Sunday, November 30, 2008

Comic Strip Cameos

I've been catching up on my comic strip reading today and happened to notice a seemingly unusually high number of comic strips referencing superheroes. Am I seeing something more evident than it actually is because of some bias, or have superheroes been showing up more in the funny pages?

Here's a quick sampling of strips I've found from just the past week...


Does anyone else notice, too, that comic books are NOT mentioned? The Age of Superheroes may have arrived, but it left the comic books where they originated back in the dust.

And... We're Back!

Apologies for the extended delay in blogging. I've been out of town for the past several days, and had less 'net access than I anticipated.

I was actually up visiting with the S.O. for the holiday. That included meeting her parents for the first time, and a Rockwellian Thanksgiving spread prepared by two of her aunts. I was even given the honor of carving the turkey. That plus, you know, spending an extended weekend with my L.D.S.O., I think it's safe to chalk that up in the "win" column. I hope everyone's holiday (well... those of you in the U.S. who celebrate Thanksgiving) went at least as well as mine.

But, you're here for comic bookery! I don't have much, since I've been out of the comic loop since Wednesday afternoon, so I'll just drop a few house-cleaning type notes before we get rolling into December.

ITEM: Back in October, I reviewed Sam Costello's Split Lip stories. He and I conversed a bit via email afterwards, as he was genuinely interested in my criticisms and seeking to improve his craft. I don't claim to be the end-all-be-all comic critic by any means, but I'm impressed by any artist who's willing to seek out criticisms as a means to move their craft forward. My initial review was indeed written in part because he was soliciting critiques via a contest on his site. A contest which, I might add, was won by yours truly, and whose prize package was delivered over the holiday.

Thanks, Sam! Very much appreciated; I'm looking forward to reading them.

Everyone else, check out Split Lip if you haven't already.

ITEM: I got the chance to preview a story proposal by High Moon creator David Gallaher, which I believe he's sending off to Marvel tomorrow. Obviously, I can't speak to its specific contents, but I did rather enjoy it and hope Marvel sees fit to publish it. I won't say it's as good as High Moon, but Steve Ellis hasn't drawn it yet!

ITEM: I finally finished reading the entirety of the original American Flagg pamphlet comics (both series and the special) I got from my father several months ago. I'll be posting a more in-depth review later this week.

Regular blogging should return tomorrow.

Wednesday, November 26, 2008

The Funny Pages

When I was a kid, I read whatever comics I could get my hands on. Often, that was limited to comic strips in the newspaper my parents got every day. Although I haven't done extensive research, I suspect many funny pages in many American newspapers looked pretty similar at the time...

As much as many of these strips are maligned today as being trite and repetitive, they were funny and original if you were nine years old and hadn't seen those jokes a few dozen times already. Besides, we also had some wildly original, and still celebrated, strips like Calvin and Hobbes, The Far Side and Bloom County. (Oh, we had Doonesbury too, but I didn't even START to appreciate that strip until I was in college.)

But, more significantly, the casts of all the comics I read were either furry animals and/or suburban white families. Even the historic dressings of strips like B.C. and Hagar the Horrible only masked what was, in effect, contemporary culture. Even in those strips above -- a medieval king talking about trying to "relieve stress", a viking raider taking out the garbage...? We'd see cameos of African-Americans from time to time in Peanuts (Franklin), Beetle Bailey (Lt. Flap) and Bloom County (Oliver), but the comics were clearly not about them. Not to mention that other nationalities were non-existent.

I'll admit that it completely didn't bother me at the time. Largely because it was a reflection of my own sheltered life. At that point, there were no black families with kids in our school system, but my dad's co-workers mostly were and I'd see and interact with them from time to time. But, because of that, coupled with a healthy dose of Seasame Street, I was completely ignorant that there was any such thing as racial prejudice. Life in America was mostly white with some occasional, but friendly, encounters with black folks. This was reinforced in other media as I got older -- one of Han Solo's good friends was Lando Calrissian and B.A. Barracas was one quarter of the A-Team.

Of course, as I was growing older, I was also becoming more aware of the world around me and the racial issues that still permeated American culture. I still don't see it as an issue for me, though, insomuch as I've never given a rat's ass one way or another what color someone's skin was. My parents raised me to believe in a true meritocracy, and that it's only what you're able to accomplish that's what counts. (This, curiously, caused OTHER problems for me later, as I harshly discovered that career advancement rarely has to do with merit exclusively.)

Technology has also improved such that cartoonists are no longer limited by what syndicates or old, stuffy, white guys in the corner office at the newspaper think people want to see. Earlier, it was in the form of underground newspapers who were able to publish using cheaper printing technology and today the internet has opened the doors for any number of people to get their voices heard.

My "newspaper" (which doesn't, in fact, exist on paper at all) today includes comics like these...

Granted, I pulled out a handful of examples that happen to feature non-caucasian characters in central, if not THE central, roles. I still read Andy Capp and Heathcliff. And some of the newer comics I read include the clever, but still decidedly caucasian, Red & Rover and Pearls Before Swine.

My point is that the comics I read today are vastly more inclusive than they were in my youth. Some, like Secret Asian Man and Maintaining, tend to deal with racial issues in relatively direct ways. Others, like High Moon and Cafe con Leche, are a little more oblique in their approach. And still others, like Tozo and Necessary Monsters, are written in an almost entirely color-blind manner.

One question that arises is: how come this isn't happening in comic books? Oh, don't get me wrong, I know that we've got Luke Cage and Black Lightning and Black Panther and Blue Beetle, but they seem much more in the background to the overall milieu of comic books than, say, Huey Freeman and Curtis Wilkins. These comic book characters are the equivalent of comic strips' Lt. Flap and Franklin.

I find it a little disturbing, too, that my funny pages have more diversity than my actual neighborhood. My S.O. has noted repeatedly how very few people of color she sees when she comes down from Chicago to visit, and I've pointed out that my subdivision has exactly one black family and one Indian one. (Personally, I figure there must be something more than just a casual correlation between said lack of diversity, and the fact that my precinct is overwhelmingly Republican -- McCain beat Obama 62%/36% in my district, and that was actually considered a success by Democrats!) Clearly, we've got a situation here where Life isn't imitating Art nearly enough, and there's still lots of work to be done.

