by Brian Hibbs

#131 – March 2005 – “The Two Problems ”

I think I’ve said, oh a couple of dozen times now, that I think the largest structural problem with comics today is the lack of venues for them. Specifically, there simply aren’t enough comic book shops to even begin to meet all of the demand that exists.

I’m in San Francisco. SF has a population of something around 750,000 people, smaller than you might think for a major city. SF is also only 49 square miles large – 7 miles by 7 miles. SF has, if I’m counting correctly, twelve stores that deal primarily or exclusively in comic books. At one comics store per 62,500 residents, SF almost certainly has the highest number of comic shops, per capita, of any major city in the United States.

And we could add 50% again to the number of stores here and I still don’t think we’d even be close to saturating the marketplace. There was a point in the 1990s where there were 20+ comic shops in SF, and there was still plenty of business to go around.

(Note, too, that I’m only talking about San Francisco, proper. If we start counting the “greater Bay Area” – Oakland, Berkeley, Marin, Contra Consta, etc. etc., the number of stores almost certainly doubles. Though, then, the population at least quadruples. But draw the circle as “an hour’s drive”, and there’s a lot of stores around the Bay Area)

Comic book stores create new comic book readers. Industry analyst Mel Thompson has said:

When a new store opens, about 65-75% of its eventual sales volume comes from customers who are entirely new or who have been inactive for quite some time. Whenever a store goes out of business, between 70-90% of its volume disappears.

And, absolutely, my anecdotal experience backs this up 100%. There used to be 20 comic book shops in SF, and now there are 12 – yet none of us (to my best knowledge) have seen a 67% growth in sales as a result. Those lost customers are lost to the medium itself, altogether.

Y’know, when Comic Relief opened their sadly ill-fated SF store something like 8 blocks from me, sales didn’t decrease because of more competition. In point of fact, they actual increased as more people were drawn to the neighborhood by two kick ass comic shops within easy walking distance.

So, I’m all for nearly anything that expands the number of places that comics are sold – be that bookstores or convenience stores or, hell, mobile trucks that roam around with bells and lights bringing comicy goodness to the world. I know that a rising tide floats all boats.

When the news broke last week about Marvel’s penetration of 7-11s nationwide, a number of industry reporters wanted to know what the DM thought. In general, these questions were framed in a kind of an “ooh, can you handle the competition?” kind of way. Heidi MacDonald posted a thread on the retailer-driven Comic Book Industry Alliance bulletin board, and within 24 hours I’d also received a call from The Comics Journal, and I was, I admit, a little surprised that there was any controversy here at all – more generalist venues for comics can’t help but be a good thing for comics specialists.

I bought my first comics from the newsstand. Virtually every comic retailer in the world would say the same thing. There’s an invisible language specific to the comics page. You already read comics, you probably take for granted how panel-to-panel transitions work, how to read word balloons, that kind of thing – but there’s a remarkable number of people who are “comics-illiterate”; who just don’t understand how to process the page. And I believe that mostly because they were never exposed to the material when they were young.

We “lost” an entire generation of comic book readers with the collapse of the newsstand. Direct Market stores can (and do!) bring new “civilians” into the medium by getting them as adults, but it’s a much harder process than inculcating awareness and comics-literacy in children.

So, yeah, Marvel in 7-11s is a great idea. And a great idea that will pay off long-term dividends not only for Marvel, but for DM specialty stores as well. I remember being a kid in Brooklyn, and the little bodega around the corner from our apartment had a rack of comics. And I consumed just as much as they every got in (which, really, wasn’t much). But I can still remember the day, when I was 8 or 9 that I figured out that there were stores that sold nothing except comic books. I remember begging my mom for weeks to take me in to Manhattan to this store I’d heard about, The Batcave, in the Village. (They’re not there any more)

This place was, in retrospect, a horrifically crappy store. It was in a basement, and smelled like it – wet and musty and full of funk. It really was like a cave, and I even remember stalactites, though that’s probably just the hallucinatory nature of childhood memory. But they had all kinds of comics, things I’d never seen or dreamed of before – old ones too, which blew my mind – racks and racks and racks of the things everywhere.

