Tilting at Windmills - Dec 6, 2012

[Brian Hibbs]

I realize this is impractical, but if you think there is a significant audience looking to buy at 12:01am wed, why dont you open your store at 12:01 wednesday? It's wednesday. No reason you shouldnt be able to sell new comics then.

Because we'd be breaking street date -- we are NOT allowed to sell comics before the "prevailing time" in our market -- currently, that is 10 AM.

Perhaps more importantly, we PAY a weekly fee to enforce this street date.

Conceptually, we could sell *DC* (only!) at 12:01 am, since THEY "broke street" first, but that's even crazier to open up to just sell one single publisher.

-B

[FunkyGreenJerusalem]

I just don't buy it. That there is one person that says, let alone 10% of a customer base, "I like print comics, but my store doesn't open till 9am. Even though I'm a human being and so I sleep at night, not waking up till 6 or 8am, I'm now gonna buy digital now that they're available in those one or two hours I'm awake before the store opens. Let's forget that fact that I'm probably not buying comics anyway because I obviously don't have a job since in that case I'd be doing that right now and getting my comics in the evening."

Of course, in Australia and other countries that are ahead in time, our comic day is Thursday, with books being delivered to stores then, but now comics are popping up on digital sellers Wednesday morning/lunchtime.

I think the publishers will be in for a shock in a year or two, especially if they manage to bust retail stores - pressure will mount/growth will stop, until they drop prices on digital issues. $3.99 for twenty pages doesn't compare to a 99c song or app. Then they'll have a short boom, and then realise there's less money coming in than ever before.
Mind you Brian, didn't you say a short term collapse of the big two could be good for the market?

[TonyJazz]

I appreciated Brian's piece very much. Comic store owners are under terrific stress just trying to keep their business running, and it is not so profitable as well.... Another loss that we've had is the collector's market, which is now dominated by online sales. You don't get as much opportunity except for very rare stores in major cities to peruse a collection of Golden Age or Silver Age comics.

I encourage fans to continue to see the added value in the paper product, and buy the better quality stuff.... Please help us retain our retail businesses, as there is a difference in having a music CD and owning a physical comic.

It is fine for some fans to move to digital (especially new fans!), and I wish you all the best. I doubt that I will choose to continue with Marvel and DC and Image comics when that becomes the only choice.

[Lemurion]

I mostly buy digital, though I do buy some print, mostly Marvel because $3.99 for digital only when a print buyer can get print+digital for the same price is a complete ripoff.

I personally have a great deal of difficulty getting too worked up about the whole release time issue. Same day for print and digital makes sense, but artificial restrictions just serve to annoy people. I'm also confused by the apparent dichotomy between saying that print is better quality on the one hand, and worrying that putting digital on sale earlier at the same price will cannibalize sales to some great degree. All the evidence appears to say that digital is additive, and anything that gets more people reading comics is good in the long term. Besides, if print is truly that much better, digital buyers will migrate to print.

(Personally, I don't think print singles are entirely better than digital. I dislike the ads and modern coloring looks better on a screen from my perspective.)

Having said all that, I do not only buy my digital books through my LCS's ComiXology storefront, I also got him to get one. He runs a mostly games, secondarily comic shop and wanted some way to serve those people who already bought digital. (He's been in business just over 3 months).

[ZiggyFakeMcCoy]

Because we'd be breaking street date -- we are NOT allowed to sell comics before the "prevailing time" in our market -- currently, that is 10 AM.

Perhaps more importantly, we PAY a weekly fee to enforce this street date.

Then don't pay a weekly fee. New Comic Day is Wednesday. There's no reason you shouldn't be able to open your store for sales whatever hours you want, and as long as its Wednesday there's no reason you shouldn't be able to sell Wednesday product. And as you point out, DC has already decided street date is 12:01am. Open your store and sell what you want, not just DC. If Diamond gets on your case I'm sure the community at large would support you. This is how change is made.

I think the publishers will be in for a shock in a year or two, especially if they manage to bust retail stores - pressure will mount/growth will stop, until they drop prices on digital issues. $3.99 for twenty pages doesn't compare to a 99c song or app.

Actually the move away from Comixology may help with that. I love Comixology. It's a great store and a great reader and I love having all my digital purchases in one spot. But their 50% cut of sales makes dropping price really hard. You can go on and on about the money saved from lack of printing, but such a big chunk is taken out before the money gets to the publisher that there goes all the savings. To be clear this means if you buy a 3.99 comic of Comixology's website, the publisher gets 1.99. If you purchase in-app, Apple/Google get their 30% first, (bringing total down to 2.79) then Comixology gets 50% of that, leaving $1.40 for the publisher. Now I LOVE $.99 comics, but that drops that income to $.50 and $.35 respectively. It's a big drop.

