Tilting at Windmills: Too Much Competition

Fri, January 9th, 2015 at 4:58am PST | Updated: January 9th, 2015 at 9:52am

Comic Books
Brian Hibbs, Staff Writer
23

I've talked quite a lot in the last year about how it is my belief that the comics industry is producing profoundly more titles than it is able to support -- that the largest factor in the decline of the circulation of individual titles is just how many titles there are in the first place.

We've at very least doubled, and maybe as much as quadrupled, the number of titles produced each month, so it shouldn't be any major surprise that circulations have dropped by 50-75%. The real answer, most of the time, to "Why didn't the market support [your favorite comic]?!?" is "There is too much competition!"

I've been struggling with a way to really drive this message home, because this title growth has kind of been incremental over the life of the Direct Market and so is maybe less obvious than it could be. So, perhaps, the way to discuss it is in terms of consumer behavior, and the ordering mechanism.

Let's begin this with a premise that you should forth-rightly accept: the average retailer really wants to sell as many comics as possible to as many people that want them. I know someone will come along with a tale of how the store they shop in is terrible and minimizes their rack copies and yadda yadda, but logic tells you this can't be the state of the typical store, otherwise the Direct Market would have, of economic necessity, collapsed a long time ago.

A significant percentage of periodical readers have a pull list at their local comics shop. There's no formal numbers, obviously, but in my own anecdotal experience, it typically hovers around half. That's purely anecdotal, though, and I know of some stores that are proud they're in the ninety percent range, and I know others who are proud they're in the twenty percent range.

However, I find that the actual behavior of subscriptions vs. non-subs to be typically distinct -- most often sub customers are far more likely to stay with a title from inertia, long past when their Burning Love for a book has faded. Oh, if a title turns extremely poor you can trigger a mass exodus of subs, but usually getting that subber signed up for an ongoing pull locks in a significant amount of long-term loyalty.

Between my two stores we have several hundred subscribers. Which means we also have several hundred "casual" periodical readers as well. Our single best-selling periodical of the moment (currently "Saga") sells to, perhaps, a quarter of the sum of those readers. Our next-best seller sells to maybe 15% of the readers. And so on down the line until there's this giant bulk of titles selling just a small handful of copies.

Comic stores buy non-returnable, so as a rule you want to watch your sell-through percentages fairly closely -- every copy unsold comes directly from your bottom line of profit, and while every store is a little different, you can make a general rule of thumb that if you're not selling off at least 80% of the comics you're buying, you're not going to make a profit.

As should be obvious, you have more margin of error to hit that 80% threshold the greater number of copies you order. If I order fifty copies of a comic, 80% means I "could" not sell up to ten of those, and I'd still make a profit. But if I'm only ordering five copies, then my margin of error shrinks to a single unsold copy. And if I'm only ordering one or two? Well, there is no margin of error.

We can talk about averages and stuff -- if there are roughly 2600 Diamond accounts buying periodical comics, and if we can look at the sales charts to find out that the one-hundredth best-selling comic in November of 2014 was "Loki: Agent of Asgard" #8 with about 23,333 copies sold, then we can posit that the "average" store is ordering less than 9 copies of that comic. But that tends to be too abstract to have a ton of value -- clearly there have to be stores that aren't selling any copies "Loki," and stores that are selling fifty, because every store is different.

What I hit upon was taking you into my stores to show you how big of an issue it is by looking just at our "rack copies" of books. Like I said, subs tend to be pretty stable and conservative -- most books' subscriptions change very little over the course of a year -- while rack copies tend to be more indicative of what is actually exciting readers.

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You're going to see a lot of crazy low numbers, so I want to reiterate what I said earlier -- retailers are committed to selling as many comics to as many people as possible. I know I am! There are, at least, fifteen publishers of which I try to stock one hundred percent of their new launches until the market shows me that it is futile. We have hundreds of customers coming in each and every month, and more than half the comics coming into my store can not sell three rack copies.

That's pretty sobering.

