Tilting at Windmills: The Force-Fed Market

Fri, August 1st, 2014 at 4:58am PDT

Comic Books
Brian Hibbs, Staff Writer
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One of the reasons that some people think that the Direct Market is "broken" is that the DM is doing a lot of things that it wasn't exactly designed to do. The system just wasn't designed with 500+ new products a week in mind.

I still have a physical copy of the very first order form we ever turned in (For April 1989 shipping products!) (I like to break it out for parties) -- where Diamond has 18 distribution centers listed on the outside of the catalog -- so, let me just do some then and now...

In April of 1989, DC Comics had sixty-three line listings (including "offered again" listings for three titles, and a Superman baseball cap -- so 59 new items).

In July of 2014, DC's listing has 115 line items. Now, this includes 11 different promotional rings, 11 offered again items, 12 DC Direct toys, and 11 variant editions of some fashion or another -- so only 70 new comics/books. But what it doesn't count is the "Futures End" event which was solicited two months in advance and amounts to 41 3-D covers, and 41 2-D covers -- so you could call it 111 new comics/books, or 197 distinct items, that DC is planning on shipping for the solicited month, depending on how you count. That's, on the "worse" end, nearly triple the number of items! But "double" would also be a fair read.

In April 1989, Marvel Comics had 70 listings (including 4 different mini-comics that were offered only in 100 copy lots [why this would ship in April of all months is lost to time for me], and five "offered agains" -- so 61 new books/comics).

In July of 2014, Marvel's listing is 151 line items long. Four of these are posters, and 39 are variants of one form or another (including four different book format items with "DM Variants," ugh!), so it is 130 new comics/books -- just more than double the number in 1989.

In April of 1989, Dark Horse Comics offered 10 items -- only 3 of those are new comics, the other 7 are reprints, cloisonné pins, and wristwatches. In July of 2014? 138 items -- but only 65 of those are new comics/books. Depending on how you count, that's somewhere between 13x and 22x as many items.

In 1989, there was no Image or IDW, among what we now call the "front of the catalog" publishers. In July of 2014 IDW is offering 130 lines item (though only 65 are new books/comics) and Image is offering 162 line items (though only 80 are new books/comics)

In 1989 there are just fifty "other" publishers with products in the catalog. Only six are still in business today and have published continuously in that time (Archie, Fantagraphics, NBM, Slave Labor, Titan, and Viz) -- the small publisher putting out the most number of titles appears to have been Eternity Comics, who offered 25 comics in 1989. Eclipse ties with Archie for second place with 20 items offered. Viz back then published nothing but periodical comics -- eight of them.

In July of 2014, there are one hundred and eleven "other" publishers -- more than twice as many! And they're publishing more comics: the publisher with the largest number of SKUs appears to be Dynamite, with a whopping 119 line items offered (34 of them individual new comics), while BOOM! has 87 SKUs (37 new titles), and Avatar has 65 SKUs (12 new titles), while Archie has 29 line items offered, but only 20 of them are new non-variants, so they're pretty much the only publisher selling exactly the same number of titles a quarter-century later. Viz has 65 titles listed -- all of them books -- but only 17 of them are new -- still about a doubling of releases.

I'm not going to count every single comic in the 1989 catalog, but for not-Marvel-or-DC, every other publisher combined is about 300 SKUs -- or about the size of Avatar, BOOM! and Dynamite together in 2014. That doesn't count the other 108 publishers offering wares to DM retailers in 2014.

Now can you begin to see the size of the problem?

Of course individual titles sell much much worse than they did back then -- there are somewhere between three and five times as many comics all fighting over the same dollar.

Here's the thing, though -- I think comics are, generally, much much better now than they were back then. Yes, I know some of you are complaining that the "New 52" has many weak titles, but back then DC was publishing "Checkmate" and "New Guardians" and "Cops" and "Young All Stars" and "Gammarauders" and "Haywire" -- few of which are fondly remembered (or remembered at all) today. Their hit/miss ratio wasn't a whole lot better in 1989 than it is in 2014 -- and neither was Marvel's, sorry nostalgia!

The number-one problem that comic book publishers today face is: how do they get retailers to order "enough" copies of their non-returnable comics? Because the very nature of an over-produced market inherently leads to fiscal conservatism in ordering. It must.

(Also, if you notice from the 2014 stats, you can see that virtually every publisher is publishing roughly twice as many of line items then they are of actual individual comics -- variant editions and the like. Those also suck dollars and circulation away.)