Now I'm not saying I support the $3.99 digital price tag (I won't buy a digital comic for more than $1.99). I'm just saying if you look at the numbers it's not hard to see why they do it. Without the Comixology middle-man they may be able to do something about that.

[Paul Nolan]

Then don't pay a weekly fee. New Comic Day is Wednesday. There's no reason you shouldn't be able to open your store for sales whatever hours you want, and as long as its Wednesday there's no reason you shouldn't be able to sell Wednesday product. And as you point out, DC has already decided street date is 12:01am. Open your store and sell what you want, not just DC. If Diamond gets on your case I'm sure the community at large would support you. This is how change is made.

If i remember correctly. The weekly fee is a payment towards Diamond enforcing a Wednesday street date (Mystery Shoppers and the like) if comic shops don't pay that. Then their comics will not be delivered until Wednesday.

[ZiggyFakeMcCoy]

If i remember correctly. The weekly fee is a payment towards Diamond enforcing a Wednesday street date (Mystery Shoppers and the like) if comic shops don't pay that. Then their comics will not be delivered until Wednesday.

Yes. I know what the fee is for. I'm a 20 year veteran of comic book retail. I just don't agree with Hibbs' constant doomsday scenarios in regards to digital. Whenever there's anything new, "this is the one! This is the move that will take our customers!" It's silly.

And in terms of street date, I don't think diamond should be enforcing any time of day beyond "wednesday". As Brian said, DC has chosen to set their release time at midnight. Marvel chooses to have special midnight releases all the time. Beyond "Wednesday" this choice should be left to the retailer. It's theaters that decided to keep release date by doing midnight showings, not studios.

And again I posit, if Hibbs thinks he needs to open at midnight to compete in this market, and Diamond had issue with it, I believe the community at large would support his decision and he, along with all retailers if they chose, would be allowed to continue the practice. As I said before, that's how change is made.

I personally would not open at midnight, but I don't think I'm losing any customers to iBooks at midnight that I also wouldn't be losing to iBooks at noon.

[Brian Hibbs]

Then don't pay a weekly fee. New Comic Day is Wednesday. There's no reason you shouldn't be able to open your store for sales whatever hours you want, and as long as its Wednesday there's no reason you shouldn't be able to sell Wednesday product.

Our books are delivered by truck (We're the drop point for the City of San Francisco) -- the truck doesn't show until about 3 PM or so. If we did not have DED, as your suggestion, we would receive the books at 3 PM on WEDNESDAY, not Tuesday. That would put us FURTHER behind.

The ONLY way TO release at 12:01 am is to be on DED. It's about a 4 hour process to count in and get the books on the racks, fill subs, merchandise the store, etc.

More importantly, as I said, we are the drop point for SF. If *I* unilaterally broke street date, this would jeopardize all of the OTHER stores in SF as well.

-B

[ScotsScribbler]

Brian has it ever occured to you that Disney and Warner would prefer to act as their own distribution and shopfront arm? I'm sure they are looking at Forbidden Planet comic book/ merchandise franchise in the UK, and wishing they could command a similar set up in the USA? Once a critical mass of stores goes out of business, the sales and profits will drop, and they will be 'forced' to establish their own comic book shopfront franchise which can unilaterally tie in more directly with whatever movies/ TV shows they are looking to promote across the nation. Don't expect many more favours from them, you're getting in the way of further profits for their shareholders.

[TonyJazz]

C'mon, guys..... Rule-breaking suggestions and conspiracy theories are not really very helpful. Brian's situation is just representative of the entire situation and country.

Yes, digital is 'taking over', but I suspect that there remain enough luddites (or, at least, people not interested in digital comics) that I hope the entire industry will be interested in continuing the production of cheap paper comics. In fact, I wonder if they'll get cheaper instead of more expensive----just as a way to continue paper comics as an alternative reading source.

I guess my comments aren't all that helpful, either. But, if anyone has a helpful suggestion, please make it practical....

[Paul Render]

I'm one of those readers who switched to digital. Mostly. I will buy a trade or graphic novel now and again directly from the publisher or through an online comic seller. I did it for the usual reasons, saving money, saving space where I live/easier to store on a computer or hard drive, plus I have access to all the comics I could want. Whereas sometimes I would walk into a shop and they only carry what sells for them, not what I am interested in. And I am not a regular enough customer to get on a subscription list, so that is a waste of time. Digital makes sense for me.

[wishlish]

DC had several options, the simplest of which is to say "digital comics are released on Thursday, 12:01 am, then" Instead they chose to throw print retailers under the bus.

While I do know ONE retailer who says that their cut from CMX is reasonable money, I also know about 20 more guys who tell me that it is a meaningless sum generated for them. DC certainly has other potential options if their store is really DM retailers selling digital -- they could go with Diamond's plan, which is infinitely more favorable to the retailer. I can say as a user of Diamond Digital that I have FOUND MORE MONEY WALKING DOWN THE STREET than that generated in fiscal 2012 so far, but then I found a fifty dollar bill two weeks ago, and that doesn't happen very often.

