Monday, December 29, 2008

ARTICLE 3: Score one for Idiocy (aka the History of Comics and how Wall Street Honchos ruined everything.)

No, seriously, Wall Street actually did have a hand in ruining comics - now mind, this is far before they had a hand in ruining the rest of the economy. Think of it as their practice run. I know it’s conveniently simple to blame the evil rich guys, but in this case, it’s also hilariously true. Somebody could make a Saturday morning cartoon out of this thing. (Hmm…) There’s greed, back-room dealing, corruption, scheming, and colossal failure. It’s like Washington DC, only funnier, because it’s all done over the control of super-powered men in tights and it‘s not spending my tax dollars.

Things begin with the formation of the Direct Market…

Now, don’t stop reading just because that last sentence sounded totally boring. I promise, this comic-book business history stuff is really quite fascinating if you consider the ramifications of… I’m not helping my case, am I?
Alright, listen. There’s something super sexy at the end of this article. Ultra sexy. Crazy sexy. You can’t even imagine how insanely sexy it’ll be. But wait! - no scrolling ahead allowed! Just slog through my ramblings, and it’ll pay off later!

Saying the Direct Market was coalescing in the 1970’s is really just a fancy way of saying comic book shops were coming into existence. Comics were fading out from the news-stand scene and coming into their own. It was a very exciting time. At least, planning on being conceived in about a decade, I thought so.
The insanely puritanical Comics Code was being slowly shrugged off, and with the retail outlets created for comics, the market was growing rapidly. Super-hero comics, reflecting the values of the times, were a popular genre. There were a dozen or so distributors, many smaller publishers getting into the game, and the scope of the medium started to open up.
Rick Veitch writes, “As the 1980’s began, many people were certain that comics had entered a new golden age, at long last poised to rise out of the ashes of censorship and juvenilia…”
The potential was there, but the big guys - Marvel and DC - got a new set of priorities. Instead of striving to create the best stories and books they could, they started striving to dominate as much of the market share as possible. Money became the priority, and they figured the best way to get it was to ensure that there was no competition. “Both (Marvel and DC), now owned by large corporations, swamped the new direct sales market with bloated lines of superhero books and used every means at their disposal to bankrupt the upstart competition…” (Rick Veitch)

Remember that last article, about HPCP? There it is, starting it’s diabolical work in the comics industry. But it’s effects were unnaturally frozen in place after a disastrous power play by Marvel went awry…
The expanding color and fun of the comic industry attracted the attention of Wall Street - but not for the books. They smelled MEGABUCKS. ‘There’s big cash monies in this here comic - stuff!’
Marvel was bought by a financial tycoon, Ronald Perleman - called by some the ‘junk - bond king‘. The top management levels of Marvel were filled with executives from Fox Television, Kenner Toys, TBS, the NBA, for crying out loud - people that had absolutely no clue or passion about comics. But, boy, did they like money.
Jealous of DC’s cozy whore/pimp relationship with Time Warner Communications, the new (publicly traded) Marvel decided it had to become a “comprehensive, global, youth-marketing company.” (McAllister 2001) If that doesn’t sound like a winning plan, I guess it at least sounded good to the stockholders. My plan would’ve been “make really good books and sell them,” but that’s just me.
The big players in the comic world started trying furiously to out-do one another. I guess they felt compelled to match the behavior of the muscle-bound stereotypes they were recycling. For a time the industry utterly forgot about this little thing called the readers. Evidently, these guys adopted their business strategies by emulating the petty, obstinate power plays of monarchies in the Dark Ages. Now if they had also adopted the same dress code, that would be something to see!
Marvel started buying up everything in sight - smaller publishers, sports cards companies, sticker companies, children’s magazine publishers, and then, they made their Big Move. (Gangbusters music begins now.)

