of "Walking Dead" v1 each month in the last twelve. However, restock is roughly two weeks away -- we can pay for 2-day service, but I haven't found the math favorable for that so far -- so I've found that having a "minimum reorder point" of five copies to work. Every time I drop below five copies on hand, a reorder is triggered, and by working this way we've only had one week out of the last fifty-two where we've been completely out-of-stock on "Walking Dead" v1. In this way, I've sold 76 copies of v1 this year while not having more than five copies in stock at any one time, and, most weeks, only three or four.

As you can see, this makes fast-turning backlist very profitable indeed for stores -- especially once you build up a stable of well-performing titles. Looking at my records, it looks like I had some 750 backlist titles that sold more than four copies in the last twelve months -- but this is from a library of some 4000 titles in stock. This means there are a lot of books which are turning less than a single copy a year.

Now, I'm universalizing from my specific results, which is always an iffy thing to do, but go with it for a minute or two: although I see myself primarily as a "book store," rather than a "periodical store" (and sales reflect that as well -- we're roughly 57/43% in favor of book format material), we don't even bother to order a single copy of somewhere between one half and two thirds of the books offered to us for sale. This is because we've learned over the years that not every book published has a natural audience. I know: duh, right? But it really took us installing a Point-Of-Sale system for my eyes to really open up to how many books simply don't turn in anything like a reasonable fashion. We liquidate hundreds of titles each year because they just don't turn.

In fact, again for us, something like 15% of the book format titles we bring in each year never turn a single copy in twelve months! And, remember, we're not ordering at least half of the books that are offered for sale. Conceptually, this could imply that a third or more of the book format titles offered for sale by publishers each year might not have anything approaching a viable national audience. Yes, I'm universalizing, and, yes, that's bad, bad math, but I think this contention is generally bourn out by the sales charts I linked above: it only takes like 4-500 copies a month to make it into the Top 300 -- by the time you get to the #1000 best-selling book each month in the DM, I'm confident that number is 100 copies or less a month. Among 1500-ish stores!

And lest you think that this is just limited to DM stores, I'd like to observe that right around 90% of the graphic novels on the annual BookScan list each year sell under 1000 copies a year -- and BookScan includes Amazon's sales. Nearly 2/3rds of the 22k SKUs with a BookScan listing sell less then a hundred copies a year across the entire nation, including internet sales!

As I said earlier, the name of the game in backlist is turns. Here is how it works: you buy your first copy of a book and sell it, then you buy another one to replace that first copy. You haven't made any money yet. You sell that second copy, and you buy a third. At this point, you've now (well, probably: I don't know your specific math!) broken even in paying for the three copies of the book, and your labor and time involved in stocking and restocking it. But once you sell that third copy? Now from here out it is essentially pure gravy -- every copy sold after this point is about as close to pure profit as is possible, as you're really just reinvesting the same bet you've already made. The smartest money I ever spent? That original $10 on the first copy of "Watchmen" I bought. That $10 has probably multiplied a thousand-fold in the intervening 22 years.

What a bookstore, any book store, whether it is prose or comics, is looking for is a stable of titles that turn very regularly -- series like "Walking Dead" or "Sandman" or "Fables" is about as close as "printing money" as you can get in the business of comics. And it is those high-turn books that allow us to stock everything else that we do.

Still, there's a pretty dramatic danger of overproduction -- like I said, 15% of the new book-format titles I bring in never sell a single copy, and in a non-returnable market, those books are a pure loss -- I may be able to eventually sell that copy for at or near my cost, but I've lost the rack space, time to stock (and unstock), shipping costs, opportunity costs of other, more profitable things I could have spent that money on, and so on. The really tricky thing is that it takes a pretty long time to see if you have a rapid turner or a stinker -- it isn't until the end of the first year that I'm really ready to start making those calls, and, even then, I could name you two dozen books that had a "bad first year" and eventually went on to become massive, massive hits for us (One obvious example: "Scott Pilgrim")

Again, every store is going to be a little different in what they do, but I can say for us that most books only get "full cover" display for a week or two before they end up getting buried spine-out. This is purely a function of space. We have a "new comics rack," and I do my damndest to keep new book format material up there for two weeks, but, even there, in exceptionally heavy weeks for books, we can end up with a few books spine-out even there.

Physical bookstores have physical limitations as to what they're able to display, so after a certain point it is irrational to keep adding SKUs at the rate that the market does. On the July order form, Marvel comics alone is adding 51 new, unique TPs to the market -- if they match that number throughout the year, that's over 600 new book format SKUs just from one single publisher. That's not only unsustainable in an absolute sense -- figure that's something like two linear feet of books right there… and we're not really adding racks to our store at this point! -- it ends up working against them from both an internal and external inventory management point-of-view, as it starts to degrade the turns of other, similar material.

A significant part of the problem has stemmed from how publisher's attitudes towards backlist have changed over the years. It used to be extremely rare that backlist material would enter the market. Heck, when I opened Comix Experience 22 years ago, you could probably hold all of the in-print graphic novels in a single armload without toppling over! Publishers generally reserved TP reprints of periodical material to the crème-de-la-crème of what they published, and for things that the market was clamoring for.

Today, however, publishers have changed their model so that the book format material is the reason they publish the periodical in the first place, it is now the goal, rather than a bonus.

While it is certainly understandable why things have evolved that way (as they say about the lottery: You can't win, if you don't play), we're suffering from drastic overproduction on all levels of the industry. The problem is that the more titles we try to pump through the market, the worse all of them end up selling.

This is the other bit that no one seems to talk about: I strongly believe that the commonality of the TP exerts a negative sales influence on the periodical format. There's no retailer in America that can't tell you copious tales of customers saying, "Yeah, I'm going to wait for the trade on that one" with all sincerity and intent. But when the trade finally comes out? Right, it doesn't sell then either. The "inevitability of the trade paperback" means that there is no urgency/em> driving the sale of material any longer, and, over time, ardor naturally cools.

Now, let's be clear: I'm not advocating for the abolition of the TP -- far from it, I'm a book store! But there needs to be more sensible collection strategies, and TP collections should not be built into the P&L (Profit & Loss) analysis needed to originally greenlight work, nor should "everything" automatically get a trade. As a rule of thumb, material that sells poorly in periodical format is going to sell poorly in collected format as well, and the overwhelming majority of miniseries have little-to-no interest in them after their run is completed.

In fact, I think that the best and smartest thing that most publishers could do is openly announce upfront that only the most worthy material they publish will get a collected edition, and that consumers should not expect collections unless the underlying periodical does well. Obviously the best-sellers will continue to be collected, but low sellers that will just clog the system over the long run? Why even bother?

What I see when I look at the sales charts is a pretty large amount of titles that simply can't be making back their creative costs from the largest publishers, being followed by collections that barely make their printing costs back. This is a fundamentally foolish way to do business, because it simply isn't sustainable.

Brian Hibbs has owned and operated Comix Experience in San Francisco since 1989, and is a founding member of the Board of Directors of ComicsPRO, the Comics Professional Retailer Organization. Feel free to e-mail him with any comments. You can purchase a collection of the first one hundred Tilting at Windmills (originally serialized in Comics Retailer magazine) from IDW Publishing. An Index of v2 of Tilting at Windmills may be found here. (but you have to insert "classic." before all of the resulting links)

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