The bad news is that there's no quick fix. Just because a black man has been elected President doesn't mean that racial prejudices will melt away. The problem in both cases noted above is that it's still Old, White, Male America that's controlling the purse strings. That's why things look better online -- no one to hold in the reins. The good news is that because there's at least SOMEWHERE where no one is being held back, their messages of openness and diversity will make their way out to the masses. It will undoubtedly take longer than when Americans only had three networks channeling the same message to everyone -- there are an almost infinite number of media outlets now that dilute what any single person hears.

But the message DOES get out there.

Some people hear it earlier than others, and some people reject it altogether anyway. But people do hear it. They listen, and they learn, and they grow. And maybe one day in the not-to-distant future, we'll have a country that looks more like the funny pages.

Except for Dilbert. I don't think anybody wants life to look any more like Dilbert than it already does!

Tuesday, November 25, 2008

Style Over Substance

As a rule, I'm always on the look-out for new comics. I enjoy seeing what different people can do with the medium, and I like the wide expression of ideas. Of course, there's always limitations I have to set for myself. Back when I was a kid working as a caddy part-time at a golf course with extremely limited income, I simply couldn't afford too wide a range of comics. As I grew older, time became a more limiting factor. Not that I could afford to buy everything that looked good, naturally, but I could afford to buy more than I had time to read.

These days, I still have limitations to contend with. Money is still a factor, of course, and I've been having to limit myself to free online comics. But time is still a factor, as well, and I've fallen woefully behind on several of the longer-form web comics that I've enjoyed. (Mostly the ones where I came to the story pretty late in the first place, and had a great deal of catching up to do.)

But I still try to pick up new strips as I find them. Especially ones that are written so that a new reader can jump in to the middle of it quickly, or those which are new enough that there's not much catching up to do in the first place.

I try to give each comic a fair shot. Any one episode (whether that's one strip a day, or six pages once a week, or whatever) doesn't really convey a good sense of the creator's ability, I feel. It might be a good (or bad) episode in and of itself, but it could be just a bit of a fluke the episode turned out the way it did. Maybe the creator's normally really funny, but just happened to have an off day when I started reading. Or maybe the creator normally sucks and just happened to come up with a brief piece of brilliance by accident. In either case, I try to read a comic for a little while to get a feel for it overall before deciding to continue with it or not.

Generally, I don't have a set time limit that I'll give to a comic during their trial period. Just however long it takes for me to get a good feel for it.

But I have noticed a trend. I have a tendency to give more leeway to artists who employ an illustration style I like.

For example, I've been reading Day by Day by Chris Muir for a few weeks now. But I don't particularly care for it; I just don't find it very engaging. I'm even impressed that, despite having a generally conservative viewpoint that I disagree with, Muir maintains a relatively intelligent and substantive perspective. But I just find that the strips fall flat for me. But I've continued reading as long as I have because I like his illustrative style.

On the other end of the spectrum, we have the widely popular xkcd. I find that the strip falls just as flat for me as Day by Day; I see and understand the jokes -- I just find them terribly unfunny. I've tried on several separate occasions to read it, but I can't get through more than a couple strips because the art is so bad. Even for stick figures, they're poorly done in my opinion.

Both strips are equally unengaging for me, but I've given Day by Day (who's political views often directly contradict mine) more tolerance than xkcd (who's thoughts and opinions are more in line with my own). Now, that's not to say I won't read a poorly drawn comic, just that I set the bar much higher when it comes to a comic's writing if it's drawn poorly.

I'm certain it's not a bias that everyone shares, but it's a point worth recognizing in myself. Knowing that I'm not keen on bad art and tend to dismiss it more readily, I know I should make an extra effort to appreciate poorly illustrated comics on the chance that I'm dismissing something special for superficial reasons.

That said, I still don't like Achewood.

Sunday, November 23, 2008

Comics Economics, Part 10

This one should be a given for comic book fans, but...

Crime does not pay.

A couple days ago, a woman reported that $80,000 worth of her comics were stolen. Personally, I think her story sounds really fishy -- $80k worth of comics in six boxes left in a communal basement? If you knew you the comics' value and knew to keep them bagged, why would you leave them in such an insecure location, which would also be prone to dampness, mildew and mold? Plus, the boxes conveniently held 100 40-year-old mint condition books? Seems awfully suspect to me.

But, setting aside the plausibility of the woman's claim, let's assume the story is true as presented. Let's assume those boxes did hold $80,000 worth of comics, and they were stolen because someone's getting hit bad by the economy and heard that comics are still good business.

Question: if you had six boxes of comics and wanted to turn their value into cash, what would you do? You'd try to sell them, obviously.

If you're trying to sell comics, you've got a few options open to you. You could hold a garage sale, but I think you'd be hard pressed to get even remotely near what you thought they'd be worth. You could take them to a comic shop, but you'd still only get a percentage of their value and there'd be a fair chance the owner would recognize the books as being stolen. (How many people have 100 mint-condition Amazing Spider-Man comics drawn by Steve Ditko that they happen to want to get rid of?) You could try putting them on eBay, but that's a decidedly public (i.e. risky) way to try to pawn stolen goods.

There really isn't a good way. At least, not in the short term. You'd really have to wait quite a while "until the heat's off" before you could try to sell them and not worry too much about getting caught.

The comic book community is a fairly closed group, a fact that has been causing publishers problems for years. But that also means that collectively, that group is relatively aware of what's going on in the business. You know who's writing or drawing for which publishers, what new promotions are coming out in the coming months, and when a large theft occurs. It doesn't exactly run like clockwork, but how often do we hear a story a comic collection, or a series of original artwork pages, being stolen -- only to hear when they're caught a week later because the thief tried selling the ill-gotten gains?

Even if the theft isn't well-publicized, shop owners are pretty quick to spot suspicious activity. Speaking of a 2005 burglary, Gene Roberdeaux, manager at Bookman's Used Books, Music & Software said, "Pretty much every red flag went up when these kids came in with these comic books. They didn't know what they had in their hands... They just wanted to get rid of them, which is another red flag." I've even read stories where the there was a good chance there were stolen comics trying to be pawned off on someone, but there was no report of a theft in the first place!

Now, admittedly, there are going to be some less-than-scrupulous dealers who don't care where the collection came from, as long as they think they can make a profit from re-selling it. But, by and large, I think the only thing you can do with a stolen comic book collection is to keep it. There simply isn't much of a black market for stolen comics.

Psstt... hey, bud! How'dja like ta buy this here CGC 9.4 Wonder Woman I've got in my coat pocket?