But, more importantly, if you don't see that the aggressive entry of Amazon, Microsoft, Apple and Google into the digital market ultimately dooms CMX to irrelevance, I'm not sure what to say. They will get their milkshake eaten.

My followup points (and thank you for answering these, BTW):

1. Diamond might be more favorable to the retailer, but has it caught on with consumers? I tried the app and deleted it. As a digital customer, I'm already upset that there isn't a DRM-free option for most digital comics (and I support the DRM-free artists offering such options, like Sim and Bob Burden). I'm not about to use two solutions to get my comics.
2. Are we sure DC would actually have the option to sell comics on Thursday? I realize they're a big fish and probably have more say over Comixology than, say, Bluewater, but it's possible their contract states that they must deliver content within a certain number of hours of print new release.
3. As for 1 out of 20 making a cut on CMX...I'm failing to see how this is substantially different than, say, the one in 20 retailers that carry anything outside the Big Two. Those other twenty retailers probably are not highlighting the digital program in their stores with anything other than whatever stock promo material that CMX provides, and probably not even that. Or they tried it one week, didn't see that big pop, and said forget it, ignoring the marketplace shift.
4. As for CMX getting their milkshake eaten...well, maybe. Certainly, there's no "little guy" in other online media sales, save for Netflix and Hulu (and those are backed by big money, and even those companies have rumblings every once in a while). But I think it's more likely- and I'll bet it's CMX's exit strategy- that they get bought by one of the Big Fish, instead. For some reason, none of the Big Fish have come up with a captivating digital comics experience through their platforms yet. I bought Wizzywig through iBooks. It's a great book, but the iBooks experience is terrible for GNs- incredibly slow at startup. And this is APPLE we're talking about. None of the non-CMX options for digital comics are as easy for the reader as CMX. At some point, one of them will decide it's worth the money to just buy CMX.
5. Unless...and this would be a much bigger threat than day-and-date...the Big Two go to an all-you-can-eat model. Instead of trying to convince the diehards to spend $3-4 per book, why not offer up a program of, saying $15-20/week for all the books? I still think this is the real endgame, and I will actually predict that it'll be an eventual iPad-Marvel relationship because of the ties of the two companies (Disney and Apple, both having deep roots through Steve Jobs). I even think we'll see something like that next year; Marvel still hasn't released a Digital Comics Unlimited app for the iPad, but swear they're working on it. I'll give 50-50 odds that an all-you-can-eat option is in there...

[Brian Hibbs]

1. Diamond might be more favorable to the retailer, but has it caught on with consumers? I tried the app and deleted it.

Obviously, I have no way of knowing if people don't like the iVerse interface, or don't want to manage multiple solutions, or if they simply just aren't interested in digital comics as a mass -- what I do know is that I have an active and high profile comics review site, and we're doing direct links to books that are available on our store, and the level of sales is virtually nil. I could really promote it, do a bunch of stuff designed specifically to promote digital comics, and my sense is that sales will still probably be insignificant and not worth even the time to do.

There's also Marvel's "bounceback" program, where they pay a small amount to retailers when customers redeem the digital codes -- YTD this has also been an utterly insignificant number. Free money, so that's fine, but nothing of any meaning or weight whatsoever.

2. Are we sure DC would actually have the option to sell comics on Thursday? I realize they're a big fish and probably have more say over Comixology than, say, Bluewater, but it's possible their contract states that they must deliver content within a certain number of hours of print new release.

I've watched DC for 23 years, and I'm fairly sure that they would never ever sign anything remotely like that, kinda ever. They're Warner Bros, and their tradition for the last umpty years is having Most Favored Nation status at distributors.

3. As for 1 out of 20 making a cut on CMX...I'm failing to see how this is substantially different than, say, the one in 20 retailers that carry anything outside the Big Two. Those other twenty retailers probably are not highlighting the digital program in their stores with anything other than whatever stock promo material that CMX provides, and probably not even that. Or they tried it one week, didn't see that big pop, and said forget it, ignoring the marketplace shift.

Most retailers I know are conscientious, hard-working, and try to maximize every opportunity that they are given. I don't assume poor-skill or ill-will on the part of the retail community because (although there are certainly some exceptions) that's a really really easy way to rapidly go out of business in a very difficult game.

4. As for CMX getting their milkshake eaten...well, maybe... At some point, one of them will decide it's worth the money to just buy CMX.

Getting bought out, to me, is the same as losing the battle, YMMV.

5. Unless...and this would be a much bigger threat than day-and-date...the Big Two go to an all-you-can-eat model. Instead of trying to convince the diehards to spend $3-4 per book, why not offer up a program of, saying $15-20/week for all the books?

