Wednesday, December 7, 2011

The Argument Against Digital Comics

Straight up: The digital comics movement scares me.

Not "scares me" in a I-think-I'm-going-to-die kind of way, but rather in a I-don't-know-if-the-comics-industry-can-survive-it kind of way. After years of being told that the industry is on the brink, I think I'm finally believing the hype.

Let's take a step back and start from the beginning. As I'm sure anyone who reads anything about comics online knows, there's been a big push from the major publishers to deliver their books digitally the same day they become available in print (otherwise known as 'day and date'). This idea, rightfully so, terrifies retailers who can only see customers leaving their shops and heading straight for their computer screens. To belay these fears, the big two have kept their prices online the same as in the store under the guise of not wanting to hurt their retail partners. Then, last week, Dark Horse jumped into the online game and nearly capsized the boat.

In their initial announcement of going 'day and date', Dark Horse declared that their new books would be offered for a dollar cheaper online than in the stores. The retailers were furious and within a few days pressured Dark Horse to amend their announcement to say that the books would be the same price at both points of retail.

Finally, a few days ago, Brian Woods (of DMZ and Demo fame) took to his blog to write a well thought out response to these retailers. His argument basically amounted to: 'the whole industry is hurting for cash, no one's making money, the fanbase is drying up, and something drastic has to be done'.

To Woods, an online component to retail only strengthens comics as an industry and will serve to get more people interested in my favorite hobby. Retailers ought to be happy that there's being made an effort to engage a new fan base that will eventually mean more profits for all. Except that, if we look at other entertainment mediums, it won't.

Here's where my cynical nature takes over.

Simply put: I don't trust these big publishers. For all the nice words they have for retailers and their attempts to 'make things right', I just don't buy it. When I look at the basic economics of the situation, it doesn't make any sense for the big publishers to try to work with physical retail partners.

Let's break down some numbers. Say, for arguments sake, that an average comic costs the consumer 4 dollars. Of that 4, let's say half goes to the retailer and Diamond with the rest going to the publisher. Of that half, so two bucks, carve out another dollar for production fees (printing, packaging, quality control, etc.) and royalties. Finally that last dollar is spent covering the 'above the line' costs of the writer and artists, with anything left over spilling over into profit. So that means, in real rough numbers, the profit for any book is probably pennies on the dollar (assuming that it meets the sales threshold to break even). To say that's a shitty return is putting it lightly.

So let's check out the numbers by going digital with the same cover price. So without having to go through a retailer or a physical distributor, a book sold for 4 bucks nets 4 dollars coming back to the publisher. We'll say that the the production costs, royalties, and 'above the line' costs remain the same, which means the publisher ends up with around 2 dollars profit per each book sold. It doesn't take a rocket scientist to figure out, even with these rough numbers, that digital is far more profitable for the publisher than anything else. The question becomes: What about the collateral damage to the industry?

As an example to what I'm implying, let's look at the home video market. For years, when a movie came out for home consumption, you had two choices if you wanted to watch it: you could either go rent it from a video store or pony up the dough to buy your own copy. Then Netflix happened; rocking the boat first with their convenient 'rent by mail' model, and later with their 'instant streaming video'. As a consumer, it's awesome because I can get almost anything I want without leaving the comfort of my couch. But while that kind of convenience is awesome for me, it's death to the video retailer. In recent years, it's meant the decline of both video rental stores and DVD sales which has lead to decreased profits that are only now climbing up the chain to bite the distributors.

Worried yet?

Maybe we should look at the music industry, that (eventually) went full bore into the digital market place only to see their profits decline and record stores drop like flies. Or the magazine industry that's seen sales/profits plummet as their content becomes cheap and convenient online (not to mention the disappearing ad revenue) while the idea of a newsstand has wilted. The list goes on and on, but I'll stop before I sound like too much of a curmudgeon. You get the point.

Making things conveniently available online seems like a great idea for everyone, but ultimately just ends up hurting the overall industry.

The way I see it, the comics industry is standing on the same digital precipice that all those other industries stood on years ago and needs to be careful to not make the same mistakes. While the physical distribution model isn't perfect, and certainly isn't as immediately profitable, it does more to sustain the industry than a pure digital model could. The implicit costs of changing things need to be weighed just as much as the explicit costs because once you start going down the road of cheap and convenient, it's damn near impossible change course.

In the end, I hope everything will work out; that this, as with most proclamations of the 'Death of Comics', will fade in time. For whatever reason though, I have this nagging suspicion that it won't and I am, for the first time, very scared about the future of the comics industry.


  1. You can't fight digital. Nobody wants paper anything anymore (witness the success of the Kindle even as book store chains shut down). I'd be worried if I owned a comic book store, but I don't so I say bring it on.

  2. You're right, you can't stop the digital revolution. At some point, we'll have no choice but to buy our entertainment digitally, where it will exist only on a cloud server accessible by any internet ready device. I just hope that by the time we get to that point, the powers that be have worked out a system that's beneficial for all sides.

    Giving consumers massive selection for a very low price doesn't bode well for anyone trying to get money to make anything new. Right? Why should a studio dish out hundreds of millions of dollars to make/advertise a feature film if they're only going to make pennies on the back end?

    Or there's the other solution, where the companies realize that they control both the product and the distribution system, only to start raising prices on their captive audience. Suddenly, by going full digital, you've eliminated your choices as a customer and either have to give up on what you like or suck it up and pay.

    I hope the solution lies somewhere inbetween those two extremes, but my cynical side is pretty sure I'll be paying more and getting less within a couple of decades.