Following the shutdown of Diamond Comic Distributors due to the coronavirus (COVID-19) pandemic, one intrepid comic shop had reportedly devised a temporary solution to get new books into the hands of comic book readers. The comic book industry was saved! Or was it? Our inspiration dropped the story yesterday that got a lot of discussion going on how to potentially save the comic book direct market.
Their story pretty much said the following:
“Within the next two weeks, you’ll be able to buy a physical comic from your LCS–anywhere on Earth–online. You’ll be able to read a digital copy the minute you buy it. Your LCS will get a free physical copy to give to you later.”
So in a switch from buy the physical comic get a free download, it’s now, buy the digital comic pick up a free physical comic from your local comic shop. Details were still being worked out, but everything was supposed to be going live in the next few days.
However, our retailer sources told us that not all comic shop owners were on board with this new program, and even Marvel Comics themselves made an announcement they would not be participating. In fact, THR reported that not a single comic publisher they contacted was willing to confirm that it was involved with the ComicHub solution. So, I sent a message to one of the owners of Kowabunga Comics, Eric Helwig, in Wisconsin to see where he stood on the matter and what he was hearing from other specialty comic shops as well.
Chris: You mention there’s been some pushback to this proposal in your circles. What your take on the ComicHub model?
Eric: As a retailer, it is easy to jump at the first proposal to make money that flies by. These are, after all, stressful times that most in our industry have never seen. While it’s true that “necessity is the mother of invention,” there are very few instances where the new invention is right in it’s first iteration. My take is that this is a well-intentioned idea that simply has too many holes with which to fall in.
Let’s be clear – Stu Colson’s entire game is making money. How else does a SaaS (Software as a Solution) provider make money? Simple. Subscriptions. Stu’s ComicHub software is available for a mere $150/month to retailers. Pocket change you say. Bet when you factor in that most stores already run on a shoestring budget, that can be a cost prohibitive entry level (most likely why there are still less than 250 stores using the technology, and that’s being generous as I understand).
For the current climate, Stu is going to reduce the cost for shops to jump on to $100 per month. That means if you bought in to the system, and we generalize to everyone getting $3.99 comics at 50% margin, one would have to sell 51 comics to see profit. So in the current downturn economy, I would have to sell a minimum of 51 comics per month just to begin to make money. Meanwhile, printers and Diamond are going to have a backlog of comics that will need to be shipped once this situation lifts.
Chris: Break that down a bit more. How will this look for an average comic shop?
Eric: Let’s say the average week sees a release of 150 titles, which have an average of 2 covers per (all numbers I’m generalizing). That’s 300 individual SKUs to manage. Multiply that by 4 weeks, and you have 1200 SKUs, or 8 weeks, then there’s 2400 SKUs. Can you imagine how a comic shop would be buried under that volume? Oh, and Diamond wants theirs, so you still have to pay for shipping charges equal to 8x your normal. All in all, this doesn’t get at the core issue. But it is a way for Stu to make more money at an opportune time.
Chris: So what are other retailers saying?
Eric: There is a poll on a great retailer group page that we’re a part of that shows at least a good margin of what many of more “aware and outspoken” retailers are feeling. The question is whether or not you support the idea of digital sales with a physical redemption code. The results are overwhelming that “no”, retailers do not support it. Comments brought up are pointing to the reasoning of not releasing non-digital first books to the market – chief among them that many readers will leave the hobby when spoilers are “out” for 4+ weeks, and they still haven’t gotten their books.
We talk about every series ending being an off-ramp. How about turning off the spigot to the physical book that keeps most people “in” the hobby? Risky proposition, and one that most retailers have already had to field calls on from subscribers.
One shared a call that went like this:
Reader “Hi, I hear comics are going to go digital, and I will need to buy codes to get physical books later. Is that true?”
LCS “Not yet, it is an idea that is being floated, but not a for sure.”
R “Okay, if that happens cancel my books. It won’t matter after that.”
Not matter?! That’s a problem.
Perhaps a bit more pressing is the fact that stores have placed orders for 4/1 product that is sitting in Diamond’s warehouses waiting to be shipped out. This could open a Pandora’s box of stores needing more stock than they ordered, and print runs being set. Surely it will not be on ComicHub to deal with shortages … and Diamond is clean of it. Publishers will say they printed to demand … so the retailer is held to the fire. Now we have to return money on a non-physical product that we cannot resell in some capacity? Dangerous, and yet again puts all the risk on retailers.
Speaking of Diamond – the comment has been brought up that this is an initiative that should be run through Diamond. Allowing for standard discounts to be applied, and a one to one with inventory purchased. Now Diamond did try some foray into digital comics a few years back, and it was a complete disaster. (What, a company built on Windows 3.1 and HTML3 couldn’t handle new tech? Shocker… I guess we see what being the big dog earns you – complacency).
Last comment I will include is around “how” retailers found out about this. It wasn’t from publishers or Diamond. It was from Stu Colson – ComicHub and Ryan Higgins (owner of Comics Conspiracy in Sunnyvale, CA) proclaiming the saving grace of the industry via Twitter. The story ran on a comic news site, and publishers were not happy to hear about it. Marvel has come out with an email saying they will not participate in or support the ComicHub movement. There goes 50% of the market, and face it, the best chance for retailers to make any money on this proposition.
And here it is. Within the next two weeks, you’ll be able to buy a physical comic from your LCS–anywhere on Earth–online. You’ll be able to read a digital copy the minute you buy it. Your LCS will get a free physical copy to give to you later. https://t.co/goxg2kz5KK
— Ryan Higgins (@RyanHigginsRyan) April 1, 2020
(editor: the tweet above has since been deleted)
Chris: Some might argue that this method would be better than nothing at the moment. How do you respond to that?