Do you want to see that ordering conservatism in action? Then notice how something very close to 50 weeks of the last year Image has sent out a press release about a newly released book that they're selling that has sold out at the wholesale level in the first week. There are so many of these press releases that virtually none of the major news sites even bother to run them any longer!

I've been selling periodicals in some fashion for at least thirty years now, and I can tell you one thing that hasn't changed at all in all of that time: there is generally a month-by-month drop in sales with all ongoing books, and that makes it incredibly important to launch a book as high as it possibly can -- to find the highest possible "ceiling" for that title -- so that as the numbers drift downwards, they take longer to fall into the "not profitable" column.

To reduce it to a simple (but unrealistic -- things are never this simple) formula you can understand: if "Dweelzeman" sells one fewer copy a month at the average store, then getting stores to stock/sell 50 copies of #1 as opposed to 30 copies of #1 extends the life of the periodical by nearly two years.

So, the name of the game for publishers of all shapes and sizes and motivations is to get the first issue numbers as high as they possibly can be.

Although I don't have exact chart-driven proof, I think it's fairly safe to assume that digital performs pretty much the same way -- that titles start at a point and generally drift downwards over time. Further, book-format comics, with very few exceptions, tend not to sell any significant quantities if the periodical serialization isn't perceived as a success.

There are only a few methods possible to get more copies out there -- you can offer higher discounts for larger quantities; you can offer returns; you can offer bribes (i.e. most limited Variant comics -- "you can buy one of this for every ten of that"), or you could overship them. You can also try to simply convince the market that the book is something it wants through marketing and promotion -- either consumer-driven or retailer-driven.

I thought it might be instructive to look at a few of the publishers to compare and contrast what each of them are doing to try and move that needle on the periodical comics.

Among the back-of-the-catalog publishers who should probably be front-of-the-catalog ones the two largest are BOOM! and Dynamite. Historically, both publishers have focused on the variant cover as their prime mover -- something you can kind of tell by looking at their SKU vs New Individual Title counts (87/37 for BOOM! and 119/34 for Dynamite) -- Dynamite, for example, is soliciting the first issue of their new "Evil Ernie" comic with no less than 12 line items: a "main" cover, four Open-To-Buy covers lettered A to D, a "subscription" variant (which is just another OTB cover -- I don't know any store in America that actually limits those to subs-only!), an OTB "Blank" cover, and then several tiered variants -- 1:10, 1:20, 1:30, 1:40, and 1:50. That seems like a lot to me.

Both BOOM! and Dynamite have started experimenting with returnability, but in entirely opposite fashions. BOOM! has started a retailer program where if you carry at least ten copies of every new periodical they release each month, once a quarter you can return your unsold material directly to BOOM! to swap for any in-print item. Dynamite, on the other hand, has opted for an order-whatever-you-want-no-strings return policy handled through Diamond, but they're only doing it on first issues of select titles.

BOOM!'s plan is audacious, and bold, seeking to get stores to be "full line" stores. I think that is generally a wise goal, but I think they're going to quickly find that the targets are far too aggressive. While retailers under-ordering on new comics is often a real issue, I generally don't believe that retailers are getting it wrong once a book gets established -- most of us are owner-operated locations who are desperate for every sale we can get, and failure to capture the vast majority tends to put you out of business fairly swiftly. If every Diamond account participated (all 2638 of them), then you could expect every BOOM! comic to jump in sales to around 25K each... which would pretty much make each and every one of them a top 100 title. But I think it is also equally self-evident that there isn't that kind of demand for those books. I believe that I understand my market size on something like, say, "Sons of Anarchy" -- I've had eleven issues to figure it out and simply stocking at 4x demand is unlikely to sell a lot more copies in and of itself. I am participating in BOOM!'s plan, but I think it is going to end up a wash in terms of capturing business I would have missed versus handling and investment on stuff that isn't going to sell.

As a retailer, I really like Dynamite's plan a lot -- I like having control over the number of copies I bring in, especially when publisher targets are often aggressively optimistic (there are a ton of Marvel and DC releases that I can't sell 25 copies of, so expecting that from titles with significantly less market awareness hardly seems possible), but by the same token, I wonder how much impact it can possibly have a result. As one example, Dynamite launched "Blood Queen" under this plan, and the June 2014 sales charts shows that the book just sold 10,352 copies, a number that probably has it cancelled before issue #6.

