[Comic Book Publishing] – The Business Side of Comics

Have you ever thought about creating your own comic book?

If my experiences in the industry reflect the population as a whole, I’d guess that hundreds of thousands of people have. And many of them have actually attempted to do it, whether they’ve created an amateur book to print at Kinko’s or gone through the process of putting together a professional-quality series. Every time I go to conventions, I’m struck by how many new faces I see… and how many people I don’t see again because they’ve quietly exited the industry.

I’ve devoted quite a bit of this blog to talking about the creative side of comics through my Comic Book Writer’s Guide. But I’ve noticed that there’s a real lack of advice out there pertaining to the business side of comics. That’s partially due to the fact that most of the companies who do succeed are tight-lipped about their best practices for fear of helping out future competitors. I get that. But it’s mostly due to the fact that most comic book publishers aren’t run like businesses at all; they’re run like hobbies. Thus, there’s a lot of bad advice out there from people who really don’t know what they’re talking about.

In my 6 years in the industry, I’ve been exposed to some of the worst practices, and I’ve learned quite a bit about how not to run a comic book company. And so today, I’m going to offer a quick survey of the business side of the comic book industry… and some tips on how emerging publishers can actually survive amidst all the problems they’re going to face.

First of all, let’s be clear on one thing: a business makes money. I feel silly pointing that out, but every time I speak to would-be publishers, I’m shocked at how often that fact is forgotten. People get into comics because they want to create, darn it, and because the barrier to entry is low. A full-color, 22-page comic book on newsprint can be created for around $5,000-7,000 and printed for around 60-75 cents a copy, provided the quantity’s high enough. If the book’s priced at $3.50, the publisher can break even at around 2,500 copies if selling directly to consumers, and at around 9,000 copies if selling through the retail channel. In terms of risk and reward, the risk is pretty low, and the reward is reached fairly quickly.

You may have noticed the disparity between direct sales and retail sales. According to my calculations, one book sold directly to a customer is worth three and a half books sold through the retail channel. That’s because the standard distributor discount for comics is currently around 55-57%. This means that publishers sell their books to their distributor (almost always Diamond Distributors, Inc.) for 43-45% of cover price… but this isn’t the end of the story. A book that would sell for $3.50 in a consumer sale sells to Diamond for $1.50. Once the publisher factors in variable printing costs, the company will see around 75 cents per book, as opposed to $2.75 per book sold directly to consumers. In other words, once variable costs are factored in and before fixed costs are assigned, a book sold through the retail channel only nets the publisher 22-27% of cover price, as opposed to the 79% the publisher would see through consumer sales.

Is your head spinning with all these numbers? Take a breath. The good news is that you’ve just been exposed to an ugly truth about the comic book industry — though the barrier to entry is low, the system is set up to make it difficult for new entrants to gain a lot of traction. This isn’t an intentional design, of course; both distributors and retailers need new product in order to satisfy customer demands, and there’s always room for a hot new product. But what this design does reflect is the fact that a would-be publisher can’t bank on a single book’s sales in order to be successful; the publisher needs to have a plan in place that can take advantage of multiple methods of distribution.

So, let’s get the big question out of the way now — How many copies of a comic book can a publisher expect to sell through comic book stores? On average, the number’s around 2,500 if you rank below the top 300, 4,500 if you can crack the top 300, and 8,500 if you can crack the top 200. (You can find sales figures here, though I’ll warn you that they’re based on guesswork and aren’t 100% accurate. They also don’t include re-orders.) It’s rare for an independent publisher to break into the top 200; those slots are chiefly dominated by Marvel and DC and by licensed books. It’s almost unheard of for an indy publisher to break into the top 100. But getting a book into the top 300 isn’t too hard, provided it’s supported with an adequate promotional campaign.

So, assuming a publisher’s got a book in the top 300, the expected sales should be around 4,500 copies, all of which are non-returnable. That’s good, but it’s still only half of what the company needs to sell in order to break even. The difference needs to be made up by other distribution channels. The most profitable channel, direct-to-consumer sales, can cause problems; retailers don’t like competing with publishers for sales. So, it’s often best for a publisher to wait a month or two after the product ships before engaging in direct sales. But notice that I don’t say it’s necessary — while a few retailers will get annoyed if you offer your books for sale while they’re currently available in stores, most won’t have a problem with it unless you’re undercutting them. After all, they don’t have to tack on shipping and handling fees that effectively double the cost of the book; you will if you’re selling via a website. They also don’t have to sit at a crowded booth and try to sell a narrow line of products to indifferent passer-bys; you will if you’re selling via a convention booth.

But there are other channels as well. One of the most popular right now is to repackage 4-6 issues into a “graphic novel collection” and offer comics through mainstream bookstores. This is a great way to make some extra money off already-produced material, and it allows comic book publishers to get their products in a store that won’t generally deal with individual issues of comics. The downside, however, is that bookstore product is returnable, and around 30% of books sold to bookstores will come back. Some publishers work around this by under-shipping orders. Unfortunately, under-shipping limits sales, and can impact re-orders. Also, based on the information I’ve seen, most graphic novels sell 10,000 copies or less; only a handful get re-ordered in large numbers. Since the cost of printing at the 10,000 copy point is roughly $6 for a color paperback and $9 for a color hardback, publishers have to be careful not to over-estimate how many copies they can sell; it’s much harder to eat the cost of unsold graphic novel collections than the monthly magazines.

