CBR: Tilting at Windmills - Jun 17, 2010

[CBR News]

Brian Hibbs is back with more on digital comics, this time focusing on the current debate over Day-and-Date releases, what they would mean to the comic book industry as a whole and why slow and cautious is the way to go.


Full article here.

[ben12]

The thing is, there are also costs to distribute digitally. Anything that goes through Apple's App Store means that Apple is taking 30% of the retail price. Further, I have to assume that Comixology, which is facilitating the Apps, isn't doing it for free (that would be...mental), though who knows how much of a cut they're actually taking. Lowballing it, I'll go ahead and guess that the cost to digitally distribute a work is in the range of 33% of the retail price, which would mean that a 99 cent download yields them 66 cents of revenue.

(Sidebar: this also ignores the impact of advertising in the print comics. This may not be a vast revenue stream, but it is a revenue stream that you lose through digital...)

So, to make the same $3.9 million revenue that they do from print comics, at 66 cents per digital download, they'd need to sell 5.9 million copies, or more than twice as many print comics as they currently do!

It's almost like you intentionally chose numbers that supported your position. If selling at $0.99 means they have to sell twice as many comics, then they should price them at $1.99!

Plus they'd now be able to sell back issues directly to the consumer, which they could not do before except in TPBs and reprints. Those could be priced more cheaply than new issues, and they'd still be making money where they never could before.

I think you're absolutely right that Marvel (and DC if they bothered to try) has to worry about capsizing their main market right now. We're in a transition period. It seems clear that at the end of this tunnel is a world where it's all digitally distributed. Print copies make less and less sense every day (for all the reasons you mention plus they're a huge waste of paper).

The publishers have to find a way to balance the interests of all their outlets until such point that the digital audience is ready to pick up the reins.

And longterm, publishers are going to have to think outside the box in how they distribute this stuff. It would be a mistake to just create digital analogues of what's available for print. So for example, they sell a monthly 22-page comic, so they should put a 22-page digital comic online for a little less than the same price. Much like how Scott McCloud talks about digital comics not being limited by a "page," digitally distributed comics are not necessarily limited by things like "issues."

Thanks for the interesting column! It should spark a lot of great discussion! We definitely live in interesting times.

[Brian Garside]

While it's true that digital comics don't CURRENTLY have ads in them, there are no technical reasons why they can't, and moreover, why those ads can't be rich media ads which command a premium. Imagine a movie trailer instead of a static picture, or an actual crossword puzzle you could do to find a clue for a prize.

Metrics work much better digitally as one can see how many ads were viewed, and what actions users did with those ads.

With Apple committing resources to their own Ad platform, this is an eventuality.

You can see this in action on Wired Magazine's digital version on the iPad.

Another thing that will be key to the success of a digital strategy is some sort of subscription process so that a user can just select a series they like and get them automatically.

[Nik]

Great article.

I can tell you one thing. Marvel and DC better sell these digital comics cheap and ad free because there is already a HUGE pirated market on comics. I think folks might pay .99 for an ad free comic but they are less likely pay 1.99 for a comic with ads.

[heroesmask]

The only thing I really question in the article is Brian's comments regarding three weeks on app approval after submission. If Comixology has a Marvel app then I would imagine new content can be added at will. A individual issue wouldn't need to be approved since the issue is not an app but content on an app.

[AvengerG]

Brian is right in that as of now, Marvel and DC need the comic shops. If they go to day and date with digital right now, it would kill everybody. Shops losing around 15-25% of their customers would cause most of them to fold and there aren't enough digital reading devices in the hands of the public to replace those lost outlets.

However, 5 years from now, comics will be released day and date on your reader and most comic stores will be gone. Marvel and DC both know this. The last thing they can tell retailers is that they know they're going the way of the dinosaur. Marvel and DC have to make retailers think they're indispensible because right now, they are. After the proliferation of digital reading devices, they can drop the rhetoric and say goodbye to the direct market which they will do happily. The last thing they want right now is retailers thinking about how they're going to support their families 5 years down the line. They need the direct market dedicated and believing in a future for themselves right up until they're no longer needed.