Probably the thing that blew my mind the most was that The Batcave had a bulletin board up on the wall, and tacked up to it was a couple months of Direct Currents, DC’s solicitation flyer for DM stores at the time. It was kind of a sad little affair, really, a couple of photocopied pieces of paper with just the solicitation copy (I don’t think it had any art, even), but they had three or four months worth tacked up, and it showed me that comics came out, wow, on a schedule! They were planned months in advance! Prior to then, I don’t know, I guess maybe I thought elves made them or something. Things showed up randomly, as far as my little kid brain understood – but this showed me there was a plan to them, a whole world that I never had dreamed existed.

Years later, after I swore off comics as “kids stuff”, it was probably the (now also defunct) Comics & Comix newsletter, The Telegraph Wire (which was, by the way, edited in those days by future Dark Horse editor Diana Schutz) that brought me back to comics as a teen. Not only did The Telegraph Wire have solicitation copy, but it also ran interviews with comics creators and had reviews and stuff. Again, showing me a world beyond just the comics themselves. It is those experiences that keep me producing Comix Experience’s Onomatopoeia, our in-store magazine, regardless of the practical real-world return-on-investment of doing so. That is to say, I definitely lose money producing it every month, but if it sparks the kind of interest Direct Currents or The Telegraph Wire did in me, I figure it is all worth it in the end.

The generalist, the little bodega on the corner for me, introduced me to comics, their language, their power – but it was the specialist, even a smelly, disgusting, and kinda scary example like The Batcave, that created a passion for the medium.

So, yes, I applaud each and every attempt to get back to generalists – we need those initial experiences in the convenience stores and airports and bookstores and whatever – but I firmly believe that if you want to fully grow the market for comics, we absolutely need more comic book specialty stores.

The specialist will inevitably be better at growing and expanding the market – the specialist brings deeper product knowledge, wider stock and backstock, and a passion and a commitment to the form. Generalists don’t. Generalists also have short attention spans, and will love you only as long as it continues to be profitable to do so. If it gets back to the point where a spinner rack of sunglasses is more profitable than a spinner rack of comics, the bottom line is going to win out. Again.

But the problem is that the barriers to entry to open new Direct Market comic shops are much larger than they once were. The move to a backlist-driven industry, while the right move for any number of reasons, means that the initial startup costs have skyrocketed. Other than my own back issue collection (60 or so long boxes), I doubt I opened the doors of Comix Experience in 1989 with more than $1000 or so of inventory on the racks. There were far fewer comics back then, and of course, they were significantly cheaper. I still have my very first Diamond order form that I turned in. DC and Marvel combined put out less comics then than either company does solo today! Most standard comics were 75 cents (so 40 cents or less wholesale to a start up store).

That’s a real world of difference to the situation today. The most recent Diamond order form has 4615 different items to a store to order for April. And while there are certainly a few $2.25 books left, $2.99 is rapidly becoming standard comics pricing. That’s $1.75-ish per comic for a new start-up store. That adds up real fast. Moreover, the amount of backlist you’ll have to bring in to form even a skeleton of a selection these days is massive. Just doing a quick and dirty back-of-the-envelope guess makes me think that your minimum inventory in a new store in 2005 is probably in the $15-20,000 range. That’s a lot of costs to eat up front.

Because there isn’t any real formalized help or subsidies for new entrepreneurial comic shop retailers, I think it’s really hard to attract the next generation of comics ships. As I noted in last month’s Tilting, it appears that new comic store growth in the Direct Market is flat. This is something we should all be thinking about real seriously. The sudden death of Bill Liebowitz should be a real wake-up call to the industry. A lot of the current DM store’s owners are starting to get older. Certainly, many of us are not exactly in top-notch physical condition to begin with. Without a big influx of new DM start-up stores, I think current ones are going to, shall we say, “age out” faster than they can be replaced over the next decade. We need new stores, and new, young, voices.

