Last week, I heard straight from the horse's mouth, so to speak: Dark Horse CEO Mike Richardson told me, in no uncertain terms, that Dark Horse had never intended to price same-day digital releases at 99 cents or $1.99. The plan all along was to price them at $2.99 for the first month and then drop the price to $1.99.
"People can believe it or not, but that was never part of our strategy," Richardson said. "We didn't blink. Our policy on day and date is not to undermine the brick and mortar, and that has always been our policy. It's not like I am suddenly backtracking."
When I pointed out that I got the price information in an e-mail from Dark Horse's marketing department, Richardson responded, "I don't know how that happened. Obviously, there was confusion on our side. I was gone when this happened and had to respond on the road. When I saw the first news site that reported this, I called and said, 'How did this get on there? That's not our pricing strategy.' I know, because I am the one who approves the strategies.
"We do have $1.99 comics," he continued. "Every $2.99 comic will end up [as a $1.99 comic]. It's not like they are frozen out; they just have to wait 30 days. But one thing we can do for the brick and mortar stores is to give them those 30 days."
One reason I believed Dark Horse's original announcement was believable and that the publisher might have been set to break the standard paradigm of pricing new comics the same in digital and print is that their approach to digital has been different for so long. They are the only major non-manga publisher to develop their own app, as opposed to signing on with comiXology, iVerse or Graphicly. The original concept for their iPad app would have seen users buying manga from their web store, in order to avoid Apple's content restrictions and to keep the price low: The initial plan was to price single comics at $1.49 and bundles from $2.99 to $5.99. That fell afoul of Apple's terms of service, which it had just started enforcing, and the digital rollout was delayed. Now, sales from the iPad app do go through the iTunes store, and while sales from the web store do not (avoiding Apple's 30% cut), Apple requires that comics be priced the same on both platforms. Passing along savings to the customer is not an option.
With all of this and more in mind, CBR News spoke with Richardson about the challenges of digital marketing and his vision for the future.
CBR News: From the very beginning, Dark Horse approached digital comics differently from everyone else. What was the thinking behind that decision?
Mike Richardson: First of all, the idea of someone else preparing our work and offering it, and other people editing it and telling us what we can and can't do inside our own books, is something I have not been crazy about. We want the books to appear as we want them to appear, not as someone else wants them to appear. I have been consistent about that since the first day I started the company.
We want to set our own prices -- in a perfect world. We want to preserve as much of the profit that is in a book for ourselves and our partners [as possible], and I have been very consistent about saying that. There is a very intelligent post after your article talking about companies that create an app and you go to get your comics, but when that company goes away, your collection goes away. It seems like there should be a way for people to get your product directly through the company that delivers it.
We are getting ready for our Android app to go out. The perfect scenario is that Dark Horse is able to offer all of its comics to every potential customer, throughout the world, in five languages, 24/7.
I'm a comics retailer [Richardson owns the retail chain and website Things From Another World], and I want to make sure that we don't turn our backs on comics retailers. I'm in the direct sales market; that's where I started, that's where my opinions were formed and I can honestly say we discussed how this will affect retailers in everything we do.
Being in the watershed moment, we are trying to keep our direct sales retailers happy and support them. At the same time, we can't be left behind on digital. You said we could have been visionary to put comics out at $1.99. They are at $1.99. It's not a price issue, it's a timing issue. That's the one concession we have for our retailers so they can keep their customers. I agree the vast majority of digital customers are new customers. That may be true, but now is not the time to be undercutting the direct market retailers. Now is the time to be giving them support in a time of change. The good stores are going to figure out how to survive with this. In my stores, we are thinking, "How do we work with this change in our delivery systems in a digital world?"
The retailers are being attacked from two sides. It's not just the digital, it's the online e-commerce. It has to be a destination. It's not going to be the place where people can buy things the cheapest, it's not going to be the place where they can buy everything -- that is Amazon. The retailers have to become destination locations, because if you settle on Amazon, you are missing out. Consumers have to want to go to the comic shops.
What role do you see digital playing in the bigger picture for Dark Horse -- is it a side dish or the main course? And how do you think that will evolve in the future?