Three copies is an important line because that's the point where the math against having any unsold copies starts to work against you. Order four, don't sell one, well, at 75% sell-through you, at least, haven't lost money. Order three and only sell two? Then you're probably, after costs, losing a few pennies. You don't want to lose money on products in retail; that's not your winning formula.

Further, there's a certain level of sales-per-square-foot that one needs to make to stay in business, and selling fewer than three rack copies almost certainly means that space could be better served by something else. The conundrum is this: not everyone wants to have a subscription. Many of them want to buy from the rack, so it is difficult if not impossible to ditch low-selling rack books entirely because you might end up losing all of that customer's business. It is a perpetual inventory struggle.

So, again, this is a look at our rack numbers only -- what I am not showing you below are the subs themselves. We have titles with twenty subs and only one rack copy sale, and we have books with one sub and forty rack-sold. Specifically this is what we ordered for books with NOV14 codes -- books scheduled to ship in January. January is almost always a weaker month for product offered because it is for a slower time of the year.

To break this up a little, let's start with the five "brokered" publishers from Diamond, which makes about 85% of my periodicals sales. The first column shows you the number of comics that each publisher offered that month. Note that I am folding variant covers together into the main parent book -- the actual title count is significantly higher, but the numbers would be significantly more depressing if I didn't fold them together.


# of titles

Zero

Subs-only


Subs +1 or 2

btwn +3 & 9

+10 to 19


+20 or more

Dark Horse

30

7

5

40%

5

17%

10

33%

3

10%

0

0%

DC

84

4

2

7%

32

38%

39

46%

6

7%

1

1%

IDW

45

10

5

33%

8

18%

19

42%

0

0%

3

7%

Image

56

4

3

13%

10

18%

17

30%

8

14%

14

25%

Marvel

78

0

0

0%

5

6%

52

67%

12

15%

9

12%


The next set of columns show how many books I am not racking at all, along with how many titles are "subs only" -- where I may not be racking it, but there are still orders being placed. Especially for these five publishers we try to carry each and every new periodical that they publish; so when racks sales have dropped to "none," that's an actual reflection of specific lack of purchases, not our cutting the book out of spite or myopia or incompetence. Those two columns are followed by a percentage of both kinds of "zero orders" combined.

Following that, you have "subs +1 or 2," which is literally that -- I am ordering only one or two copies for rack sales. These books are, generally, anchors on our profit -- almost never does ordering one or two copies pay a divided, and, most often, these indicate titles that are "failing," where we are trying to cut as fast as we can to minimize our losses. This group also holds the "ultra-specialized," usually for licensed titles, where the actual real-world demand is actually rock-solid month-by-month, but very very small.

Next is +3 to +9 rack copies. These are the risky ones where we may or may not be making a profit issue-by-issue depending on sell-through. Figure we're probably breaking even on these comics. After that you have +10-to-19 rack copies and 20+. Once you're at +10 rack copies you're almost certainly profitable as you start building up a proper cushion, and if you're at +20 or more you are a genuine hit that is making everyone money in happy ways.

So, the way you'd read the above is that Dark Horse offered thirty periodical comics for sale to us in November, for January on-sale. Seven of them we have found zero demand for, and five more have some subscription orders, but no sales past that. 40% of the books Dark Horse offered us this month had zero rack orders from us.

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Another five titles sell subs+1 or +2 (probably loses money), ten are +3 to +9 (probably break even), and three are +10-19 (probably profitable), none are +20 and up (immensely profitable).

A couple of on the above: Returnability is the exception to how business is done in the Direct Market, but some publishers are using it as a tool. Specifically, above, all three IDW +20 titles are returnable, as are six of the fourteen +20 Image titles. Our orders would very likely have been at least one band downwards without that returnability option, as we would have been significantly more conservative in ordering.

Of the fourteen Image +20 books, nine of them are ordered at +40 to subs or greater. Image is, currently, the "great civilian publisher" with an enormous level of walk-in customers supporting their books. Demographically, this is a positive development, but the real hope is to convert some or all of these new faces into ongoing sub customers. Image, in fact, became my number one publisher in 2014 largely as a result of this "civilian" attraction.