They lucky ones in all of this are the independent comic companies. Their sales aren't keeping the stores open so they can immediately go day and date and get an online foothold while Marvel and DC play their balancing act. Marvel and DC do have a huge inventory of back issues that will help them get their own foothold but neither has utilized them to their full potential. Those older comics will be gold for them when digital hits big and will help them offset any losses from the demise of the direct market.

And for those of you posting you'll never read comics digitally, in 5 years, you won't have a choice. Enough people are willing to switch to digital that print will die. It won't be worth printing 5000 copies of X-Men to satisfy those that won't switch. I've been reading paper for over 30 years and I'll be the first to jump to digital and leave paper behind when day and date hits. The collectors mostly left in the 90's and now all that's left are the readers. We don't care about the bag and boarded copy in our spare room. We just want to be able to read it. Most of us will be happy to see those 10-50 long boxes condensed to a 2 terabyte hard drive I can plug into my pad/tablet. The direct market isn't dead yet, but make no mistake, it is going to die.

[Daniel Veltre]

There's at least couple of other things to consider regarding digital distribution.

All of this discussion doesn't consider all the add-on sales that take place in a comic shop. When a customer comes into my store they usually (but not always) purchase more than one comic. They look at the racks, check out the covers, flip through the books, talk a little bit about the hobby and often make additional buying decisions on the spot. I think a think a lot of those add on sales will be lost. Publishers will have a very difficult time attracting readers to other titles via digital distribution. Not everyone is as plugged in to the net as many here and online would like to believe.

And don’t be fooled by the numbers of illegal FREE downloads. I don’t believe that the actual numbers of dedicated regular fans that are willing to PAY for a digital download are anywhere nears the numbers many folks believe they are.

The top selling book each month generally sells about 100K. And remember – that’s sales to retailers not readers. Of that 100k how many books actually go to readers? Lets be generous and say 80% (I doubt it, that 100k book is often an event or special book supported by variants and such so many retailers order additional copies to reach that 100k) leaving total actual retail sales at 80k. Would paid digital distribution double that? Triple that number? What about the lower tier books (of which there are many)? What if due to digital distribution the number of comic shops decreased to such an extent that the direct market was no longer funding the production costs of a title, and those costs had to be absorbed by digital? How long do you think digital prices will remain at about $2-$3?

Remember, comic publishing itself is barely profitable for most publishers. Publishers, especially the major publishers receive much of their income not from comic sales from licensing and movie sale. And many of the smaller publishers are only publishing material in an attempt to sell movie rights.

Whoever said somewhere here that comic publishers were in the business of selling to readers is wrong. Comic publishers are in the business of selling to us, to retailers. That’s why most of their marketing is directed at retailers and not fans. It’s retailers who are in the business of selling to readers.

I’m sick and tired of retailers being the bad guys in this industry. There would be no comic industry if not for the -3000 or so retailers out there willing to put their money where their mouth is. Most retailers I know are good folks who work harder than they should, work more hours than they should, and make less money than they should for all the effort they put in. Yet it often seems to me we get blamed for all the evils of the industry. “Prices are too high.” “There are too many company crossovers.” “Why is company x putting out so many titles for character y?” It’s a lot of bull**** to put up with for this industry so many of us enjoy.

I have a couple of proposals to make as we move toward the eventual digital/paper distribution system. I sent this note to ICV2 yesterday (I have no idea if they’re planning to run it) and I’d like to share a couple of points here and see if they make sense to others …

“As a retailer I’m not afraid of digital distribution, simultaneous or not – it’s simply one more form of competition and I accept that and I’m willing to deal with it. It’s no different to me than competition with Amazon, mailing order websites or book store distribution.