Eric: Those retailers are very likely the ones that are heavily dependent on new comics and gaming. While this model can work in an environment under normal circumstances, running a business is similar to an investment portfolio – you need to diversify. Look at companies that did vs did not and see market changes without global pandemics fared (Netflix vs Blockbuster). Running our shop we have far more than nothing, even though our comic and gaming distribution is currently turned off.
We have over 100,00 back issues, board games, statues, figures, trades, retro video games, vinyl, etc. And yes, our store is closed to in-store browsing. But we have shifted to create a webstore and are actively listing product there as well as on sellers like eBay. Our days are somehow longer with the store closed than they were open – often hitting 18 hours. But I am happy to say that our revenue is maintaining more than the cost to operate at this time, so we feel our energy is being well spent.
Our customers are calling to have their pull boxed shipped, and we are still doing quite well. Had we not diversified, we would be hurting. Piling up high risk on X weeks of physical books you will need to pay at once for shipping, the fees going to ComicHub, and your timing can be a crippling tide of work to overcome. Is it worth the risk? I don’t think so at this time.
Chris: Do you have a modest proposal or suggestions on how to help comic shops who are struggling under the burden of not being an “essential” service under the current pandemic shutdown of the world economy?
Eric: If your only job is to run a comic shop, there is no reason you can’t be in there working on listing your inventory, cold calling customers, being inventive. We have looked through many of the shelter in place orders, and the ones we have seen all allow for minimal business function such as inventory management. This is written in to allow small business owners who can sell online the ability to maintain their revenue.
Chris: How do you feel about how the major publishers are performing under these conditions?
Eric: Of the major publishers Marvel has far and away been a leader. Love them or not for their variants, market flooding, etc they are easily doing the most right now. The provide timely communication regarding their plans and have put some very distribution channel focused policies in place to help us. Additional discounts on ALL titles from March and April as of now, potentially longer, returnability, extending terms to diamond, etc. Image immediately announced full returnability, and BOOM!, who has been a fantastic partner is continuing their retailer centric partnership with active communication and active measures for when the shipping ban has lifted.
Unfortunately that leaves DC. Suffice it to say communication has been minimal, and as of right now they have put in place returnability for books with in store dates from March 18th through June 24th. Certainly appreciated, but that’s about it from them. In years past we would have seen DC taking the lead, but that seems to have changed since the AT&T merger.
I also would like to mention two publishers that I feel are doing great things; Valiant Entertainment texted us to say “Hey you should see a package arriving at your store in the next day or so.” Sure enough, a FedEx package arrived from Valiant with a stack of product for us to use if our store was open to sell, or sell online to help bring in some cash flow. Not necessary, but very welcome. Valiant, thank you! Secondly, TKO who has lit up trade sales at our store with titles like Sara by Garth Ennis, uses a self-distribution model. We order direct from them, and they ship us product. In the current climate, and knowing that not every store is open, they are handling direct to customer distribution on their own, If you go to their webstore and order product, you are asked to put in your local comic shops name. Whatever shop is attributed to the sale gets a check every Friday from them for 50% of the value.
This is ingenious, and incredibly generous (considering they are doing ALL the work). We were alerted that our first partner payment would be arriving tomorrow. There are many other publishers doing things that aren’t mentioned, and this is not meant to detract from that. These are the ones that have the largest impact on us at this time.
Chris: What do you see as the fallout to the comics industry in the wake of this pandemic?
Eric: First and foremost I believe that publishers will look to break their exclusive distribution contracts with Diamond, perhaps over a breech of contract for the April 1st books that were printed and delivered. Secondly I think that we will see a reduction in the number of stores out there – I know some store owners have thrown their hands up and already claimed they are done, others will likely not be able to survive the disruption.
We may see a return of the printing industry in America – book printing largely happens in Canada, and that has been shuttered as well. I think we will see buying patterns that are slow for 6 months as out of work individuals get back on their feet. Most importantly I think the industry will have fall back plans should this ever happen again. This is a case where no one had a comprehensive plan. We dealt with the L.A. Port strike, as that only affected a small percentage of on sale titles a few summers ago.
Chris: Pretty dire situation. Is there anything comic readers themselves can do to help the industry?
Eric: First and foremost talk to your LCS. If you’re out of work and won’t be able to get your books for a while, let them know so they can make a plan for that. If you can afford your books, call and pay over the phone and get them shipped. If you just want to let them know that you are thinking about them, do it! Most stores have Facebook or Twitter – a friendly message is a good morale booster. Buy from TKO, and invite your friends to – use that LCS name to help the shop. Also look to see if your shop has a webstore, you never know what you may find.
Also, some creators will be hurting bad during this. If you have an artist that you love, and your unused convention money is burning a hole, see if you can get a commission from them. Con season is often times where they make the most money they see over the course of the year. Keeping that going during these times can help them greatly. Writers can be a bit tougher, but check to see if they have comp copies they can sign and sell you – or if they have a Patreon where you can drop $1 per month and get some killer writing tips?
Bottom line – everyone is in a different place. Those who can help, please do. Those who cannot, do not feel like you are the problem. We are all in this together. We will see it through, and be stronger (albeit a bit leaner) on the other side. Comics unite us – hit those to read piles and share your love of the medium however you can! Now is our time to bring people in!
Chris: Thanks, Eric. Always great chatting with you.
Eric: Thanks, Chris.