There was a time when there were programs designed for new stores, expanding stores, or even just helping professionalize stores. Once upon a time, back when there were enough distributors to have an organization, the IADD (if I remember my acronyms correctly: International Association of Direct Distributors) had a rack program where new racks for your stores were heavily subsidized. Marvel and DC used to have robust co-op advertising programs. Marvel cancelled theirs a long time ago, and DC’s got watered down to the point to become functionally valueless for most retailers. At this stage I believe it’s really only there for DC to be able to say, “See, we have one!” rather than be a practical tool for retailers. Marvel used to have a cash register program, where they heavily subsidized that basic piece of equipment. They also used to offer general business books, like Jay Conrad Levinson’s Guerilla Marketing, at what I remember to be cost. Marvel doesn’t offer that anymore.

You have to ask yourself why we don’t have these kinds of programs any longer. Why we don’t have directed and practical things like starting inventory packages, or management-oriented training like “how to do cycle sheets” and that kind of thing? Why have no publishers taken a lead on trying to get a standardized Point of Sale system set up for comic shops nationally? Why aren’t there rack programs any more? Why aren’t there co-op programs that working retailers will, as a body, actually use? Subsidizing basic start-up costs, and encouraging better business practices, these things couldn’t help but encourage more stores to start, and grow.

(Seriously, why don’t we have a single POS standard for the comics industry, being underwritten by the publishers with a goal towards having a neutral-party BookScan-like reporting mechanism? Not only would it make for a stronger Direct Market, but it would be a practical and tangible tool for publishers that they could actually use with sell-through data. I also strongly believe that the increased sales that would result from better data management would pay for the costs of implementing such a system, very quickly. Someone needs to tell me why on earth this isn’t being worked upon.)

In the end, I absolutely believe that resources put in to the Direct Market will always pay off at a greater rate than any other market segment – it is cheaper and more efficient to sell comics through the DM mechanism because that is what it designed to do.

So, that’s major problem #1: we don’t have enough stores. I think that one is pretty fixable, but it will take vision and leadership from entities that, typically, don’t like leading at all. Or, for that matter, like thinking past the short term.

What’s major problem #2?

*           *           *

Major Problem #2 is, I think, Too Many Comics.

If you’ll permit a lousy analogy, the DM is like a garden that’s been allowed to get overgrown. If you want plants to bloom, you often have to winnow the number of things that go into your garden, so that everything can get enough soil and sunlight. Ugh, that’s a really lousy analogy.

But there are too many comics being produced, that much is clear to me. In the March order form, there are 655 items coded as “category 1” – that is to say, “comic books” – shipping in May through Diamond. That’s not even an especially large month for comics – during the peak months, it’s almost certainly over 800 comics a month.

And Diamond doesn’t carry every comic that is being produced.

150-200 comics each and every week, think about that for a moment.

How on earth can the market support that much material?

Well, the short answer is: it doesn’t. It can’t possibly support that kind of production.

Not only do you have the “majors” over-producing (15 Batman titles? 22 X-Men titles? 42 comics coded from Image? All just in May), but we’ve got new publishers launching whole new lines of books, not just individual titles (Alias has 9 new titles, Kandora has 3, with more to come – everywhere you look, there’s new publishers trying to break in with huge packs of material), and then everyone scratches their heads and wonders why most of it isn’t selling. Well, sheesh, it’s clear to me – we’re massively overproducing to what the market can handle and absorb.

I believe that this overproduction is the key reason that the “midlist” is still continuing to dissolve. Absolutely, the top of the market has yet to find it’s ceiling, because retailers are a conservative lot – the quarter-million in sales of, say, a New Avengers #1 is probably still only 80% or less of what the market could take (even with the multiple printings and a “must have” there is still demand), but if you take a look at the history and trends of the “not top” books, most of them are continuing to decline on a year-to-year basis.