Among the front of the catalog publishers, Dark Horse is generally relying on increased discounts (though they're just trying their first returnable experiments this month) -- "Order 15 copies of ‘Creepy' #18 for +10%" or "order 90% of ‘Hellboy in Hell #6' for ‘Baltimore Wolf & Apostle #1' for +10%," and I dutifully try the math every time, and I can almost never make it work for me. The problem with discount-driven schemes is that if you're not right on the cusp, the math is difficult. We've only sold 3-4 copies of the last three issues of "Creepy," so the ~$2 a +10% discount would save me would only make sense if that ordering threshold was like five copies. That's where I would take that chance.

There are two ways to do discount-driven incentives -- the first is with a specific target like that 15 copies of "Creepy". The problem is that those kind of one-size-fits-all programs reward the store that sells a lot, even if they didn't change the behavior and order more like the publisher is trying to get them to! If I sell 20 copies of "Creepy," I could drop my order, and still put more money in my pocket!

The other way is to set a percentage target by a "like" -- "Baltimore Wolf & Apostle" is "like" "Hellboy in Hell" at least in that Mike Mignola's involved in each. One can see the logic involved. And yet, we sold 40 copies of "Hellboy" (mostly because Mike draws that one) compared to 12 copies of the last "Baltimore" mini-series -- it isn't rational to triple orders for a 10% discount -- essentially I'm being penalized for being successful in selling Mike Mignola-drawn comics, which, clearly, wouldn't be the intent of the promotion.

Sadly, I find that too often publishers set targets that don't seem rational to me, because they're not designing them for individual participants. While I participate in virtually every single returnable program, I almost never find myself qualifying for any of the discount-based ones because the targets are too aggressive to make the math an easy walk. Bear in mind the 2638 Diamond accounts figures -- and then figure just 5 copies per account would yield you almost 13K copies right there.

IDW has been really aggressive with returnable programs, most frequently doing a fixed number set at 25 copies. As I said, I participate in virtually every returnable program because my assumption is that even if my guess on my order was right (i.e. I am returning 100% of the difference), my cost to do so isn't so much as to be prohibitive -- at worst, it amounts to a no-interest loan for a few months. It is really the publisher with the most to lose in this circumstance -- in addition to the wholesale cost to retailers, they are also absorbing costs from Diamond to take those returns.

Another thing that IDW does that I think is smart is that they keep those returns in play for the first three issues of a series -- by #4 is the place that retailers really start getting a good idea of what the long term sales potential of a title will actually be.

Image was really aggressive with the returnability, but in recent months they've switched many of their promotions over to extra discounts instead. They've also announced a reasonably complicated "full line" program, where if you order any quantity of 85% of their line, and half of the line at a specific quantity (in my discount bracket: 25 copies), then you get an extra 2.5% discount across the line. The problem, again, is that the math doesn't work -- I could save about $90/month that way, but I'd have to buy about $250/month of comics I don't believe we can sell.

But almost a larger problem for me on that one is the "K.I.S.S." principle -- Keep It Simple, Stupid. Any plan from any size publisher that asks me to look at data other than sales data for the specific individual periodical that we're ordering is unnecessarily complex and does nothing but to slow down the ordering process. Image's plan, as announced, would mean that I would have to keep a running tally of how many qualifying titles they offer each month, and keep track of that throughout each ordering month as I process my Final Order Cutoff orders each and every week. Even relatively simple ones as the "like" approach favored by Dark Horse halt the ordering process dead as I have to leave one set of data to go analyze a second, different set. When you mix the stop and start nature of modern ordering (every second I have to consider a SKU that isn't a new book or comic -- and some publishers are 3:1 or worse -- that's a second I'm not giving the new item enough consideration. Hours and hours are added to ordering every month as a result).

Image has also announced an overship program where they'll overship six different titles a month and you only pay for what you sell at the end. That stands a decent chance of working if they're not entirely obvious about which six books they pick each month -- you don't want a situation where people can "game" their orders.

Then we have the Big Two.

DC virtually never does any kind of a stick or carrot plan other than basic variants. Really, the only significant exception these days is that with their weekly series, which they offer returnabilty on for (usually) the first three months -- except they have a 29 cents per-copy fee, which is deliriously retrograde in the 2014 market. DC is the sole publisher to charge for returns, and their offer on returnables has a high enough minimum to begin with.

Well, except on their all-ages line, where it is free returns on 3-copy minimum orders. See? That is a rational target for the average store.

