Tilting at Windmills v2 #4

By Brian Hibbs

[#121 – April 2004 – “Conjunction Dysfunctions”]

I hate deadlines sometimes. I swear I can barely pop out a monthly column – I really can’t figure out how people like Peter David manage to knock one out every single week. No way I can do that, and keep running my business and raising a child at the same time.

So because I’m turning this into Matt Brady about as late as late can be, we’ll take a quick pause from addressing “big picture” type topics like “How and When do you do a trade paperback?” and look over a spate of recent news that probably aren’t worth columns individually.

● CrossGen (CGE) seems to be on the rocks lately. Not only have they seemingly lost most of their sales staff, and cancelled good chunks of their books, but I’m not even sure if they have a single “on-staff” writer left besides Chuck Dixon.

This is a shame because parts of what CGE was doing seemed to make a fairly large amount of sense.

CGE targeted largely untapped genres in comics: fantasy, space opera, martial arts, pirates, etc. CGE also seemed to understand that repurposing the same material into multiple revenue streams makes a lot of sense – comics, TPs, Comics on The Web, “Bridges” their classroom initiative, and so on. CGE had a creative setting within which many creators seemed to thrive. They also had the most-impressive on-time record of any American publisher in recent times.

So what went wrong?

What’s interesting to me is that almost everything was done correctly, at first. They launched slowly (only four titles to start), and built their line with a reasonable amount of patience. Really, the only thing to take issue with was the tactical blunder of “linking without continuity” the titles by means of the “sigil tattoo” – the yin-yang looking company symbol. Each book had at least one character wearing one of these, although this dubious connection generally wasn’t played up to any great degree.

The problem is this made the CGE books neither fish nor fowl: they weren’t actually building the soap-operatic connections that “mainstream” (DC and Marvel in this context) readers craved, but they were also trying to sell the line as a line, and so the “rest” of comic’s readership was largely scared off from the onset. I don’t think they recovered from this initial impression until it was too late.

Once the line got rolling, I think the problem then became one that the business side of CGE treated what was being produced as interchangeable products – they were, after all, being produced in a comics factory – every book was treated the same in terms of formatting, of getting a TP, of being in the Compendia, etc.. Even when there wasn’t a real long-term audience for the work.

Trying to treat each book as equally strong and equally marketable was a really bad mistake – but that’s the kind of thinking you get when you launch a line, rather than a title.

What always drives me batty about line-thinking is that we have plenty of plenty of evidence that it simply doesn’t work – whether it is outside players like CGE or Tekno or inside attempts like the Ultraverse or Tsunami or or DC Focus or Comics’ Greatest World time after time these things crash and burn pretty darn rapidly.  Everyone seems to think “Well, this will be the time it works!” when it never once has...

CGE seems done to me – the latest sign is their pulling out of Free Comic Book Day. As we’ve discussed before, given a non-returnable marketplace, perception is reality, at least for the comic book retailer. While it’s still, of course, completely possible for CGE to pull out of their tailspin, I believe that their step away from FCBD creates a strong impression that they’re not in the running any longer to be a “major” publisher. Certainly Acclaim spent something like a year as a “Premier” publisher before they went out of business.

The real tragedy about CGE is that I think this time really is going to cost a lot of faith in “independent comics”. There’s a lot of stores that invested reasonably deep in CrossGen books – even stores that claimed that CrossGen was their #1 publisher. The loss of momentum is going to really hurt those stores.

Maybe CGE’ll prove everyone wrong – maybe they’ll get out of this in the end, and I’d like to hope they do, but I think the writing is sadly on the wall.

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● There have been a lot of big moves on the chessboard lately – some of which I think have been pretty badly misunderstood.

The biggest move most recently is that Marvel is setting up a new imprint to publish Powers and Kabuki, taking them from Image.

From a perception = reality POV this really weakens Image. Powers was certainly my best-selling Image title (by some 5:1, yikes), and it’s hard to see how this isn’t a big loss.