In a sleazy ploy, Marvel -well aware of it’s position in the market- decided to take a swipe at seizing control of the comic book world‘s supply lines. The plan was to buy a distributing company, and then use it to distribute all Marvel titles exclusively - refusing to let other distributors sell a single lonely edition. The Wall-Street fat cats planned to stomp out the competing distributors in this manner, since the idea was they would all go out of business if they couldn’t gain access to Marvel merchandise. Then, when Marvel owned the sole remaining distribution network, their nemesis DC would be at their complete mercy! MUAH -Ha - HAH! And all of Comic-dom would be at THEIR COMMAND!
No, I’m not making this up - they really went the whole evil-master-plan route. I think phase two was a volcano island base somewhere, and a Washington lobbying organization…
“Near monopolistic control by one omnipotent company… Has occurred because of the 1990’s attempted industrial coup by Marvel.” (McAllister 2001)

It wiped out the competition, all right… All of it.
There were 10 significant distributors working in comics before the Marvelicious revolution. Within a year of the play, there was only one left. The distributors, working within very narrow profit margins, were unable to survive without the volume of Marvel books feeding their bottom line. They were bought out, bankrupted, or just plain forced out of the industry. Farewell, diversity.

Want to know what’s funny about Marvel‘s little takeover, though? …This is great. It’s hilarious. It’s poetic justice in action… Marvel isn’t the company that wound up in control of the monopoly. Listen to this. (And imagine what it would be like if it were a Three Stooges episode.)

DC Comics and Diamond Distribution, reacting swiftly to Marvel’s vertical integration scheme, decided to up the ante. They held an emergency closed-doors meeting - (TO THE BAT CAVE!) - and came up with their own scheme.

DC announced publicly that it would also be working exclusively with one distributor - Diamond. This hard-ball reaction guaranteed the annihilation of every other distributor in the business, as they were all denied access to both Marvel and DC comics.

But the DC scheme wasn’t just a hard-ball reaction… there was a little more planning involved than that. (Juicy, ain’t it?) As the announcement of further consolidation hit, Diamond sent emissaries to the other major publishing houses, Image and Dark Horse - offering them exclusive deals, as well… The message was simple; “You’re either with us… or you’re not.” The prospect of being locked out on the dying - fields with the doomed distributors wasn’t too appealing, so of course they fell in line. Home of the Brave, after all.

So, the field was down to two: Marvel with their acquired distributor Heroes World, and Diamond with all the other big publishers.
Marvel’s little takeover plan turned out to be a total disaster. Heroes World couldn’t handle the gargantuan task of distributing the endless rank and file of Marvel’s cloned superhero crap. Retailers couldn’t get their orders filled. Shelves sat void of She-Hulk. Phone lines literally overheated at Heroes World headquarters, putting them out of contact with enraged storeowners. The situation deteriorated into a genuine debacle, one of the worst (or best?) business implosions of the twentieth century. Heroes World collapsed in screaming, agonizing failure, shattering Marvel’s hand-rubbing dreams of power.

...Left with nobody else to distribute their work, Marvel had only one choice. Seduced by the Dark Side of the Force, they joined the Diamond monopoly, transforming it into an all - powerful Comic Empire. (Cue Imperial March score.)

With literally no competition, Diamond was free to name it’s own terms. But not wishing to alienate it’s biggest and best customers, it forged exclusive ’brokerage’ agreements with the Big 4...
“These special status agreements… allow the four largest publishers to control their own discount structure (Diamond dictates a higher rate to all other suppliers) and assures them the most and best space in Diamond’s monthly product catalog. The end result is that, not only is it harder for retailers to order comics that aren’t published by the Big 4, but there is less incentive for stores to carry anything but Marvel, DC, Image, and Dark Horse, since those companies get a preferred price advantage built into their discount structure. If you’ve noticed your comic book store is carrying less and less of the good stuff and more and more of the same-old same-old, this is why… Small and self publishers, who have traditionally provided a creative cornucopia of diverse products, are being squeezed out of business - while the Big 4, in monopolistic cahoots with the last distributor, continue to flood the market with lousy superhero books that don’t sell.” (Rick Veitch)

Tell ‘em, Rick!