Finally, of the nine Marvel comics that are +20, seven of them are the first or second issue, which really does tend to skew higher overall as we try to predict who wants to sub to new ideas and titles.

The next band of publishers looks like this -- please note that every publisher in this band is essentially guaranteed rack space on our shelves to see how many we can sell. Specifically this means that when books are "zeroed" that is an indication of lack of consumer demand here:


Comics

Zero

Subs


Subs +1 or 2

btwn 3 & 9

10 to 19


20+


Archie

11

4

0

36%

5

45%

1

9%

0

0%

1

9%

Avatar

8

1

3

50%

2

25%

1

13%

1

13%

0

0%

Bongo

4

0

1

25%

0

0%

3

75%

0

0%

0

0%

Boom!

36

0

0

0%

0

0%

31

86%

5

14%

0

0%

Dynamite

34

15

4

56%

8

24%

6

18%

1

3%

0

0%

Oni

7

0

1

14%

2

29%

4

57%

0

0%

0

0%

Titan

7

1

0

14%

0

0%

6

86%

0

0%

0

0%

Valiant

10

3

2

50%

2

20%

3

30%

0

0%

0

0%


The major note for this part of the chart is that BOOM! has a program that we are part of that makes every comic they publish returnable at a certain minimum order -- without that program, roughly nineteen of their "between +3 and +9" titles would instead likely be subs-only or in the +2 band.

These are staggering numbers of comics with poor-to-no commercial prospects. Let's bring it home with Every Other publisher, and the All Publishers Together stats:


Comics

Zero

Subs


Subs +1 or 2

btwn 3 & 9

10 to 19


20+


Everyone Else

61

41

5

75%

7

11%

6

10%

2

3%

0

0%














TOTALS:

471

90

31

26%

86

18%

198

42%

38

8%

28

6%


So, at the end of the day, there are a staggering 471 periodical comics being released in January 2015. Of those more than a quarter, I am unable to sell even a single copy. Only about 14% of them sell enough copies that I'm making a profit of any significance. The other 60% are probably, taken together, just barely breaking even, or making a tiny little profit.

That's horrible, and I think it really illustrates just how broken the current distribution system has become. Because I very much believe there is an "as above, so below" situation going on here -- I don't think that many of these books are genuinely profitable for the publishers, either. They are, like for the retailer, marginally profitable, at best -- and yet their proliferation makes it so it is significantly harder for anything to stand out and gain traction in a radically oversaturated marketplace.

And this is for my bigger and stronger store -- the one that focuses on graphic novels. My newer store, which is roughly 70% sales of periodical comics, has it "even worse." Here is the chart for Comix Experience Outpost:


Comics

Zero

Subs


Subs +1 or 2

btwn 3 & 9

10 to 19


20+


Dark Horse

30

6

8

47%

9

30%

7

23%

0

0%

0

0%

DC

84

3

6

11%

30

36%

35

42%

8

10%

2

2%

IDW

45

12

9

47%

10

22%

12

27%

0

0%

2

4%

Image

56

5

4

16%

9

16%

25

45%

5

9%

8

14%

Marvel

78

1

0

1%

8

10%

43

55%

18

23%

8

10%














Archie

11

0

1

9%

9

82%

1

9%

0

0%

0

0%

Avatar

8

5

1

75%

0

0%

2

25%

0

0%

0

0%

Bongo

4

1

0

25%

0

0%

3

75%

0

0%

0

0%

Boom!

36

0

0

0%

0

0%

36

100%

0

0%

0

0%

Drawn & Quarterly

0

0

0

0%

0

0%

0

0%

0

0%

0

0%

Dynamite

34

8

14

65%

7

21%

5

15%

0

0%

0

0%

Fantagraphics

0

0

0

0%

0

0%

0

0%

0

0%

0

0%

Oni

7

2

3

71%

1

14%

1

14%

0

0%

0

0%

Titan

7

1

0

14%

3

43%

3

43%

0

0%

0

0%

Top Shelf

0

0

0

0%

0

0%

0

0%

0

0%

0

0%

Valiant

10

6

1

70%

2

20%

1

10%

0

0%

0

0%














Everyone Else

61

47

8

90%

0

0%

6

10%

0

0%

0

0%














TOTALS:

471

97

55

32%

88

19%

180

38%

31

7%

20

4%


At this location, almost a third of comics can't find a single rack sale, and just 11% are unequivocally profitable by this measurement.