However, Image follows a slightly different rule-set than some other publishers, largely because their success or failure isn’t predicated on individual books.

Image, y’see, makes their money from a flat-fee assessed per-book. I believe the number is something like $500-per. This means that from Image’s business point of view one book is very much like another (putting aside any aesthetic judgments), and the loss of any given title simply doesn’t impact their bottom line to any appreciable degree.

Having said that, there’s still the psychological impact of losing a key title(s). There was a day, not all that long ago really, where the “basic order” on an Image book, regardless of the who and the what, was in the double-digits – these days that figure has dropped to as little as a single copy for us. The general salability of the entire line has eroded immensely.

The thing is, that can change again in a really brief amount of time. Image, unlike many publishers which are tied directly to their icons or licenses (Batman is Batman, and has value, largely regardless of who is doing it), Image revolves almost solely around the creative strength and visions of the talent working there. It’s entirely conceptual that, in six months time, Image could once again be filled with top-flight creators doing top-flight work. Image will be very very difficult to “kill”.

More intriguing, perhaps, will be how or if this affects Marvel. Smart money says that Icon is not Epic, and this won’t trigger any mass-publishing of new creator-owned (or, perhaps more importantly, creator-controlled) work.

It’s really hard for me to see Icon as anything other than a “gimme” for Bendis – he’s their most-prolific, possibly most-profitable, creator, and they’ve got a very vested interest in keeping him happy and content.

The question then becomes, “who else do they have such an interest in?” Mark Millar, probably. The Kuberts and JR jr, probably. Maybe even JMS and Kevin Smith, though it becomes a little shakier down that path. There’s really nothing in it for Marvel to pursue new creator-controlled books, because if the set-up is even marginally like Image’s (A flat fee, or, perhaps in this case, a percentage), these deals simply aren’t long-term revenue generators for the nominal publisher.

For what they do, Marvel is already chronically under-staffed – I’m continually amazed Marvel produces as much work as it does, with that small of a staff – yet, by Marvel’s standards, Image is a rinky-dink organization. Image has six employees, I think? Marvel must have 10 times that conservatively. To take stretched resources and to place them in a situation where you can only gain a finite and fixed revenue stream is, I think, against everything Marvel has set themselves up as in the last decade.

From this retailer’s POV, there’s only two bad things about Icon. The first is that, due to my individual ordering patterns, I’m going to lose 1% of my discount on Powers and Kabuki. While this works against me, the hope (perhaps futile because we have a great individual market penetration on Powers) is that we can make up the loss of discount in increased volume. It’s hard to say how many retailers are losing discount in this move – discount tiers are one of the absolutely secret pieces of data in this industry – but I have to assume it’s a respectable number. However, some retailers are likely to gain some discount – perhaps as much as 3%. In the overall picture, it probably amounts to a wash, but this is definitely a concern for stores in my position.

Of equal concern is backlist. Particularly on books like Powers or Kabuki Comix Experience ultimately makes more money on the TPs of the work than we do on the initial serialization. Apparently, all existing backlist will stay with Image, but Marvel will be handling new collections.

This is a concern because Marvel still hasn’t figured out how to handle backlist with any appreciable skill. In fact, it appears to this observer that they’ve made an unannounced switch to treating many trades as “frontlist”-only items. Several recent Marvel trades appear to have been printed either at or very near to initial orders, judging by how fast they sold out. – Supreme Power, Thor: Vikings and Captain America: The Truth being the some recent glaring examples. All went OP within a week or two of initial release.

(This means that if you’re “waiting for the trade”, you might be very very disappointed, by the way)

I am less than sanguine about Marvel’s ability to properly stock and support future backlist items from Icon. Hopefully Bendis has a good contract lawyer, and is able to assert some control here. We’ll see how things play out next year.

Oh, and Powers sales figures? They’ll bounce by 50% or more on #1, but by issue 8 they’ll be back at or below where they were at Image.