"Cute, Sean, but that's not really economics. What about that bit you said earlier about a comic shop only buying a comic for a percentage of what it's worth? That sounded kind of economics-ish."

Actually, that's pretty simple and shouldn't take long to explain.

Those values you see listed in price guides? Those number are what SOME people are willing to pay for a comic. If you have a near mint copy of Action Comics #1, there's a lot of people who would like to have it. Some people want it more than others, and some people can afford to spend more on it than others. There might be a few folks who are willing to spend over $2,000,000 to get it, but I don't have that kind of money. In fact, at the moment, I'd be hard pressed to spend more than a couple hundred bucks on it. That's what the comics' value you is TO ME, because that's what I could afford to spend on it. But to SOMEONE, it's worth $2,000,000 and that's what shows up in price guides.

Now if you take your collection into a comic shop to sell, they're going to go through and see how much it's worth TO THEM. Some of the figure they might quote you is going to do with how much money they can afford to give you at that time. But the other thing to remember is that a comic shop is a BUSINESS. They're going to take whatever comics you try to sell them, and sell those same comics to someone else. And, like any middleman, they're going to add some markup to the book's value so they earn some profit on the venture.

If they buy a comic from you for $100, they're not going to sell it for less than $100, right? They'd lose money that way. If they sell it for exactly $100, they still lose out because it used up some of their time and energy, but they ended up right where they started financially. They could've spent the time doing something else. So they need to sell it for more than $100.

The businessmen I've talked to usually offer to buy comics at about half what they think they can sell the issues for. Inevitably, some of the books don't get sold at all, but the 50% profit margin on the ones that do sell helps to counteract that. That way, the retailer still makes a profit, even if some of the books languish in the back issue bins.

And because a retailer almost certainly can't sell a comic for MORE than what's listed in price guides, the price they offer to buy it from you is going to be lower than that. In my experience, as I said, by about half.

Clear? Good.

Let me add just one final note that I'm going to take a bit of a hiatus from the Comics Economics series. I'm thrilled that it's been as well-received as it has been, but these posts have been much more time- and thought-consuming than my regular ones, and I need to devote some time towards getting some holiday preparations underway. I'll definitely continue on with regular postings, and throw out an occasional Comics Economics update as I have more time to put into them again. Hopefully, though, this series has given you all something to think about, and I hope people are able to continue the discussion in their own respective venues.

Thursday, November 20, 2008

Comics Economics, Part 9

This week has seen the release of sales info from the month of October, the first full month of data we have after the economic meltdown began. I put together a couple of handy charts, showing the past year's worth of data. The first one (with the blue line) traces the overall number of individual issues sold. The second one (with the red line, for those of you playing along at home) shows sales in terms of revenue dollars (i.e. the cover price times the number of issues sold).


(For the record, I'm using numbers pulled from the ICv2 site. And it should go without saying that these are all estimates based exclusively on Diamond's reporting. I think most arguments about how accurate these numbers are shouldn't concern us much here, since I'm only concerned at the moment on overall trending.)

As you can see, October actually shows an industry-wide increase both in terms of how many comics were sold and how much money was spent on them. In fact, The Comichron has done some more historical research to discover that we're also looking at the highest dollar value since at least April 1997. October unit sales are up 5% over last year, 2% over five years ago, and 7% over ten years ago.

In fact, the only thing that looks down at all are year-to-date sales compared to 2007, and that decline appears to mostly be the result of weak numbers back in February and March.

I'll admit that this totally caught me off-guard. I'd expected that sales, like those being reported across the country in other industries, would be down.

But on the way home from work today, I caught this report on NPR that made a quick reference to the fact that the index of leading U.S. economic indicators fell 0.8% in October. And then it clicked for me in a way that I hadn't realized before: comic sales numbers are seriously lagging economic indicator and won't take a downturn for another month, and won't take a serious downturn for another two.

"Sean, what the heck are you talking about?"

There are any number of things people can measure to get a sense of how well the economy is doing, right? It should be easily understood that some things are better measures than others for any of a variety of reasons. One of those reasons is that the time it takes to provide a measurement of something is long enough to allow for conditions to change. I actually alluded to this in Part 1 when I cited that comic sales are a lagging indicator because we don't see those numbers until several weeks after the books are sold. The numbers that came out this week are talking about comics sold last month.

Now there are some things, though, that can actually provide economic information before it affects the economy. We're not talking a huge amount of time, mind you, but it does provide a little advance warning of things to come. For example, it costs a fair amount of money to build a house. You have to buy lots of lumber and drywall, and nails and screws; and hire contractors to put it all together. But before you can do any actual construction -- before you buy the materials and hire the builders -- you have to get a permit from the local government to be able to build on a particular site. So if we look at the number of permits that are issued, we can forecast how many homes will be built, and consequently how much lumber will be sold and how many construction workers will be employed.

There are actually ten different indicators that are generally looked at to assess the future of the economy. It includes such things as the number of permits issued (see above), the average number of hours worked by laborers in manufacturing facilities (stuff needs to be built before it can be sold), and the number of new unemployment applications (more people out of work means less people producing stuff). If the leading indicators are showing a downward trend, it's a pretty safe bet that economy as a whole will follow soon after.

Now, the epiphany I had with regards to comics is that we have the exactly opposite situation there.

First, you have to realize that the numbers we see from Diamond are not the amount of comics sold to fans but the number of comics sold to retailers. A Local Comic Shop can order 100 copies of Schmuck-Boy, the Wonder Twit #23, but he might only sell 2 copies to people who come in his store. He's then stuck with 98 copies he has to file away in the back issue bins. But it's that 100 number that Diamond cares about and it's that 100 number (or, to put it more accurately, something estimated to be around that 100 number) that makes it's way on to the sales reports you and I see online.

That's relevant here because the comic you bought from your LCS on October 29 was ordered from Diamond on August 26. Some numbers can be adjusted after that date, and retailers have some ability to return some books after they've arrived in the store, but those changes are, by and large, relatively minimal.

Now those orders that retailers put in to Diamond months in advance? Those are implicit and explicit orders from you, the fans. If you've got a pull list with your LCS, you've effectively said, "Order a copy of Schmuck-Boy for me each and every month, and I will buy it from you." (That would be an explicit order.) Alternatively, you might buy every issue with an appearance by Schmuck-Boy and, even if you didn't specifically ask for it, your retailer (if he's a good one) will also order a copy of Shmutz-Man #12 for you because he knows it will feature a Schmuck-Boy appearance. (That would be an implicit order.) In either case, you tell your LCS what books to order before he makes his order to Diamond. You're effectively making a future purchase based on your current economic conditions.