And that’s a scary trend.

Further, it’s almost impossible to launch a new book into market conditions like this – brand new books from new companies and new voices can almost never  crack the top 100, and even characters and concepts that have a past history, like your She-Hulks or Firestorms start at pathetically low numbers and just decline and slide from there.

I think there reason for this is that all of the money is drawn out of the marketplace by overproduction on the “top” lines. I’ve just created our subscription form for June shipping books, and there are seven Fantastic Four comics being offered, as well as 6 TP/HCs. While I know there’s a movie coming out, it’s the rare FF fan who could, or probably would want to keep up with that kind of production. It’s the rarer one still who could do that and keep up with that and the 9 different Spider-Man titles, y’know? Then add the X-Men books (21 in June), 3 Icon books, 4 more Knights books, 2 Max ones, the other 17 Marvel universe titles, and you kind of stop wondering why the new #1s of New Warriors and Gravity are probably going to get lost come order time.

And I’m not here to pick on Marvel – you can perform the same exercise at DC (22 items in the Batman family, 7 in Superman, 11 items in Johnny DC, 12 Wildstorm books, 15 Vertigo, 11 GNs being co-published [and all $9.99-$19.99, at that] and the 33 other “DCU” titles, and it makes you wonder why they’re publishing Son of Vulcan, too) or at Image (43 books being offered, eight of them new “first issues”), or, hell, even at IDW… I love my publisher, but how in god’s name are they publishing 19 new items in a single month?

It’s really difficult to get a new idea to stand out in the deluge of product that flows through the Direct Market. Any manufacturer that’s not a brokered publisher is already hampered by the lower max discount, and reorder fees that get charged, and even the majors are simply competing against their own titles.

See, the problem is that the major promotional tactic for the overwhelming majority of comics being produced is, well, um, depending on the retailer to hand-sell it.

Sure, that worked, once, when about a third as much product moved through the market, but it’s simply not possible for a salesman to give full attention to more than a handful of items in a single week. You can’t push more than 2-3 comics a week and have any cohesion doing so.

So, when Gravity or Son of Vulcan come out in June, they have to hope that a two-step hurdle gets passed by retailers: 1) that the retailer is struck enough by the solicitation to order the book in the first place, and 2) that once it arrives, the retailer pushes it at the point of sale, and that it doesn’t get lost in the flood of other material on the stands that week. Otherwise the book is DOA.

The hurdles are much steeper for a smaller publisher, with their postage sized solicitation in the hinterlands of the back of Previews.

The market can’t actually support more than about 2 Batman or X-Men books a week – yet DC and Marvel produce something like 5 a week on average. Well, no, let me amend that: the market can’t actually support more than about 2 Batman or X-Men books a week if you also want it to support your Gravitys and Son of Vulcans.

And here is what I’d argue to the bean-counters – by cannibalizing your midlist with overproduction of your most popular characters, you’re limiting your ability to create new products and new revenue streams. I mean, you’ve already sold the X-Men license to the outside world, right?

As a working retailer, it’s clear to me that overproduction fragments the readership, and quickly reached a point of diminishing returns. There are X-Men titles (Rogue, Gambit, District X) where I am selling single digits. I really don’t need more titles clogging the racks that sell 7 or 8 copies – I need more books where I can move 50 or 60 copies, let alone the ones that sell 150…

I believe that we’re probably overproducing the market by about 50% -- and I really believe that if a winnowing of titles was done, the remaining books would all sell better as a result.

Both problems are going to take real vision and leadership to address – does that leadership exist in our current Direct Market?

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Brian Hibbs has owned and operated Comix Experience in San Francisco since 1989. 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 Tilting at Windmills on Newsarama can be found right here.