Marvel... well, Marvel on the other hand never ever, under any circumstances, does returns. Ever. Instead, they try to move the needle primarily by complex increased discount formulae coupled with aggressive variant cover programs. They also have incredibly gated variants that are Open-To-Buy once you jump the gate. An example of this might be the Skottie Young variants on most first issues. My second store actually came with a built-up audience for these books -- to the point where I won't sell less than twenty copies of any Young variant at Marvel. The problem is that Marvel sometimes sets the gates way too high on these books -- "Order 200% of ‘All-New X-Men #25'" and things like that which appear nearly impossible to profitably handle for us. The thing is that turning down an order of 20 copies of anything is mental to me -- there are regular mainstream Marvel titles that I can't sell 20 copies of, combined, at both stores -- why gate that kind of demand? We're not selling them as "collectibles" with "collectible" prices -- no, these are going at cover to regular readers who are buying comics that the otherwise probably would not because they like the Skottie Young art. And some of them come back for the second issues too.

Crazy to me to not let these people openly buy those comics.

Overall, I'd say that Marvel's stunts like this usually end up costing me more money than we'd ever be able to make by reaching for the targets.

Then there's the game-playing that Marvel does with "classified" solicitations, poorly named comics, and other kinds of stunts that seem designed specifically to confuse the market into buying comics, rather than trying to actually sell them. For example, this is the scheduled shipping order for the "Original Sin" event that Marvel is currently running. Numbers "3.3" and "5.2" ship after issue #6, do they?

ORIGINAL SIN #0
ORIGINAL SIN #1
ORIGINAL SIN #2
ORIGINAL SIN #3
ORIGINAL SINS #1
ORIGINAL SIN #4
ORIGINAL SIN #3.1
ORIGINAL SINS #2
ORIGINAL SIN #5
ORIGINAL SIN #3.2
ORIGINAL SIN #5.1
ORIGINAL SINS #3
ORIGINAL SIN #6
ORIGINAL SIN #3.3
ORIGINAL SIN #5.2
ORIGINAL SINS #4
ORIGINAL SIN #3.4
ORIGINAL SIN #5.3
ORIGINAL SIN #7
ORIGINAL SIN #5.4
ORIGINAL SINS #5
ORIGINAL SIN #8
ORIGINAL SIN #5.5
ORIGINAL SIN ANNUAL #1

This is not the product of an ordered mind.

Again, I'm absolutely certain that I had lower sales than I would have otherwise from all of the obfuscation on display here.

When I order Marvel comics, it constantly feels like a struggle to me -- a contest between me and their marketing department, as I try to order correctly while dodging the formidable and prodigious obstacles they toss at me. This is actually true for most of the "big" publishers, actually, to greater and lesser extents -- but at Marvel it usually feels like a real fist-fight every month. I don't want to feel like that from doing something as operationally key as ordering comics!

I can only speak with absolute assurance for my own business, but I find that the best way to motivate me to stock copies above what I believe the likely number I will sell is to go the returnable route -- most times, math-and comparable-driven programs only favor the largest of accounts.

Returnability means I am effectively spotting the publishers a loan until we see how many get returned, so I'm not interested in paying fees to do that. I also prefer my being able to set my own ceiling based upon my knowledge of my store, and my desire to loan them money -- it doesn't seem smart to be obligated to buy 25 if you truly believe the audience is 2 copies deep. Having said that, I do understand the motivation of minimums. On the other hand, there is a practical limit on the number of and size of these effective loans that I have any interest in extending every month -- not everything can be made returnable (not at least unless returns are made at my sole discretion and timetable -- in other words, some books are returned the next week, while others are held for six months or more, all based on velocity).

I think a lot of the problem, honestly, is that publishers don't have to fill out order forms, as such. They don't understand that soliciting 3 line items for every new release, even if you're not going to order from all of those lines is a hassle that slows down the ordering process. That every second you waste clearing through chaff is a second you can't spend paying attention to the product the bulk of customers actually want. That the notion of stopping to check to make sure if you're ordering "85% of the full line, but half of it at 25 copies or more," is actually a pretty staggering burden when the publisher next to you is asking to compare your orders to unrelated comics from 6 months ago, while the one next to him is asking you to find his actual listing in a stack of 12 different variants, and the one next to him is asking you to do math with three variables, at odd numbers you can't do in your head.

It isn't even that any one of these things is heinous individually (though, really, they usually are), but when you start adding them together, it begins to add hours of time to the ordering processes.

Keep It Simple, Stupid.

Brian Hibbs has owned and operated Comix Experience in San Francisco since 1989, was a founding member of the Board of Directors of ComicsPRO, has sat on the Board of the Comic Book Legal Defense Fund, and has been an Eisner Award judge. Feel free to e-mail him with any comments. You can purchase two collections of the first Tilting at Windmills (originally serialized in Comics Retailer magazine) published by IDW Publishing, as well as find an archive of pre-CBR installments right here. Brian is also available to consult for your publishing or retailing program.

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