(Credit Where Credit Is Due Department: The cartoon at the right was drawn and copyright by Mark Engblom.)

But think about this: if you tell your LCS to stop ordering Schmuck-Boy for you every month, he will have already ordered at least the next issue, if not the next two (depending on when exactly you tell him and what schedule the book is on). So the sales numbers we see from Diamond are indicative of what you felt you could afford to buy at the time your LCS made the order, somewhere between a month and a month and a half before you actually have the book in your hands. And THAT means the October sales numbers are representative of the economy as it looked back in August!

The sales numbers we saw reported on November 18 only tell us what comic book fans' wallets looked like on August 26, several weeks before the world's economies went south.

The orders that were made in the end of September after things started going down the toilet were for November's sales. As it will have only been a couple weeks into the problem (as reported by the major news outlets), I suspect that many fans hadn't started adjusting their buying habits by that point, as they either didn't understand what was going on or believed it was more of a blip than it is. Plus we won't see those sales figures until about a week before Christmas in any event.

My guess is that most people will have been sufficiently informed about what happened to the economy to change their buying habits by the end of October, which would have been the next order cut-off date for retailers after September. The books ordered at the end of October are due to come out in December, and we won't see those sales numbers until Barack Obama is about to be inaugurated.

To be continued...

Wednesday, November 19, 2008

Comic Books In Life

Just taking a brief respite from the Comics Economics series to point out that Google and Life have teamed up to put 10,000,000 images from Life's library online. A quick search on the term "comic books" turns up dozens of images, many from the Senate hearings on juvenile delinquency.

Comics Economics, Part 8.5

As a minor follow-up to yesterday's post, I offer -- without commentary -- the following news items from the past 30 days...

October 28; Claremont, CA -- Comic Bookie closing
November 12; Las Vegas, NV -- Dreamwell Comics closed
November 13; Binghampton, NY -- Made In Japan closing
November 17; Las Vegas, NV -- Kool Kollectibles closed

October 31; Eldersburg, MD -- J&M Comics and Games opens

Tuesday, November 18, 2008

Comics Economics, Part 8

So, are we in a recession or aren't we? If so, are comics immune?

(By the way, normally, I try to make all of my posts as internationally accessible as possible, despite my obvious U.S.-centrism. With so many countries having a multitude of different fiscal issues, though, I'm going to have to limit my post today talking exclusively about the U.S. economy. Hopefully, some of the basic ideas are somewhat transferable internationally.)

By definition, a recession is two consecutive quarters of negative capital growth. In layman's terms, that means six months of the country spending less than it used to. Not just individuals, mind you, but everyone, including corporations. For the first six months of 2008, the U.S. GDP (Gross Domestic Product -- the dollar value of everything a country produces) did in fact rise, albeit slowly. It wasn't until the third quarter (July-September) that we saw an actual decrease. By that estimation, we might be in a recession, but we won't know until the end of the year.

However, some economists have argued that the inflation rate throughout 2008 has far outpaced the GDP. For example, if the GDP increases by .5% but the inflation rate for the same period is 1.5%, the real-world effect would be the same as if the GDP decreased by 1%. By that definition, we've been in a recession for essentially all of 2008.

Further confusing matters, an October study from Moody's noted that 381 of the States' largest cities were actively in a recession by the common definition, as were 28 states. Springfield, Kansas might be fine, but Atlanta, Georgia not so much. But since CNN is based in Atlanta, their perspective is going to be one of an economic downturn, which they're going to report on and broadcast to a national audience... including Springfield. Which, not surprisingly, scares and confuses them.

We are (or, at least, I am) still waiting on October sales numbers in comicdom to see how they compare to September's, when the economy took a noticeable turn for the worst. But, obviously, I've been keeping abreast of anecdotal news sources from individual comic shops, and the news is positive. Lone Star Comics reports "modest gains", Comix Experience is up 15% over last year, and Super-Fly Comics & Games just had their "best October in history." Indeed, Super-Fly has plans to expand into a new location in early 2009, they're doing so well -- despite my initial reservations. (For the record, I'm quite happy to have been totally wrong back then!)

Soooo... comics are recession-proof?

Well, there's a particularly interesting bit in that same piece that talks to Lone Star's General Manager, Chris Powell. Powell says, "In my work with ComicsPRO, I have contact with retailers all over the country. Different parts of the country are being affected by the economic downturns in varying degrees, so I seem to be hearing much more doom and gloom from the east and west coasts or areas that have had large layoffs."

What's particularly interesting is that squares very well with the actual data we're seeing. Below is a map of those 381 metropolitan areas I mentioned above. As you can see, most of said areas are on the east and west coasts. Moreover, this map in particular (from a separate PMI report; wholly unrelated to the Moody's one I cited earlier AFAIK) shows the risk of that area's home prices falling in the near future.
Why are home prices relevant? Well, because it was the housing market that really start causing all the problems in the first place. Also, it's a good indicator of how wealthy people feel. Many people don't play in the stock market, and their 401k plans are long-term investments that they can't really touch until they retire. But their house? That can be sold pretty readily for cash, and is almost as liquid as your bank account. ("Liquid" means how quickly you can get access to the money.) So when home values drop, people feel like they have less money.

Going back to that map, then, the implication is that the areas hardest hit -- with regard to how they FEEL they're getting the pinch -- are on the east and west coasts. The places Powell noted were seeing the biggest problems in the comics market. Probably not so coincidentally, they're ALSO they centralized locations of many major media outlets -- the ones who are telling the rest of the country how bad things are.

For the record, here's a map indicating which states are in recession. Notice again that the swath of not-yet-in-a-recession states runs through the middle of the country.
I pointed out the other day how even a single country can have multiple parallel, but distinct, economies. I think that's what we're seeing right now. The United States is a huge country by any definition so it should come as no surprise that any economic change (good or bad) rolls across the country relatively slowly, and not just smacks it equally all at once. We're talking about over 300 million people! There are economies within economies within economies within economies at that scale.