Here's what's going to happen: We are going to see the whole culture move to a digital place. We can't be left behind in the digital world. We have to stay viable as a company, our strategy will be to be in that space, but my hope is that we can move with brick and mortar stores to help them grow at the same time. We have ideas to make that happen, but nobody knows how to do that now. We are all trying to figure that out. I don't think we can anticipate what the market will be like five years from now, but digital will be a key part of it. Hopefully, if you are talking about, in a few years, a billion tablets being out there, and you get a small percentage of those, hopefully some of those people will buy the physical books.
I understand why direct market retailers are worried about digital. We sit and have those discussions, but the hard truth is: it's coming. There's nothing we can do about it, so we have to figure out -- retailers and publishers -- how we stay strong and how do we keep our partners strong, and one of our partners is the direct sales market.
You are, in fact, pricing some digital comics lower than print: The digital versions of your $3.50 comics are priced at $2.99 on the day of release.
Yes. It didn't dawn on us -- the Apple store will only take [prices that end in] 99 cents, so some of the books got priced at $2.99, because the $3.99 price makes me flinch a little bit. If you take $3.50 and move it to $3.99, it's not a very good experience. Some of the retailers are asking us please put them at the 3.99.
It's not our policy. I don't like to charge more online than I do [for print copies].
Are people switching to digital to save that 51 cents?
It doesn't seem to be happening. Print sales are steady and digital sales are growing.
Do you think digital readers prefer single issues or complete story arcs?
I think trades are important to the consumer, to be able to have all the story available. Initially, it certainly was trades. Maybe the individual titles have become more important, especially with day and date, but we have so much we are putting up there, most of what we are putting up there is the trades. We have been putting up a lot of material -- the complete "Star Wars," "Hellboy," "Goon." I don't read one issue and then wait -- I'll find a four-issue series and read all four in a row. That's the effectiveness of the bundles, and we are pushing bundles pretty hard.
How do your digital sales compare to print?
It's a small piece. It is growing, but we haven't achieved critical mass. We are encouraged by the numbers -- it's interesting to watch it grow month after month.
The biggest jump in digital sales came after last Christmas holiday season. [Richardson is talking about all e-book sales, not just comics] There was a huge number of e-readers and tablets that were sold, and this year it's even larger. I think in 2011, the number they are expecting is 65 million tablets will have been sold. Next year, that goes to 135 million, and 355 million in 2015. If add all those numbers up, year by year, there's a lot of tablets that are going to be out there in the next few years. If you get 1 percent of a billion, that's a pretty great number.
I know we had our biggest month ever, last month, and I know that, just as with the last holiday season, with all the new tablets, we are expecting to see another jump. We can build our business plan for growing that market, but that market doesn't compete, at this moment, with the direct sales market or the bookstore market.
Your digital sales are divided between the iTunes store and your web storefront. Which is more important?
We don't feel that we can't be available to the iTunes store. I can tell you that the Apple store brings in more business than our own store, at this point, but our storefront is growing.
What are people buying in your digital store?
Obviously, books like "Star Wars" are not necessarily being purchased by comics readers. Star Wars has its own fandom, so whether it be in paper form or digitally, there is going to be a large consumer base for that title. We are seeing the trends everywhere -- in film, in books, you are seeing branded entertainment coming to the forefront. It's harder and harder to get attention for new material. In films, it's sequels; in comics, licensed comics seem to become more and more important when you move out into the digital world. Maybe not in the direct sales market, but when you move into bookstores and the digital world, licensed material seems to have a different life. "Buffy" is very successful, "Mass Effect" is very successful, "Hellboy," Frank Miller's work -- Mike [Mignola] and Frank are brands in their own right.
So, you believe your digital comics are reaching people who don't usually read comics?
Yes. One of the big things coming up is the annual Star Wars convention, which has nothing much to do with comics. We get to go and do missionary work there, every year. We look at all our properties and try to figure out, where is the untapped market, where is the audience that would embrace this material?
In the direct market, you can count on making a profit off established characters -- Superman, Spider-Man. It's very hard to launch another line of superheroes. We put our toe into that water every once in a while, most recently with the classic media characters, "Doc Solar," "Magnus, Robot Tighter." It's amazing how many people said those characters are old and tired. Is that really true? Superman and Batman were created decades before. Are they old and tired? There are prejudices against licensed books, but is "Star Wars" that different from "Superman?" The original creators don't work on it any more, they are owned by corporations -- I don't see the difference. They are all characters. They are all as good as the creative team. When we started doing licensed books, there were three axioms: Licensed books don't sell, anthologies don't sell, black and white comics don't sell. We launched with all three and we did well. It's all about the material.
