The Forbidden Planet International Blog Log

New York Comicon is filling many of the blogs and comics news sites this week as the publishers push their upcoming products for the year. For me the most interesting article so far has been the admission by Marvel president and Publisher Dan Buckley that Marvel are looking at the digital distribution of comics as a near future event. And where Marvel go we can assume the other large publishers will follow (World Wide Web of Spider-Man, anyone?). Given a fully digital distribution for what are somewhat horridly called ‘floppies’, could this signal the end of the traditional comics store? With the news last week that Graphic Novel sales have slightly overtaken the sale of traditional comics in the marketplace we can imagine that more and more the focus of comics companies is the production of material for collections. In this scenario the ‘floppy’ becomes the seed capital invested to produce the Graphic Novel sales you reap at a later date. What if you could produce the material and sell it online before it was collected – then you could also avoid the cost of ever having to make the hardcopy comic in the first place. It may sound a little fanciful but let’s consider the economics of it – these are a bit back of an envelope and make a lot of assumptions but I’d say were a reasonable finger in the air.

Lets say a publisher has an all-in page rate (penciller, writer etc, etc.) running to $400 a page. That means that his cost of goods before he does anything with it is around $8,000 (I suspect it may be lower for some – much higher where big names are involved). So to get his money back what does he have to sell to recoup his initial outlay? Well if you take a $2.95 retail price what is he left with? I’m presuming about 65% of that goes to the distributor in one form or another (may be more may be a bit less) and that the actual production of the comic is probably running around 30-40 cents – optimistically he is looking at a profit of around about 60cents a copy. After some cost is offset with in-mag advertising this probably equates to a break-even number (of course it would be cancelled at this number unless merchandising was involved) of around 11,500.

If you go to the digital distribution model using a price point of 99cents (not that I think people will actually pay this) then at 11,500 downloads there would already be a profit generated. Maybe as low as 7,000 downloads would pay the cost of producing material you can then feed into the book channels as collections. Suddenly a whole load of characters that aren’t worth producing material for when you have to print the comics become worth looking at. You can run stories online have a small hardcore group download and attract other media with the storylines – a movie based on online only comic characters would become a possibility. What if you decided that the download price was as low as 25cents? Wouldn’t most comic fans want it at that price? You might have to sell 40,000 to break even but perhaps you could sell 150,000 based purely on the price point – cheap sells. That then is a huge weight of ‘interest’ behind a character to leverage into other media – to punt to bookstores looking for bestsellers (and a big potential audience to entice movie moguls to buy the film rights – more profits – with an eye to an inbuilt audience and ready-made marketing). You might argue some online comics which later become collected print versions are already using a form of this model; build an audience via the relatively low cost medium of the web (although usually for free to begin with) then publish a paper collection if there is enough demand.

Of course the big selling comics will always return more with the paper product for now – as the cost base is reasonably set (only incremental is the number of copies printed), so sell 150,000 of a comic and you might see $90K back – whereas to download 150,000 at 25cents would only generate around $32K. But who’s to say how many downloads there could be, and the risk is lower once a customer base is established (you don’t think Marvel make you sign up and give your details now , after a few pages, when you look at their online comics for no reason do you?). I don’t buy songs from I-tunes but then I’m fixated on an album model of listening to music defined by my age group – and it’s cheaper to buy the whole album per track usually than download all the songs on it – and you get a physical product to collect. I’m becoming unusual in that though as more people download only the tracks they want; could the same happen with comics readers? I’d expect it could.

(Emo Boy #11, one of the downloadable comics from Slave Labor Graphics)

Could people decide just to download comics – who knows, it may happen. Indeed smaller publishers like Slave Labor Graphics (and others) are already experimenting with downloadable comics sales and it raises another interesting question of how such digital sales and distribution direct to readers will affect the playing field between Indy presses and the major publishers. After all, we already see independent small presses and self-publishing creators managing to create far more awareness of their comics work via the web and if you can ‘pick up’ a copy of a new Indy comic for a very cheap price (such as the mere 89 cents for Emo Boy #11, sold for SLG via Eyemelt) without even having to go to a comics shop aren’t you more likely to take a chance and try something different instead of mostly reading the most popular series? There might also be a bonus in the ‘impulse buy’ factor – there you sit reading about a particular comic, you think it sounds interesting and think you might look at it next time you are in a comic store. But if you can have it instantly by clicking on the paypal button on that site there is a strong chance you might just buy an issue then and there to try it. Don’t knock the power of impulse buying, it is a big factor in most forms of retailing and a low price point allied to instant availability may well boost sales, at least for initial issues.

If I was a publisher I would be over the moon at the potential thought of a bigger online audience, generated by cheap price points, where I don’t have to share the revenue stream with old fashioned brick and mortar distribution and retail. I think this may take a few years but if you are a comic retailer still existing on comic sales you better start looking to improve your graphic novel ranges and learn to compete with major booksellers or the whole market may well be history by 2010. I think the one to watch on this will be game distribution where it seems very likely that the old model will crack and the producers of games will start to service customers direct without the need for retail very soon. We live in interesting times.