I talked yesterday about this at a more personal level. One company closes. Which causes another company to close. Those two closures put thousands of people out of work. Those people buy less, and impact other businesses. But it works at a larger level, too. Staying with that DHL issue I was talking about, they're an international company? What they do doesn't affect ONLY the people/companies in Wilmington, OH. That's going to ripple throughout any number of businesses and, indeed, whole industries.

But, like any ripple a pond or lake, it takes time for those ripples to reach out across the water. It affects the water in the immediate area first, and then slowly rolls out across the surface of the pond. The leaf floating close to the epicenter will be disturbed far sooner than the grains of sand along the shore.

We're still pretty early in this economic period, regardless if it's officially considered a recession or not. While I don't doubt that comic fans are tough bunch who stick through a lot of garbage just to get their comic fix, each person will reach their breaking point at a different time. When they say, "You know, I really need to spend my income on food and shelter instead of comic books."

So, even when we do start to look at October's overall sales numbers, that will only reflect the collective national trends, and not individual localities. There's a good chunk of the country -- according to most statistics I've found -- that aren't yet in a recession. Those states/regions could well offset (to some degree) whatever recessionary problems we see in other parts of the country.

There was a lot of pundit talk during the recent election about how no group of people is monolithic. That holds true here as well, and the economic realties of Atlanta won't necessarily mimic the economic realities of Springfield.

To be continued...

Monday, November 17, 2008

Comics Economics, Part 7

Last week, due in part to the global economic recession, DHL announced that it will be discontinuing its U.S. domestic package shipping operation by the end of January 2009. Accordingly the DHL operations in Wilmington, OH will begin laying off workers at that time, and the entire facility will be shut down within six months. Also located in Wilmington is a company called ABX Air, Inc. which handles DHL's airfield and hub in that city. Once DHL finalizes a deal with UPS to handle such operations, ABX has announced plans to remove themselves from Wilmington entirely.

Those two closings will put a little over 3,000 people out of work. That's in a city with a population just shy of 12,000. Put another way, one quarter of Wilmington's population will be put out of work in the next year. And that's only the direct results of the the two closings.

What frequently happens when people get laid off? They cut back on their expenses until they're able to secure a new source of income. That includes things like going out to dinner and the movies, and buying a new coat just because it's on sale, and continuing that gym membership that's not really being used anyway... And, as the time the person continues without income increases, the cutbacks continue.

What that means is that other businesses start to get hurt as well. The mom-and-pop diner has fewer customers, as more people start cooking at home. People go longer between barber visits, or start cutting their hair themselves. These types of behaviors hurt all those other businesses in the area because, obviously, the fewer customers result in fewer sales. A business can't survive long without customers, and if 25% of the town's customers suddenly don't have income, that's going to have an impact on the local economy.

"Sean, your post here is called 'Comics Economics.' You haven't mentioned comics once yet."

How about I make my point with an address?
The Gaming Goblin
15 E. Main Street
Wilmington, OH
Yes, Wilmington has its own Local Comic Shop. I've never been there, personally, but the photo from their web site certainly makes it look like a nice, clean, friendly store. Right in the middle of town, too.

So, what do you suppose happens to a store like this when a quarter of the town's population loses their source of income? Well, I certainly don't know Gaming Goblin's client base, but I think it's safe to assume that their revenue will also drop by about a quarter.

Now, it's entirely possible that none of the people who frequent Gaming Goblin happen to work at DHL or ABX. But here's another figure to mull over: the city has only 4,867 households. That means that, statistically, every other household will be directly affected by the layoffs. How can that NOT impact other businesses in the area?

The median household income for the city is $34,880 -- around $10,000 lower than national numbers. (The median family income, at least, is on par with national numbers.) The lower income suggests that smaller changes in personal economies will have larger impacts. (i.e. People with less income use a greater percentage of what they have on necessities; people with higher incomes tend to have more luxuries they can afford to cut back on.)

Let me throw out some more chilling numbers: According to the U.S. Small Business Administration, over 50% of small businesses fail in the first year and 95% fail within the first five years. Why exactly is that chilling? Gaming Goblin opened on May 3, 2008. Because of the high start-up costs, very few businesses see any profit at all the first year or two. The reason, in fact, why so many of them fail so early is because they don't plan on NOT making a profit for the first two years. A good business plan will take that into consideration and budgets for the fact that they won't see profits until Year Three. I don't know anything about the business acumen at The Gaming Goblin, but I certainly hope that they've planned accordingly.

Now, I do note that The Gaming Goblin also has a relatively noticeable presence on eBay. That will certainly help to mitigate drastic effects from their local economy by tying them to the larger/more robust national economy. But, even so, the national economy isn't doing all that much better and overall eBay sales/revenue are down by over 50% from last year. And that's from the quarter ending on September 30, only a couple weeks into the economic downturn.

I hope The Gaming Goblin does well. I really do. I have a lot of respect for comic shop owners -- even of those shops that are run poorly and don't deserve my custom. (That's by no means a commentary on Gaming Goblin! As I said, I've never been there, and can't speak at all to how well they might run the place.) Running a comic shop takes a lot of hard work and a lot of chutzpah just to open in the first place, and it's almost always done out of a love of comics, because that's about your only reward. I sure as hell wouldn't want to try it myself.

That said, though, Gaming Goblin is going to have some tough times in 2009. Probably moreso than a lot of other shops. But if you're wondering how an economic downturn might impact a comic shop, I think Gaming Goblin will be a prime example to look at regardless of how well they do over the next twelve months.

To be continued...

Sunday, November 16, 2008

Comics Economics, Part 6

Today, we're talking about credit. As always, I'm going to try to tackle this from a practical point-of-view, so I won't be getting into all the hooey that put the world on an economic downslide. But I will be talking about what you might want to know, as credit -- and in particular, credit risk -- pertains to comics.

There are two types of credit: installment and revolving. Revolving credit is essentially a credit line someone has that does not require a set number of payments. Credit cards are probably the most common example of this; you, as the consumer, can spend as much as you like on your credit card (up to a maximum limit) and, while you will likely have to make regular minimum payments, there's still a great deal of flexibility in how/when you pay back that loan. A bar tab would be a less formal version of revolving credit. Generally, the credit limit is ongoing indefinitely -- you can repeatedly borrow against it, provided you are able to make those minimum payments.

Given my definition of revolving credit, it shouldn't take much to figure out that installment credit does have a distinct and finite number of payments. Probably the most common examples of these are car loans and home mortgages. The consumer takes out a loan to pay for a specific good or service, and pays that back over a clearly defined period of time. Once the loan is paid off, the consumer is no longer considered a client of, or has any relation to, the bank/institution that provided the loan in the first place.