This is why comics retailing is hard and this is why retailers are insanely skittish and conservative when it comes to ordering -- because the overwhelming majority of comics being published are inherently borderline in their ability to generate cash flow and profit for all parties involved.

I remind you: it didn't use to be like this. There was a time where it was essentially inconceivable that you would order less than five rack copies of each and every Marvel and DC (and Eclipse and First and Comico) title, even if it was a massive flop of a comic.

The single best thing that each and every publisher could do right now, this minute, is to cut their line in half. Sales wouldn't necessarily immediately rise for the remaining titles to offset the revenue, but it would leave the ground much much more fertile to launch new work at proper levels.

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I spend... well, no, strike that, I waste the majority of my hours in writing orders for my business essentially into deciding whether to buy two or three copies of a comic book -- essentially a waste of my time and effort and brain-cycles. I need more comics that sell 20 or more rack copies, and I need absolutely positively no more that sell one or two.

Lest you think the solution is in the book format, let me assure you that things are even more lopsided there. My main store is a book-focused business, where nearly 60% of our sales come from trade paperbacks and graphic novels. Here's the bottom line figures there:


Books

Zero

Subs


Subs+1


2 to 4 cpy

5 and over

Dark Horse

23

6

2

35%

12

52%

3

0

13%

DC

26

11

1

46%

12

46%

2

0

8%

IDW

22

9

0

41%

11

50%

2

0

9%

Image

8

4

0

50%

3

38%

1

0

13%

Marvel

33

17

2

58%

12

36%

2

0

6%











Archie

5

4

0

80%

1

20%

0

0

0%

Avatar

2

1

0

50%

1

50%

0

0

0%

Bongo

1

0

0

0%

1

100%

0

0

0%

Boom!

8

5

0

63%

3

38%

0

0

0%

Drawn & Quarterly

1

0

0

0%

0

0%

1

0

100%

Dynamite

3

1

0

33%

2

67%

0

0

0%

Fantagraphics

5

1

0

20%

3

60%

1

0

20%

Oni

3

0

0

0%

3

100%

0

0

0%

Titan

6

4

0

67%

1

17%

1

0

17%

Top Shelf

1

0

0

0%

0

0%

0

1

100%

Valiant

2

0

0

0%

0

0%

0

0

0%











Everyone Else

126

94

2

76%

26

21%

2

1

2%











TOTALS:

275

157

7

60%

91

33%

15

2

6%


Books have slightly different metrics because, unlike comics, there's a fair chance that they will sell significantly past their first month on sale, so this chart is divided into +1, +2-4 and +5-up. At +2 or better, this indicates I believe I would have to reorder within the first month, and +5 or better means it's going to be a genuine, broad-based success. January '15 is a pretty lousy release month for books, actually -- with only two (the second volume of Congressman John Lewis' "March," and Julia Werz's "Museum of Mistakes," if you're curious) hitting that +5 level for us.

A staggering sixty percent of book releases I can't see an audience for -- I am unwilling to invest that $8+ wholesale in. And, this is a book store we're talking about. Why? Because I find that, generally, about half of the titles that we order the one rack copy of never sell, and end up getting liquidated eighteen months later.

(The other half go on to turn 1-2 times a year, so it's not all bad!)

Our comics-focused store clearly has it significantly worse on that front.

This isn't necessarily anything new for Art -- clearly there is more music and film and novels released any given week than there are firm audiences for -- but I firmly believe that if publishers want to grow their markets then it is absolutely in their best interests to give consumers a much more curated publishing plan that's building more for genuinely profitable books, and fewer kudzu-like growths of publication density.


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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