OK.

I don't think so, because I think that yields DRAMATICALLY lower revenue, and there's no way that you generate *brand new* readership with a weekly payment model like that.

Also, those kinds of aggregate payment models are absolute hell on creator royalties.

-B

[Lemurion]

I can't speak for others, but for me iVerse/Diamond was a non-starter.

As a user, the one thing that drives me to an app is unique content, and I don't see that on iVerse. In fact, quite the opposite, as they lack three premier publishers, including the two biggest. There's no benefit to me as a user from using iVerse; buying through a retailer's ComiXology storefront may help the retailer less than buying through Diamond/iVerse, but it's a better fit for my needs; especially since the Android iVerse app does not have a good rating.

I'm still flabbergasted at the idea of pushing digital back a day to 12:01 AM Thursday (Pacific I assume). All that does is penalize and anger digital customers, and there's no evidence it would help print sales. Not every digital sale is a lost print sale.

[gevdarg]

"No business model can last forever unchanged. The Music industry had to evolve to allow single song downloads to combat piracy, in doing so a lot of independent stores died out. But if the Musical labels didn't change, they would have died out along with them."

The thing about digital distribution for comics is that in the long run, it is not a good business model for comics. The only cost savings a publisher would enjoy is with paper and printing costs, which are interconnected. These savings can (and should) be achieved by (1) reducing the number of titles offered each month by the Top 5 (DC, Marvel, Image, IDW, and Dark Horse) and (2) higher print runs which will reduce the unit printing costs. Nearly every other cost savings advantage that would be enjoyed by digital comics is either already enjoyed by print distribution or it costs more with digital distribution. Let's talk returns and distribution.

The Direct Market is already nonreturnable. Period. Unlike every other sector of the publishing industry, comic book publishing for at least the last 10 years has not had to deal with returns. People will cite this as an advantage of digital distribution. The comic book industry already enjoys this advantage. Distribution is where digital loses me when concerning comic book publishing. ComiXology is undeniably the leader in digital comic book distribution. Guess what? The distribution costs for a digital comic book are 65% of the cover price vs. 60% of the cover price for a print comic book, despite lower overhead. Let that sink in for a minute. With digital, you are eliminating the costs that would be required for a physical product because there is no physical product. With no physical product, there are no shipping, inventory, insurance costs, etc. There are no returns. And the distribution costs for a digital comic book are 5% more than a physical comic book. The industry hasn't simply created a digital Diamond, they've created something far worse.

Then let's talk about the realities of pricing and consumer preference. First, "digital dimes" are not going to offset the losses from print revenue. No one, and I mean no one, thinks and no one is putting forth data that digital comics are going to move at $2.99 and $3.99 cover prices. These books are going to be 99 cents or $1.99 at best. So for essentially 35 cents in revenue, remember your art & editorial costs are going nowhere, you are going to need sell-through numbers that dwarf the current sell-in numbers of the Direct Market. And with DC particularly (and everyone else remaining mum) stating that digital sales are additive, going digital is going to cost comic book publishers a lot more revenue in the long run and the short run than if they threw some real support behind the Direct Market and print comics.

Consumer preference is another matter altogether in that there is nothing officially or unofficially that suggests that comic book consumers prefer print over digital. Nothing. The Economist managed to double its circulation in recent years because they have a very specific demographic who derives a very a specific use from that publication. They do not operate under the same marketing conditions as their fellow newspaper and magazine publishers. The same goes for comic book publishers. Advertisers are moving their money to digital...so what? Comic books have never relied on advertising for revenue as a part of their business model. Newspaper and Magazine publishers have to follow the money, so digital is the smart move for them. We readers are the source of revenue for the comic book publisher and we don't prefer digital over print, yet. BTW, The Economist is making greater pushes into digital only because of reader surveys that indicate that 60% of their subscribers will come to prefer digital over print in the next year or so. We'll see.

This is a short-sighted move, as always, by comic book publishers to undercut the Direct Market for the digital market. The same forces in play in other parts of the publishing industry are not in play in the comic book industry. The publishers are drawing the wrong assumptions and are making bad business policy as a result. Digital music shook out the way it did because for a 16 song album, we were getting overcharged $16.00 (the music companies had lower overhead with CDs than Vinyl, sound familar?) and the product increasingly sucked. When MP3s allowed consumers to go a la carte, Apple saw the writing on the wall and made the smart move because consumers had already indicated how they wanted to consume music. Apple now dominates because they read the tea leaves correctly and accurately. We, retailer and consumer alike, are telling the Top 5 how we want to consume this product. If they listen and institute the right business policies, this business will grow because there is a lot of pent-up demand. If they don't listen, kiss this industry good-bye because it will have betrayed its maturity and its inability to grow.