In both cases, the company who issues the credit to you is taking on a certain level of risk. They're loaning you a certain amount of money now, on the promise that you will pay them back. It's a risk because you might NOT pay them back. You might come back and say, "You know what? I just lost my job; I've got no income. I don't have any money to pay you." Companies know this happens, which is why they charge interest. The interest you pay on a loan is the company's way of ensuring that they don't lose money by loaning it to people who can't pay them back. (It also encourages them to continue lending, as you're promising to pay them more than you borrowed -- compensation for their lending money in the first place.)

Typically, installment credit comes as one-off situations. You're buying a car or a house or some other big ticket item. Because of that, it's generally less risky for the credit issuer. Even if you can't pay off the loan, they can take the item(s) you bought with the loan, and re-sell them. This is what's happening when a repo man takes your car, or the bank forecloses on your house.

With revolving credit, though, it's not so easy. If you use your credit card to buy a new TV, that's one thing. But it's impossible to get back the money you spent going out to dinner and a movie. That means revolving credit is generally riskier for the lender, and they account for that with a higher interest rate. That's why your mortgage rate is considerably lower than you credit card. More risk, more interest.
Now, here's an interesting wrinkle to you, the comic book fan. Let's say you go to your Local Comic Shop on Wednesday to pick up your new books. You walk in, you're greeted by the owner, you exchange pleasantries as he hands you the comics out of your pull file, you pull a few more comics of the wall of new books, hand the stack back to the owner who rings them up, you pay the total with your credit card, and walk out of the store with a bag full of new comics. Not an unusual situation, right? Now, how many times did you personally utilize credit during that sequence?

Twice.

Obviously once, when you use your credit card to pay for the comics, but you're actually using a form of credit the moment you walk in the LCS. How? Your pull file.

Many comic shops use a pull file of some sort. You ask them to set aside whatever titles you want on an ongoing basis, and they essentially guarantee you'll have those issues reserved for you, on the chance that the issue sells out before you might otherwise have a chance to get a copy. But what you're doing is telling your LCS to order a book for you months before it's actually available. And you're promising to pay them for it later, once it arrives in the store. That LCS could easily be ordering hundreds of dollars worth of merchandise for you every month, based entirely on your verbal promise to pay for it later.

I was in my LCS (back when I was still buying pamphlet books every week) and one of the owners got off the phone and declared that she had just tried calling a former customer and couldn't get an answer. The other owner said that it'd been six months since they'd even heard from the customer, let alone seen him, and it's time they cleared out his pull file. Which he proceeded to do. He called me over and said that I might actually be interested in some of the books; he thought my tastes and this other customer's seemed fairly similar. He further said he'd give me a 30% discount on any books I bought. (My normal discount for being a regular customer was 15%.) I looked through the pile, and there were indeed some books that looked interesting. But I noted that this guy looked to be spending $20-$25 a week or so. That means the LCS had accrued around $500 worth of comics that were not only no longer a guaranteed sale, but a considerably questionable sale since most were not particularly popular, or even well-known, titles.

Think about this for a minute. The LCS essentially extended a $500 credit line to a customer, asking for no interest. The customer defaulted on his credit (by not picking up the books) and now the LCS is left with $500 worth of merchandise it has to find another outlet for.

A couple years ago, I heard Chuck Rozanski state that any new comic that is not sold before the subsequent issue comes out decreases in value to about ten cents. What he meant was that, regardless of what comic it is and what price might be put on it, there's a good chance that no one will buy it, and it will end up sitting in the LCS's back issue bins for years, if not indefinitely. Only a small percentage of the back issues that are collected by an LCS in that way are sold, effectively devaluing them collectively to about ten cents each. That's why my LCS owner offered me a 30% discount on those books. He wouldn't be making the same amount of money selling them to me as he would selling them to the originally intended customer, but he'd have that many fewer books that were next to worthless.
Now, we could argue about that particular LCS's policy regarding how long to hold someone's pull file before eliminating it. But even if they had a one-month policy, that's still a line of credit they extend to every regular customer. No interest. No credit check. You can walk into pretty much any LCS in the U.S. and tell them you're new in town and want to start a pull file -- the most you'll get asked for is an address and phone number, which likely won't be confirmed in any way.

I've been to a few shops that require a nominal deposit ($5.00) to start a pull file. Depending on the amount you purchase, this could easily be saved in a discount fairly quickly, but what this also does is alleviate some risk on the part of the LCS. Indeed, my LCS did that, so the gentleman who left suddenly had already essentially paid $5.00 interest on the books he hadn't yet ordered. It still doesn't cover the $500 worth of books he left, but it's something. Especially when it's added to the customers who don't skip town, but still paid their $5.00 up front.

Here's another wrinkle: special orders. If you flip through Previews and run across an up-market statue or bust, what do you do to order it? Same thing as your new comics -- you just ask your LCS to order one for you. Doesn't matter if you can't pay the $150 three months later when it comes in, or if you're even in town. Anything in Previews is fair game, whether the item costs $2.99 or $299. You ask for it, and your LCS will order it. No credit application required. Imagine if that guy who left six months worth of comics had also left behind six months of high-end prop replicas! That could very well put the LCS out of business!

Starting any new business involves risk. But starting a new comic shop with the way the industry is currently set up (with new comics being sold by Diamond to the LCS on a non-returnable basis) seems to involve taking on more risks than many other types of businesses. Comic shops are effectively being asked to become credit issuers on behalf of the distributor. They're being asked to take on additional risk for the distributors and publishers with no real effective compensation available for doing so. Credit companies charge interest or can repo your car. What sort of fallback options does a comic shop have?

To be continued...

Thursday, November 13, 2008

Comics Economics, Part 5

Remember yesterday I was talking about how comics don't cost the same for everybody? Today, I'm going to extrapolate that globally and show how the recession is having a more direct impact on you.

Let's start with a look at exchange rates in general.

Despite the fact that we live in a global village, each region still has its own economy. That was one of the points I was trying to make yesterday. But while all the regions in the U.S. use the same currency with the same federal backing, folks living in other regions -- like, say, Canada or the U.K. -- use a different currency backed by a different federal government. Because those different federal governments often have significantly different priorities, any number of other factors come into play when you start comparing the economies against one another.