What I’m not willing to accept is statements from publishers that one of the reasons for simultaneous digital release is to bring consumers into retail stores. It’s not. The reason for digital release is to bypass retail stores and sell product directly to consumers with no middle man. It’s plain and simple competition. The simple truth is I HAVE noticed a negative, although slight at this time, impact on sales of titles that have had some form of additional digital release.

Because of that, I think it’s only fair that a company that is planning to release certain material digitally as well as in print provide that information up front to retailers in the ordering process so that we can order their product appropriately.

I’ll go a step further – I think items that are released simultaneously should be made fully returnable for retailers. The company that is simultaneously releasing material digitally is putting retailers in an unfair competitive advantage by usually releasing material (this most recent Marvel experiment aside) at a lower price than at regular retail price. Altering the price is akin to altering the creative team on a book, and that is generally a reason for returning product to Diamond. Pricing is an important factor for retailers when ordering a book.

I would like to see the powers that be at Diamond get behind such a proposal and require that all the publishers for whom they provide distribution agree to make these changes and provide retailers with this information. “

And as I added in my note to ICV2, I’d also like it to be sunny and bright every day, temps in the mid-70s with a cool breeze, and for it to never snow on a Wednesday here in the north east. Good luck with that.

Dan Veltre
Dewey’s Comic City
Madison, NJ

[nova64]

However, 5 years from now, comics will be released day and date on your reader and most comic stores will be gone.

And for those of you posting you'll never read comics digitally, in 5 years, you won't have a choice. Enough people are willing to switch to digital that print will die. It won't be worth printing 5000 copies of X-Men to satisfy those that won't switch.

Why would the publishers stop printing just because digital is available? I don't see it as an either/or option. That would be the same as saying that movie studios are going to stop releasing movies to theaters and going straight to DVD/Blu Ray. Digital is just another revenue stream just like the HC/TPB option is.

That's a pretty big assumption. You're assuming that current readers are going to switch to digital and are willing to pay the $600 - $700 for an i-Pad in order to read comics.

Given how many readers have said they are dropping titles because of the costs being $3.99 an issue and the current economic environment, how many do you think will be willing to pay $1.99 an issue along with the big upfront cost? My guess is a lot of current readers will drop comics altogether rather than being forced to buy an i-Pad and then still having to buy the comics even if it's at a lower price.

I really enjoyed the article!

Doug

[Brian Hibbs]

And for those of you posting you'll never read comics digitally, in 5 years, you won't have a choice. Enough people are willing to switch to digital that print will die. It won't be worth printing 5000 copies of X-Men to satisfy those that won't switch.

I respectfully submit that we're still a long way from proving that xx,000 people are willing to pay $x for a comic book story that they don't physically own -- AND that they're willing to do so 12x a year. That MAY be the case, but it also may not be.

It may also be that enough people are willing to pay for a Top 10 property for that to be viable, but they may not be interested in paying for a c-list title like, say, Ms. Marvel or something.

The collectors mostly left in the 90's and now all that's left are the readers. We don't care about the bag and boarded copy in our spare room. We just want to be able to read it. Most of us will be happy to see those 10-50 long boxes condensed to a 2 terabyte hard drive I can plug into my pad/tablet.

I have to say, as a guy who runs a comic book store squarely aimed at reading, which doesn't overtly run any real "collectible" side to my business... I really don't think that your individual desire and experiences are at all reflective of the greatest mass of readers.

While I've never formally polled on the subject, my sense of my customer base is that at least 2/3 of them would entirely stop reading comics if they weren't physical objects.

-B

[Daniel Veltre]

B However, 5 years from now, comics will be released day and date on your reader and most comic stores will be gone. Marvel and DC both know this. The last thing they can tell retailers is that they know they're going the way of the dinosaur. Marvel and DC have to make retailers think they're indispensible because right now, they are. After the proliferation of digital reading devices, they can drop the rhetoric and say goodbye to the direct market which they will do happily. The direct market isn't dead yet, but make no mistake, it is going to die.

You know, AvengersG, you really have to be careful making predictions because you can really look foolish when looking back...