Of course, operating an exclusive kick-back laden market-hogging monopoly is theoretically illegal in the United States - which is why Diamond was put under investigation by the Justice Department in 1997 to determine if “Illegal trade restraints exist in comic book distribution.”
“…this arrangement gives the big two leverage over the marketplace that other publishers simply cannot match; the cash available to retailers is finite, which means that if either Marvel or DC decide to publish more titles on a given month, correspondingly less capital will be available to retailers when ordering other titles, allowing the big two to literally flood their competitors off the shelves.” (Dirk Deppey)

Luckily, the government never screws anything up. They quickly realized that there were really lots of distributors out there, so there must not be any monopoly… Of course, they listed book distributors - books, as in Charles Dickens and Jane Austin. Evidently, when investigating the comic-book market monopoly, they forgot that it was actually about comic books.. (WTF!?!?!) That, or maybe a now-giant corporation greased the wheels a bit. Who’s to say? I honestly can’t decide if beaurocratic ineptitude or corruption is to blame. I guess it’s a toss-up. Pick your favorite. I like grape!

History lesson over; Now, fire up that Dolorian and flash to the present-

Diamond is now the undisputed industry titan. It is common knowledge that any publisher wishing to see the inside of a comic store had best start begging the tyrant for a bestowment of opportunity.
“Steve (Steve Geppi, president of Diamond) is now in a position to completely control the ebb and flow of the comics market. If he liked a particular comic book, he could promote the hell out of it. If he didn’t like a particular comic book, he could bury it. If a particular publisher offended him (Sure hope he doesn’t read my article!) or proved too troublesome to carry, he could effectively put the publisher out of business.” (Peter David, 1996 - Parenthesis included by David Lillie 2008)

But are things really that bad? So what if the whole industry is controlled by one company? So what if tons of smaller publishers were put out of business forever? So what if the Federal Reserve is unconstitutionally owned by private interests? Who cares? It’s not like Diamond is evil or anything. You’d think having absolutely no competition would be a bad thing, but, come on. They just want to make money and sell some books, right? Where’s the harm? After all, Diamond has promised to value the interests of small publishers and diversity. Whew! Good thing Diamond is all about promoting diversity! Right? They promised! Right?

You know how politicians always promise to serve their offices with dignity and integrity? Yeah, well, it was one of those kinds of promises, something to paste on a press release and forget about. Don’t believe me?

An honest glance through an average (customer-free) comic shop tells the tale; the Big 4 are still in charge - and, surprise, the store is filled with their shopper-repellent (Superhero comics). Comic sales continue to track their terminal slump, as repetitive material fails to ignite the interest and imagination of consumers. The industry creators are resorting to pathetic gimmicks, struggling to scrape together publicity -
“EXTRA, EXTRA, READ ALL ABOUT IT! Spider-man’s radioactive sperm kills Mary Jane!”
“Hulk was green - but now - but now he’s RED!”
“What if, like, all of the superheroes were also - it’s the popular thing now, right?- were also ZOMBIES!”
“Um, some of the heroes aren’t really heroes - they’re ALIENS IN DISGUISE! Wow - better buy a copy now, right?”


Now, don’t worry if you’re just reading this article for that super-ultra sexy thing I promised- it wasn’t that Spiderman bit. It’s still coming up, relax.

Besides the obvious zero-competition closed-doors monopoly situation, what are the major reasons we aren’t seeing any fresh new talented creations in the industry? (Key phrase ‘in the industry’…) Well, there are three big reasons, which I’ll only go into briefly; (You can tell I’m lying about the ‘briefly’ part, can’t you?)

REASON ONE: The Big 4 have hijacked not only the entire market share of the comic book industry, they have hijacked the very definition of what comics are. Since they focus on superhero stuff, and it used to be big in the past, (HPCP - guaranteed hit!!) and they aren’t creative enough to think up new ideas, they define the entire world of comics on their terms.
“As DC, Marvel, and the similarly marketed Image establish the marketplace definition of comics (Featuring overly - endowed male or female superheroes itching for a fight), even new publishers, seeking to fit in with marketplace predictability, accept this definition… Publishers who attempt to publish non-superhero comics may find distributors and retailers not supporting their efforts…” (McAllister 2001)
“Anything that doesn't have tights on it has to be literally hand-sold by its creators…” (J. Hues)