A little over a year ago, I bought a limited edition, hardbound copy of Garen Ewing's The Rainbow Orchid. Ewing lives and works in Great Britain, so he priced the book according to his local economy. Given the limited print run, and it being hardbound, he opted to charge £25.00 for each copy. At the time, though, the British economy was faring better than the United States' and I ended up paying $53.34 for the book. (To be fair, some of that went toward a currency conversion fee, but only a few bucks.)

As of this writing, though, a £25.00 book would cost me $37.53 -- a savings of $15.81, 30% cheaper than what I paid a year ago! (Not that I'm upset about it, mind you! Ewing's book sold out VERY quickly, and I doubt any of us who have a copy would be willing to give them up!) The reason, for those of you not paying attention to the world stage, is that the recession has hit Great Britain much harder than it's hit the U.S. Their regional economy has suffered quite a bit, causing the value of the British pound to fall more than the value of the U.S. dollar. So Americans can now buy more British goods for less money.

(On a side note, I did see David O'Connell bring up exactly this point briefly a couple weeks ago in an effort to sell more of his pamphlet comics to Americans. He put a decidedly positive spin on things by saying, "Hooray for the global recession!" Probably a bit overly cheery for the situation, but he's taking advantage of the deeper problems he's seeing at home by focusing on his not-quite-as-bad-off U.S. customers.)

Now, here's where things start to get tricky. Let's say you have $100. With that $100, you can exchange it for a certain amount of Euros. Let's say 100, for the sake of simplicity. Now you can exchange those Euros back into dollars any time you want. But if you wait until the Euro becomes more valuable, relative to the dollar, you will get more than $100 back in the exchange. If the Euro suddenly explodes in value, you might get $150 dollars back for your 100 Euros. It's a lot like trading stocks, only you're dealing with actual currency from governments instead of promissory notes from corporations.

Almost every American comic you buy has two prices on the cover: one for the U.S. and one for Canada. Both countries use a currency called the dollar but, because they're backed by different governments with different policies and different priorities, the value of each is different as well. While generally pretty close in value, a Canadian dollar (abbreviated CAD) is worth something different than a U.S. dollar (abbreviated USD). Because those fluctuations happen on a daily basis, we can track how much one is worth against the other over a fairly short period of time.

Yes, that means it's time for some charts.

First, we're going to take a look at the price of a comic book in U.S. dollars over the past 90 days. The red line represents the price of a comic here in the U.S. -- $2.99. As you can see, the line is flat. Last month, it cost $2.99 USD; this month it cost $2.99 USD. The blue line represents what Canadians pay for the same comic, but I'm highlighting here in U.S. dollars. A Canadian is still going to pay $3.05 CAD for their comic, but since the Canadian and American dollars' values fluctuate against each other, the blue line rises and falls.
As you can see, back in July, Canadians were paying just a bit over $3.00 USD for their comics. At the time, the Canadian and U.S. dollars were about equal, so the $3.05 CAD they paid was almost worth the same as $3.05 USD. As you get closer to now, though, that $3.05 CAD is worth around $2.50 USD. That means that it's cheaper to buy comics in the U.S. now than it is in Canada.

Let me put it another way. If a Canadian has $20 CAD to buy comics, they can buy 6 books in Canada. But if they exchange that $20 CAD, they'll get a $24.60 USD and can buy 8 comics here in the U.S.

Here's the same data from the reverse position...
You'll notice that the chart is listed in Canadian dollars this time. So the cover price of a comic is stable at $3.05 (the red line) but the U.S. dollar gets more valuable against the Canadian dollar over the time period we're looking at. So now, if I travel to Canada, my $3.05 USD can purchase $3.76 CAD worth of goods. The charts, it shouldn't surprise you, are mirror images of one another. Like I said, same data just from a different perspective.

(By the way, the breaks in the blue lines of both charts represent days that the markets were on holiday and did no trading. Essentially, the exchange rate during those periods would be whatever the rate was just prior to the markets closing.)

This ultimately leads to a bit of a conundrum for international audiences. Books are designed and lined up months in advance of their sale, so no one knows what the exchange rate will be when the books actually hit the stands. The publishers put two prices on their goods to provide a form of stability across countries. A Canadian knows, for example, that he's going to pay $3.05 for his comic every month. However, if the two countries' currency have a prolonged period of sizeable discrepancy, that can alienate their customers. "Why should I be paying $3.05 when Americans are paying the equivalent of $2.50?"

Although the exchange rates fluctuate on a daily basis, most people don't really need to worry much about it, unless they happen to live where two or more currencies are in active use. These charts, again, represent a 90 day period, and the fluctuations are pretty minimal prior to the middle of September. The exchange rate at the beginning of August is about the same as the exchange rate at the end of August. The problem has only become noticeably significant in recent weeks/months as all of the global economies have become more volatile.

Now, depending on what the U.S. and Canadian governments do, their currencies could (and likely will) improve at different rates. Indeed, the U.S. currency has held up better than the Canadian one, as indicated on these charts. But that effect can become more subtle or more pronounced in the coming weeks and months. That means American comics will likely continue to have a $3.05 CAD price tag until things begin to stabilize (it'd be realistically impossible for anyone to keep up with the rapidly changing rates as the comics are published). But after that stabilization occurs, publishers could well look at their pricing structures in whatever new economic environment we're in, and adjust the Canadian price up or down accordingly.

To be continued...

Wednesday, November 12, 2008

Comics Economics, Part 4

You know, I was thinking about talking next about buying/selling comics internationally with fluctuating exchange rates during this global recession, but as I was rolling over some of the ideas in my head, it seemed to me that I ought to cover something a little more basic first.

Let me start by asking a simple question. Who pays more for their comics: me or Marvel editor Tom Brevoort? Brevoort does.

Let me ask another question. How much do you pay for an average comic book these days? Hint: the answer is not $2.99.

How much you pay for any given issue actually depends a lot on where you live. Why? Because of taxes.

Taxes, in a broad sense, are fees paid to the government. Those fees are then used by the government to pay for social services such as road maintenance, police, school systems, and public parks. Every society has different values, and is going to allocate those resources differently, but the upshot is that the money you pay in taxes gets aggregated with everyone else's, and is used to pay for things that benefit that society in some way. (Whether or not that benefit is greater than what was actually paid in taxes is often a matter of debate, however!) The U.S. government collects taxes from its citizens in a number of different ways, but the one method I'm focusing on here is the sales tax.