I remember when B&N and Borders started carrying comics and trade paperbacks and the guy that worked with me at the store at that time said "Close the store Dan, it was a good run, but we're doomed..."

And Amazon grew their trade and HC business and offered books at big discounts and that same employee said "Close the store Dan, etc..."

And trades paperbacks got big and everyone said that format was the wave future and no one would be buying comic books in 5 years, and guess what same employee said....

There was a lot of uncertainly in some of your predictions. I think you may be off base. Let's wait and see if in 5 years you're right and it's time to "close the store Dan, etc..."

I kind of doubt it myself.

Dan Veltre
Dewey's Comic City
Madison, NJ

[AvengerG]

I respectfully submit that we're still a long way from proving that xx,000 people are willing to pay $x for a comic book story that they don't physically own -- AND that they're willing to do so 12x a year. That MAY be the case, but it also may not be.

I have to say, as a guy who runs a comic book store squarely aimed at reading, which doesn't overtly run any real "collectible" side to my business... I really don't think that your individual desire and experiences are at all reflective of the greatest mass of readers.

While I've never formally polled on the subject, my sense of my customer base is that at least 2/3 of them would entirely stop reading comics if they weren't physical objects.

-B

The thing is, I think Marvel and DC believe they will pay for that digital copy and stop buying the paper. So much so in fact that they're going to try to hold off on doing digital day and date as long as they can. If they don't believe it is going to kill the direct market, what are they waiting for. They should already have the stuff available on the web for download. The technology is there. The first of the new era of digital reading devices have surfaced which most say are perfect for comics yet Marvel is "experimenting" with one annual and is going to charge more than cover price for it. Doesn't make sense if Marvel and DC think digital can coexist with comic shops. The only explanation is they don't believe they can coexist. These are huge companies with the resources to find out what will happen and I think they know exactly how things will go. Right now they are protecting comic shops and will do so until their data says that they can survive without the direct market. I do agree that there will be some readers lost at some point but I think the gains made will make up for it.

Also, whether or not my "individual desire and experiences are at all reflective of the greatest mass of readers" is really irrelevant. It only needs to be reflective of about 15-25% of readers to destroy the direct market. Maybe only 10%. I don't think that is much of a stretch at all. Marvel and DC don't think it is. Especially as tech gets better and the prices of the readers drop. It wouldn't be surprising if in 5 years you'll be able to get a nice reader for around $250 or less.

[Brian Hibbs]

Also, whether or not my "individual desire and experiences are at all reflective of the greatest mass of readers" is really irrelevant. It only needs to be reflective of about 15-25% of readers to destroy the direct market. Maybe only 10%. I don't think that is much of a stretch at all.

I agree with the second part of that statement, but I think that you could be overestimating the number of people interested in comics-without-paper.

In fact, this is, in essence, exactly what the article is about: you suggest that (let's say, for rounding) 20% of the current paper-reading audience who would switch immediately to digital.

However, if there isn't a NEW audience out there that's more than FOUR TIMES that segment of the current market, AND (and this is very important) has roughly the same buying habits of the current customer base, then Marvel and DC will be in a WORSE place then they are currently now....and they wouldn't have the DM to "fall back upon".

-B

[DownInAHole]

Speaking as an "old" reader I will not be switching to digital at the $1.99 price nor do I think a lot of other "old" readers will. For people like me who already read comics the main attraction of digital comics is that they are (or should be) significantly cheaper than paper comics. Admittedly I don't know the exact costs but when you compare the two formats digital has got to be much cheaper for Marvel to sell than paper. Right now from mail order services I can get a $2.99 book for $1.79 (sometimes as little as $0.74) and a $3.99 book for $2.39 (sometimes as little as $0.99). Why would I ever pay more than that for a digital copy? For me, and I think for most people, digital has got to offer significant savings over paper. $1.99 is just not a good value for what you are getting.