REASON TWO: Diamond is a big business, and - let’s be realistic - they’re set up to work with big businesses. Little publishers with original ideas are shouldered out financially.
For this, I don’t even need any references -I’ve got firsthand knowledge. First, a bit of background info on what a distributor is supposed to be.
Basically, in the normal world of bookselling, you can go with a distributor, or a wholesaler to get your books in stores. What’s the difference, you ask? (Because I know you’re interested.) Wholesalers buy your books from you for about half price, so you get to keep 50%-45% off the retail value - which is decent. However, since they give you a good cut, the wholesalers aren’t going to run around and put a lot of effort into selling your books. They’ll sell ’em if people ask for ’em, but that’s about it.
Distributors (Again, in the normal world) take a bigger piece of your action - usually 60%. So you only make 40% off the retail value. But a distributor justifies this cost by actively promoting your book - they have full time sales reps in the field, they promote your line at trade shows, they make calls to stores, and basically, they use that extra chunk of money you give them to bust their ass on marketing to drive sales.

Back to “comic world”, where Diamond is the King, with none to challenge rule:
Diamond takes a HUGE chunk of the pie, leaving publishers (At least, outside the Big 4) with a paltry 35% of the retail value. 35%. So if you go to all the trouble and work of publishing a great book worth ten dollars, you keep a lousy $3.50, before taxes. Keep in mind, this is after the publisher pays their authors, pays their overhead, pays for the ISBN codes, pays for printing cost, and pays to have the books shipped to Diamond. (That’s right - Diamond Distribution doesn’t even cover shipping.)
Now, for a reality check to those who haven’t tried printing their own work before - you lose. Simple as that. With only 35% of the value, the only way you can make back your money is to print thousands (minimum) of copies of your book, and to miraculously sell every copy through Diamond - if you can only afford a few hundred books, you’ll lose money no matter what. Good luck staying in business.
And that’s IF Diamond sells EVERY one of your copies, mind. Fat chance of that - remember those sales services I mentioned up there that normal distributors do? Diamond charges you extra for them - out the nose, to be exact. Here are a few small examples:

Invoice Message service - $150
ReOrder Confirmation Message - $100
Mailings - $20 an hour, plus 20% postage.
Point of Purchase Display - $100
Sales Rep visits- $35 per hour per rep
Phone calls to accounts - $250 a week

So, they charge you if they make phone calls about your book, they charge you if they’re at a convention where you want your book visible on the table, they charge you to remind retailers your book exists, and this is even BEFORE they charge placement rates in their ‘Previews’ catalogue.
Friendly to small publishers, my ass. Patting independence cliché Jeff Smith on the head nonstop doesn’t mean you viably promote independent comics.
Diamond does have the ‘Indie Edge’ blog on their site… The issue I read touted Mike Allred. His featured work included superhero comic Madman and the Atomics (being reprinted by Image), X-tatix (Another super hero book with a ‘Marvel Comics’ logo emblazoned across the top) as well as a random advertisement for ‘Fable’, which isn’t exactly independent - it’s owned by Vertigo, which is owned by DC, which is owned by Time Warner Communications, which now owns a 78% share of God. All in all, their Indie section was a token piece of lip-service plastered with Big 4 ads.
So, Diamond is definitely playing its part in keeping fresh ideas out of the industry.
But here comes the biggest reason for the current, undying stagnation in the Direct Market…

REASON 3: Licensing.
You’d think with terrible sales and receding readership, the Big 4 comic book companies would be driven by the almighty dollar to find something that sells. That if not for creativity, at least for the sake of cash they would try to pick their industry up out of the gutter. Well, they couldn’t care less about slipping comic book sales, because they don’t need the money. They have bigger fish to fry.
Comic book companies don’t stay in business by selling comic books. That would make too much sense. (And result in a moderate concern for quality and reader satisfaction.) The Big 4 stay in business by licensing their ‘products’ (characters) out to other corporations. Movie contracts, TV deals, Toy contracts, clothing lines - big time licensing pads the income of Marvel and DC so well that they couldn’t care less about how their actual books are doing. Have you ever seen any Batman toys in a toy store before? Maybe a couple?
“The revenue from comics was quickly becoming, to use the words of one industry analyst, ‘chump change.’… By the late 1990’s, Marvel management clearly viewed the organization as a licensing, not a comic book, company.” (McAllister 2001)