“What about going straight to the graphic novel phase?” you might ask. My advice: don’t do it. Produce graphic novels in monthly comic book segments, and use the sale of the individual issues to help defray your production costs. That will allow you to realize profits from the graphic novel. Avoiding the individual issues will lower your printing bills, but drastically decrease your revenues and exposure.

There is an exception to this rule, of course, and that’s the manga market. Manga books are printed in pocket format in black and white, and often are close to 200 pages long. They cost about $2 to print, and they’re well-liked by bookstores. Unfortunately, it’s extremely difficult for titles not produced in Japan to catch on, because manga readers are selective and savvy. Tokyopop, Viz Media, Del Rey Manga and others have tried to introduce American-made titles, with mixed results. Generally, only licensed books (such as the Avril Lavigne based manga) have done well. Papercutz bucked the trend with its Nancy Drew manga, but it’s more likely due to the license than the format.

Speaking of licensing, most of the independent publishers out there are making licensed books their business. I dealt with this a lot when I was working with Dabel Brothers, and I’ve noticed that most of the other mid-range publishers, like IDW, Devil’s Due, Dynamite and Dark Horse, focus on producing books based on popular licensing. It’s a smart strategy, because consumers like to buy what’s familiar, and licenses with a following can translate into big sales. But licenses cost money and often introduce restrictions, so they’re not a surefire solution. Also, some licenses are just duds; I’ve seen a “Mr. T” comic floating around from publisher to publisher for quite some time, and I suspect it’s because the license lacks selling power. The insanely popular “World of WarCraft” license should have been a surefire success for Tokyopop, but the way it was handled by the creative team turned many fans of the MMORPG against the comic book. (Let’s hope they fare better with the “StarCraft” license, since my good friend Jesse Elliot is working on it.)

So with low expected sales, an increased reliance on licensing, and high variable costs… can an indy publisher make money in the comic book industry?

The short answer is no. The comic book industry is not built for small publishers, and it’s extremely hard to get in and stick around. The industry has chewed up and spat out hundreds, and maybe even thousands, of would-be publishers. The best most indy publishers can hope for is to break even; most accumulate so much overhead that even that task is difficult.

But the long answer is yes, provided it’s followed with ellipsis that wraps around the Earth seven or eight times. There are ways to make money in comics. It has been done, and it can be done again. But it requires adhering to most, if not all, of the following strategy:

1. Have enough cash reserves to be able to withstand losses during the first year.
2. Have enough cash reserves to be able to fully produce books 4-6 months ahead of release.
3. Have enough cash reserves to pursue one or more lucrative licenses.
4. Have enough cash reserves to be able to fund appropriate printing levels instead of banking it all on large runs, even if smaller, more manageable runs translate into higher costs overall.
5. Have enough cash reserves to properly promote and position a book.
6. Have enough cash reserves to advertise in Diamond’s Previews.
7. Have enough cash reserves to attend conventions and trade shows.
8. Have enough cash reserves to have a retail incentive program.
9. Have enough cash reserves to quickly run a second printing.
10. Have enough cash reserves to have an adequate support staff.

Clearly, there’s a theme here. In order to succeed, you have to have a large reserve of capital. Based on what I’ve seen, it takes most indy publishers around $15,000-20,000 to fully produce and print a single issue of a comic book. In order to make that book succeed, the publisher should have double that amount of cash available and on hand for every issue the company plans to produce during the first year. Having the correct amount of cash available will put a publisher in a much better position to stay in the game. And believe it or not, it’s because most publishers plan to have too little money on hand that they fail.

I hope that this article has been helpful. I apologize for painting such a bleak picture of the comic book industry, but the truth of the matter is that things are bleak right now. It’s not impossible for a new company to break in… but it’s very hard to stay in the game. I suspect that this will continue to be a trend, and the best way to break in as years go by will be to bypass the industry entirely… and focus on making comics available in new places, to new people, with a new philosophy of what comics should be.

-SJJ

2 Comments

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  By Antionestrife, June 28, 2008 @ 4:53 am

  Thanks for that sobbering out look. I have some questions being a self publisher myself. The big comic book companies have advertisements in their magazines. How much do they make from that? There should be a way for comic book publishers to help each other by promoting other self publishers in here comic book for low advertising slots. Maybe $1.00 for slot or a $3.00 for a full page slot. Maybe more or less I’m not sure how much should be charged. I think we should use this type of avenue. This would have to be for self publishers who have made it into stores though. If anything this could help fellow self publishers with cost. Think this could work?

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  By SeanJJordan, June 28, 2008 @ 11:15 am

  Hi Antione,

  I’m actually going to post an article about the evolution of the comic book format, but basically, ads provide a lot less revenue that you’d think because circulation numbers are so low. Marvel, DC, Dark Horse and Image can get away with selling ads because they sell enough books that they can claim high circulation. But these ads aren’t really targeted and are essentially worthless since they generate so many repeat impressions; advertisers aren’t paying a lot for them.

  Your idea is interesting, since you’re basically saying “why not make a small amount of revenue while helping to promote other small publishers?” I would suggest, however, that these publishers would have more power banding together under a single brand than they would cross-promoting one another’s books. Also, generally cross-promotion occurs with a trade — “you promote my book, and I’ll promote yours.” So charging money would just complicate the process.

  An alternative would be to offer to publish pin-ups of characters with fans (at their request) and charge $25 per page. Keep in mind, though, that you could only use your own characters to do this, since anything else would be copyright infringement.

  Advertising is a tough topic, because so many people talk about it as if it’s a guaranteed source of revenue. But really, it requires a proven product and a dedicated sales contact, so it’s as much work as anything else.

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