[davebaxter]

However, if there isn't a NEW audience out there that's more than FOUR TIMES that segment of the current market, AND (and this is very important) has roughly the same buying habits of the current customer base, then Marvel and DC will be in a WORSE place then they are currently now....and they wouldn't have the DM to "fall back upon".

-B

A couple of things, though:

First off, there's a huge error with the math that changes everything, the Top 300 TPB's were included in the $24.86 million figure you started with, and they comprise 22% of that 24.86 million, or in other words TPB's comprise 2.45 million of Marvel's 11.16 million share. And each TPB = AT LEAST 4-6 $0.99 or $1.99 digital comics, or else the TPB is offered digitally for $9.99 or $12.99 like they already are on ComiXology and Panelfly. Right there that dramatically decreases the number of unit sales needed to equal the 3.9 million in profits.

In fact, it decreases it a shit-ton:
You say 5.9 million units would need to be sold at only $0.99 to make the same 3.90M profit = 22% of those 5.9M units will be TPB, or 1.30 million units, and 4.6 million will then be individual issues. Let's say an average TBP collects 6 issues, so 6 $0.99 units per TPB. 4.6M units of single issues profiting $0.66 each = $3.09 million. 1.30 TPB units profiting $3.96 per unit (6 x $0.66) = $5.14 million!!! So if Marvel actually sold twice the number of TPB and single issue units as they do now, they would in fact earn 8.18 million or MORE THAN TWICE WHAT THEY'RE EARNING NOW. Meaning at only $0.99 per issue, Marvel is making a profit. At $1.99? Boo-effin'-yah. For Marvel, at least, not for readers :P

Secondly, if comics moved entirely to digital, they wouldn't be digital versions of their print editions. Right now, digital is limited and more of a novelty than a medium because print is still the meat of the market, and so digital editions are simply cleverly coded little ditties of the same print reading experience, which isn't worth much more than $0.99 or $1.99 (which is pushing it). If comic book movies or video games were cinematic or interactive versions OF THE PRINT COMIC ITSELF, you'd never pay effing $20 or $50 for them respectively, either. The value of a digital comic won't be accepted or even guessed at until it becomes an actual medium that can stand alone and isn't seen as a copy of another medium. And that's still, in tech terms, a long way away, at least a few years.

But steady migration over to digital will happen consistently over time. Is there another, broader audience? Does there need to be? What's a price people will pay? What will the actual business model be? We don't even know what the technology or the platform will be 2 years from now, but publishers are pretty agreed that the time to experiment and start taking all this seriously is already here, and without the experimentation, none of these questions can be answered.

[boberto]

Hi all. This is my first post, but I've been intrigued by the whole digital sales thing for a while and, as somebody who has been reading for around 16 years or so, thought I'd contribute. I started out reading individual issues, mainly X-Men, for several years, fell out of it and then picked up again during college after X2 came out. I kept it up, shifted more towards Avengers and Iron Man and began to get trade paperbacks and hardcovers: That's how I've been getting everything since around Civil War. It's less expensive, I get them delivered to my place and I rather enjoy reading an entire story arc at a time.

I don't care about day-and-date distribution. I suspect that the new audiences that Marvel hopes to gain through digital downloads don't care about it either because they're not current readers, so as Brian Hibbs noted, anything will seem new to them.

Rather than have a fixed delay, I think a tidier compromise would be for the digital downloads to be timed with trades. They come out around 3 months after the last story is published, right? When the next Iron Man hardcover comes out, Marvel should put the digital downloads of all the issues online, presented as a packaged story, which can be bought as individual issues or as a set. That hardcover will retail for $20; Amazon's selling it for $13.49. The issues individually should add up to somewhat less than that, with some discount for buying all of them.

Maybe eventually day-and-date distribution would happen, but treating digital like the trades (which I kind of see as akin to DVDs collecting TV shows) seems like a good way to start. Nobody's going to switch from the direct market, but you might have people going from trades. And you might have new readers that you otherwise wouldn't have.

Bob