Take a minute to let the implications of this sink in… The only corporations with a major presence in the field of creating and selling comic books don’t really care if anyone buys their books. There is ZERO incentive for quality. Do you really think these established corporate icons are going to put effort into books that they have no need to sell?
Now, I’m sure the individual creators working in the industry try their best - like Peter David, who was pushed off the Hulk series by pressure from Marvel to write a more marketable, stupid version of Hulk. He was replaced by John Byrne, who was willing to render the stereotypical, same-old same-old shallow version, because “That’s the direction Marvel wants to go.” (Byrne 1998)

Hulk isn’t in comics to make good comics - he’s just there to sell movie deals and plastic Hulk-shaped sippy-cups in Walmart. (Although those Hulk-Smash fists are great - I wholeheartedly support anything that removes the use of opposable thumbs from shrieking children.)
To quote McAllister, “The emphasis on licensing, rather than on comic books, may influence the creation of comic books in a way that may be good for licensing activity but not good for the comic book industry. As the comics industry becomes one link in the chain of media conglomerates, it may set less priority on the creation of good books… Changes in comic book characters reveal the lower status that the comic book medium has in comparison with other windows of revenue.”

You wanted to know what happened to comics - and now you do. Some high-rolling fat cats crashed the industry and set up a monopoly in the mid 90’s, and now we’re stuck with Diamond. It’s rigged so, even though they’re the only interests with the leverage to sell books, they have absolutely no financial need to do anything besides squash competing ideas. New, original, creative work from upstart publishers is deliberately squelched financially before it gets exposure. With the lion’s share of the market reserved via back-room dealing for the big boys, and the fact that the big boys are too high and mighty to worry about little things like good books, we’re stuck in a system that manufactures mediocrity and zaps competition.

Now, after wading through all my high falutin’ self-righteous indignation up there, it’d be easy to get the idea I’m some anti-business, anti-licensing, anti-media idealist who only believes in always being victimized. Not the case! (Yet!) I’m looking forward to the day when I will expand Vivid Publishing, and make some beneficial licensing deals of my own. It would be fun to have some Dreamkeepers merchandise in stores, and maybe a well-done, supervised cartoon out there. Licensing and money are potentially great tools. As long as the quality and integrity of the original characters and story are always the priority, additional success is a good thing. Licensing activity is only bad when it takes precedence over telling a good story - when the characters don‘t act real, but instead act marketable. (Admit it - if Mickey Mouse ever stubbed a toe and dropped an F-bomb, you’d be impressed.)

Another impression you might have garnished is that I’m depressed about the current sad state of comics. Oh no, they don’t play fair! Oh no, comics are receding!

Quite the opposite. I’m good. I’m ecstatic. I couldn’t be happier about the state of things. I’ve got a jack-o-lantern sized grin carving through my face right now.

In the short time I’ve been working in comics, I’ve seen two things - talented young artists without a place in the current system, and surprised, delighted readers enjoying the new material I’m presenting them... Readers that weren’t interested in the existing run-of-the-mill Big 4 selection. Readers that are, so to speak, available.
“Comic shops are reaching just shy of 3% of their potential audience with their current tactics. That's a lot of untapped potential…” (J. Hues)

The established monopoly has complete control, alright… Control over a tiny, dying corner of comics - their corner. And they’re welcome to it.

As for the rest of comics? A dormant giant sleeps, ready to be awakened at any moment. Readers are ready for something new. Readers are ready for something original. They are ready for some fresh, relevant comics - and that’s exactly what today’s young creators have to offer. The comic book market today, the real market awaiting discovery, is unclaimed and desperate for new talent to emerge.

In my next article, I’ll be talking about the imminent comic revolution happening right now. Who cares if the old industry is broken? It’s about to be history. And we’re going to be the future.

…What are you still doing here? The article’s over.

…Oh, that’s right. You want the super-ultra sexy thing. You didn’t scroll ahead, did you? If you did, GO BACK! Read your vegetables!