Do you have any sense of who is buying comics digitally -- is it your existing customers, new readers or lapsed readers, returning to the fold?
I don't feel all of them are [new], but I feel it's a good portion. There's no way to know for sure. In the traditional comic book market, first of all, it's a retailer who decides how your book is going to sell. If they don't carry it, we don't sell any. In the comics world, it's not about the consumer, which is why Superman, Batman and Spider-Man all do well. They have long histories. [Retailers] are taking risks with new characters, and if a retailer won't carry a book, it is harder to sell. You put that material up on digital, and the issue of whether a retail outlet carries them or not is gone. The material is there, and whoever is interested can pick them up.
There's also the thing if you have a hit, there aren't enough books to go around, or for some reason retailers are shorted, or for a variety of reasons the book is not distributed properly. We have had books that disappeared and were found months later on railroad cars. All these situations you find yourself in as a publisher are eliminated with digital. In the traditional returnable market, the mass market, the newsstand market, up to 80 percent of every one of those titles was destroyed. If they didn't sell, the comics didn't come back. There was this honor system. Some people would ask for cover returns, so they would tear off the covers. Think, for decades, how many comics were destroyed to sell 20 to 50 percent of them? It was a very inefficient system.
A few of your books are available via comiXology. Is there a reason why you don't use them in addition to your own app? Would you consider it?
It's on our radar. We know those guys well, we like them, we like their company a lot. They have their strategy and approach, and we have our strategy and approach. We will be working together in different ways, and we have to figure out how we can sync up in certain areas.
Have you considered going onto e-reader platforms such as the Nook or Kindle Fire?
Is that in the works?
Yes. Some of the companies we are negotiating with right now, some are on the way. Android is where we are headed next.
What do you believe is the optimum price for a digital comic?
When we are talking about pamphlets, I think $1.99 is a good area. Sometimes there's not more profit on the digital -- it depends on the kind of deal we make. Part of our strategy is to preserve more money for creators. If you go through a service, it takes a share out. Apple takes a share out. Our goal is to present our material and preserve as much profit as we can.
I think our prices have been within a range where we see steady growth and consistent growth in all of our areas. When you start talking about $2.99 graphic novels, it's not a viable price. The lower selling print books take a long time to get to profit.
We keep a lot of books in print. You sell 80 books a year, it's a nice service, but it's a real expensive service because you print books in lumps of 2,000 or 3,000 and you are paying storage fees. One of the nice things [about digital comics] is, when the brick and mortar stores lose interest, they don't go out of print. You can keep them available digitally and maybe find a new audience, and those are the books you can offer at a very good price. We keep as many of our books in print as we can afford.
When you launched the digital store, you said you would have programs for retailers. How has that worked out?
We have done some, and they were not as successful as we hoped. I have talked to the retailers about what the issues were, and we are going to go back and see if can make it more attractive. We had exclusive material that retailers could get codes for and give to customers. We were surprised retailers didn't jump on board. Some retailers are concerned that if they get involved in digital, they are handing their customers over. So we try to think of ways that make sense. Nobody knows what they are doing in digital. Everyone is trying to figure this out, so some things we think are really smart and that every retailer should jump on board, when we hear from the retailer's perspective, it doesn't seem so smart.
Finally, with the advent of digital and Dark Horse's focus on promoting collections in its digital storefront, do you think monthly issues are on their way out?
I don't think in the near future, but they get harder and harder to justify. We had books that sold 250,000 and even half a million copies. Nobody sees those sales any more. Where the profit comes back into the picture is in the trades. Since we have done the trades from the very beginning -- it was part of our original strategy -- we trained our readers to bypass the pamphlets and wait for the trade. There are two kinds of people: The collectors, and the readers. Both overlap, it's not cut and dried, but the collectors want the pamphlets. I'm a collector. I'm also a reader. I built a place in my house where I have 170 boxes of comics going back decades. It's pretty clumsy, and I can't find anything I ever want to look at. I continue to pile those boxes in there, and meanwhile, I load my iPad up with comics and I read them on my iPad. On a plane, I can read every Hellboy book that has come out, every Spider-Man, every series I want to read. It is all there in a thin, little tablet. Someday I will be able to have every Dark Horse comic, Marvel and every company that ever existed on my little tablet. That doesn't mean I'm not going to buy comics. It probably means I'm going to buy more comics.