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● Another recent “chessboard” move which I think has big implications is Tokyopop’s decision to go exclusive with Diamond.

To really understand this one, you need to know a little about how comics distribution works. Retailers get a discount based both on the overall amount of comics that they buy, and the discount that the publishers sells to Diamond for.

Most publishers that Diamond distributes are in a “buy/sell” relationship – meaning that Diamond purchases outright the comics or books, then sells them to retailers. If they guess wrong, Diamond eats the unsold product. In that sense, they buy non-returnably, just like the retailers do.

Things are a little different for the “brokered” publishers – DC, Dark Horse, Image, and Marvel. Diamond never actually owns any of these publisher’s books – those publishers are actually selling directly to the retailer, with Diamond acting as an agent.

Right, so in theory it’s possible for a retailer to receive up to a 57.5% discount on the “buy/sell” comics they purchase from Diamond (Heh, though you would have to be buying more than a quarter-million dollars a month from Diamond to reach the top level club. I think all of 3 stores get that high) But, in practice, only one “buy/sell” publisher has ever offered max discount in recent history (that would be Dave Sim’s Aardvark-Vanaheim, by the way) – most publishers cap out far below that.

For example, for books that are offered with a “H” code, your discount is the “Lower of 40% or Standard Discount”. Thus, if you were a “55% account” (like I am), you’d still only get 40% from Diamond on Drawn & Quarterly or TwoMorrows. Most publishers are evenly split between “E” (50%) and “”F” (45%)

Now the thing is, this only applies to orders submitted through Previews, otherwise Diamond assesses a 3% reorder fee. That means that every trade paperback I reorder, Diamond gets an extra 3% of the cover price, if you can believe that.

Interestingly enough, understanding what a huge drag this is upon growing the backlist, the brokered publishers actually eat this fee themselves. That is to say, they pay it (or a reasonable facsimile thereof) to Diamond rather than making the retailer pay for it.

So, in other words, while I can buy a DC and Image TP at 55% and Marvel one for 54% off, when I buy a Drawn & Quarterly TP from Diamond, I only get 37% off the cover price (base discount of 40% minus the 3% reorder fee)

And people wonder why independent books don’t sell better?

This would suck badly if Diamond was the only game in town, but thankfully they are not. There are at least three other distribution options: Cold Cut, FMI, and Last Gasp. Cold Cut, for example, offers me Drawn & Quarterly at 45%, no reorder fee, and free shipping. Shipping is going to move around dependent on your individual details, but it’s generally worth about another 1-2%

The Diamond /Tpop press release cooed about how the max discount under the new exclusive was rising to 50%, but, in effect it’s actually only 45-46% given that Tpop is the epitome of a backlist publisher – -3% for the reorder fee, -1-2% for shipping. Cold Cut offered Tpop at 45%, FMI offered them at 50%, making this deal a wash for Cold Cut customers, and a bottom-line loss for FMI ones.

While there are certain things that the brokered-exclusives brought to comics distribution that I’m not sure we could live without any longer (most importantly accountability and assurance of availability... but maybe that’s a column for another time), buy/sell exclusives just don’t make any sense to me. If anything, they really work against what are meant to be the strengths of capitalism, the ability to let the market create its own efficiencies.

Again, distributor discounts are built upon volume, so the more insidious effect of this kind of deal is that it steals volume from the smaller distributors. There are certainly retailers now that will find it harder to get the max discount at Cold Cut or FMI because they’re losing the volume of TokyoPop from those distributors. And TokyoPop has accounted for a lot of recent volume for a lot of stores.

This deal really hurts Cold Cut and FMI, and, worse, hurts the stores who would prefer to order from one of those distributors, while gaining very little (if, indeed, anything at all) for buying through Diamond instead.

Yuck.

Ultimately, the market needs more choices from where and how to but what from whom. Not less.

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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 also 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

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