Are we set?

Alright, well, here it is:

You're welcome.


Anonymous said...

That was.... awe inspiring.. almost made me wanna turn away from animation for a second...
David, you're gonna be some kind of comic book prophet, and that... is awesome. I bow down to you my friend.

Anonymous said...

I wish you nothing but good luck, my friend. I hope that luck is enough to keep you under the radar so the Big 4 don't come after you!

Tygepc said...

Wow. that was awesome. I agree with you that this is the best time to poke the giant. It sounds like you have a good plan and you know something about your readership. I hope to see your dream fulfilled.

Where the hell did you find "Kings Nuts?" They were pushed out of the Renaissance Festival I worked at years ago by a greedy conglomerate that wanted a bit more money. The nuts they tried selling didn't taste nearly as good, and the old-timers still talk about the good days.

Anonymous said...

Sounds to me like comics are being forced back into the "HEY KIDS! COMICS!" rack all over again. When there is THAT much power to dictate how comics are sold, what is to say they don't get to dictate what's in them as well?

Creations like Usagi Yojimbo would have never seen the light of day under the regime of Steve Geppi (who is notorious for his open loathing for anything that's not full of rippling muscles or boobs in tight spandex). Who knows what indie titles are being squashed today due to the inability to provide a bazillion units for Diamond to distrubute? Who knows how many artists we will never see because they wouldn't/couldn't toe the corporate line?

Who needs the Comics Code anymore? Even Doc Wertham never could have imagined such a downfall to the comics medium.

Nerves said...

When you are a jolly old successful old person sitting in your shiny, glowy throne of well-deserved success in the comic book industry, you should sit down and write a huge, fat History of the Fluxating Comic Industry, because I just read I don't know how many pages of, basically, text book content, and I enjoyed every sentence. Add that to your lift of assets. Artist, writer, revolutionary, and enjoyable text book content maker.

But seriously. That was condensed, entertaining, almost overwhelming information you presented in laymen's terms. You went straight to the throat and effectively horrified me with the current state of DC and so on. Halfway through I was thinking 'darkest before the dawn' thoughts about how the industry would eventually run out of iconic momentum, implode, and new distributors would crop up, but they've quashed that with licensing long ago, it seems.

Also chilled my spine when you touched on how Diamond can anihilate offenders and you hope he doesn't read your article. Though I have to say, that's be the Assasination of Archduke Ferdinand, seeing DK go under, and just might spark the early demise of Diamond's head fat cats.

Jammer said...

Slowly getting through these... I've recently been reading a book called "The Economics of Web Comics" and it mentioned the deal and lawsuit against Diamond Distributing, but not the details, so thank you for sharing that.

It also mentioned how anything not in the Big 4 is put in the back of Previews with no real rhyme or rhythm. So it's harder to even look up the books from smaller publishers.

Such a shame.

David Lillie said...

Wow, thank you to everyone for reading, and for providing such encouraging feedback! 8 D I'm happy you seemed to enjoy the article. 8 ) To answer the question above... King's Nuts was found at the Ohio Renaissance Festival this past summer, '08. Hopefully it's not shouldered out of there as well, I've heard rumors that there's new management in town... First comics, and now nuts - is nothing sacred?

Dan said...
This comment has been removed by the author.
Dan said...

wow witty and informative. nice job!!! I will remember all the old Marvel and DC heroes as they were not the bloated cash cows that they became. Also I wish you luck in your venture and hope you can stick it to big business because lord knows how I hate greedy people who don't care who or what they step on to get more money.

P.S. if it says i removed a comment above this sorry i had to fix a spelling error XD

dreamkeeper said...

I love you...


Ozuan said...

Oh my god. OH MY GOD. It's the Great Comic Revival... and I'm witnessing a part of it. I'm... I'm proud to be alive.

Anonymous said...

I just got through reading this and, I gotta say, I am truly inspired by your post(testify, brother. Testify). If I could draw, I would ask if I can become your ally in the full out war against mamsham, mediocre, and just flat out terrible comic-books.
Sooo... can I become an ally?