For just about everything you pay for, a percentage of what comes out of your wallet goes to the government in the form of sales tax. What you might not realize is that the sales taxes you actually pay go to different things, and none of it goes to the federal government. Most states in the U.S. have a state sales tax that is imposed on a majority of goods and services sold within that state. Most range between 4%-7%, meaning that whatever amount you pay on a product, a percentage of that is added on top of the base price. So a $2.99 comic book actually costs between $3.11 and $3.20 depending on what state you live in.

But to complicate matters, counties and some cities ALSO apply sales tax on top of the state sales tax. Those sales taxes have a relatively broad range, so that $2.99 comic costs me $3.18 here in southwest Ohio but $3.30 if I buy the exact same comic when I'm staying with my girlfriend in Chicago. (Brevoort, by the way, will pay $3.24 in New York City where I know he does his shopping. I believe he lives in New Jersey and, if he shopped for comics there, would only pay $3.20.)

The Local Comic Shop that sells you a comic is the one who's actually charged taxes from the government. They merely pass the additional costs on to you, the consumer. When you hand the LCS your $3.18 (because you're a smart shopper and went to the place where you can get your comics cheaper) that does indeed go in his till, but when he fills out his tax forms, he's going to have to make a note on that sale and then pay the government nineteen cents.

Now, you're thinking, "Wait. You're talking about a twelve cent difference -- you're talking pennies here. Pennies are effectively obsolete."

Well, at that level, you'd be right. We are talking about pennies and wouldn't have that big of an impact on most people's budgets. But what if you spent $25 a week at your LCS? (My small amount of anecdotal evidence suggests that $20-$25 seems to be about what the average comic fan spends per week.) If that LCS is here in SW Ohio, your monthly comic expenditure would be $106.25. If that LCS were in Chicago, your monthly comic expenditure would be $110.25. Let me put it this way: if I have exactly and only $110 a month for comics, I can buy two more new comics a month where I'm living right now than if I lived in Chicago.

(I'm using Chicago as an example, by the way, because it has the highest sales tax rate of all major U.S. cities -- a whopping 10.25%! My home town is 6.25% -- not the lowest in the nation, but notably lower than average.)

And the more you buy, the more noticeable the difference becomes. I understand that it's not uncommon for Chicago residents to head up to Wisconsin for larger purchases like cars. A car with a $20,000 sticker price would cost $22,050 in Chicago versus $21,100 in Wisconsin. It's hardly surprising that people would be willing to spend a few more dollars in gas and drive out of their way to save $1,000.

By and large, tax rates are not very directly affected by a recession. Interest rates are another matter, but tax rates (at least here in the U.S.) tend to stay fairly stable. But during a recessionary period, people naturally tend to spend less. Which means that they are giving the government less money in the form of sales taxes. Which means the government has less money to spend on things like road maintenance, police, school systems, and public parks. And public libraries, a topic I discussed the other day.

While sales taxes don't figure prominently into a discussion of the current recession, I think it's something that needs to be brought up before I get to the topic of international trade. The fundamental lesson that needs to be understood before we get to that topic is that a $2.99 comic does not cost you $2.99 and, in fact, can fluctuate in price fairly substantially depending on where you live.

To be continued...

Tuesday, November 11, 2008

Comics Economics, Part 3

So, what have we gotten out of the last days' worth of posts here? We've got some data that suggests that comics aren't doing too badly, and some more qualitative statements that point the other direction. Let's take a look at the comic book supply chain to see what might be going on there.

Gas prices have gone up. There's been some surprising declines in the past week or two and we're now down (on average) 88 cents from a year ago. But, historically, we're running pretty high and have been for the past year or two.

Fuel costs affect everyone. Yes, it will cost more to fill up your own tank, but that ALSO means it will cost more for every delivery truck and plane to fill up their tanks. That means the cost of moving goods is up. So, even if you don't drive at all, you're still paying for the higher gas prices every time you buy anything from corn to jeans to laptops. It costs more money to ship those items to wherever you purchase them, and that impacts the entire supply chain.

Let's look at a specific example.

Marvel has hired Mark Millar and Bryan Hitch to create The Fantastic Four. Hitch receives an electronic script from Millar and begins drawing an issue. But he doesn't make his drawing paper himself; he buys it. Some company had to chop down a tree, convert it to wood pulp, press that into paper, and ship that to wherever he bought it from. Looking at just the gas consumption alone, the paper costs more to make. So they pass those charges on to Hitch in the form of a price increase. Maybe one or two cents a sheet.

Marvel receives all the material electronically. It gets reviewed, approved, and then sent (again, electronically) over to their printer in Canada. That printer needs paper to print the books on, so they have that shipped in not unlike the way Hitch does. Except Marvel needs around 60,000 comics at 32 pages each. Even at only one mil (one one-thousandth of a cent) per page, that amounts to an additional $1,920 every month. Sure, Marvel has deeper pockets than I do, but I don't mind saying that's a fair sight more than my monthly mortgage payment!

But now that printer needs to move those 60,000 comics. They get shipped out to regional Diamond warehouses. Again, increased gas prices impact how much that will cost. And from those warehouses, the books will then be distributed (i.e. shipped by a gas-guzzling truck) to your Local Comic Shop.

So before the comic has reached the hands of any of the ultimate recipient, we've already seen cost increases at almost every stage of production and distribution, just based on gas prices alone. Now, start to factor in that many electrical plants that supply power to Millar's and Hitch's homes, the Marvel offices, the printing plant, the Diamond warehouses, your LCS, and the administrative offices of every delivery business in the process are powered by the same fossil fuels that are the cause of higher gas prices. Now factor in that each and every one of those individuals along the supply chain need to eat, and have their food shipped to them in some capacity. Now multiple that by every almost every comic that's published in the United States every month.

Since I'm trying to explain this from a practical perspective, I don't want to get into all the details, but you can at least start to see the cascading effect even small price changes can get felt throughout the industry.

"But, wait," you say. "I'm paying more for groceries every month because of these fuel increases. Don't the producers just pass their cost increases along to us consumers?"

Generally, yes. But what does Fantastic Four cost you, the consumer? $2.99 -- the same price it was back in 2004.

So, somebody along the supply chain is taking a financial hit and I suspect, at the moment, it's your LCS. They're still selling you a $2.99 comic but had to pay more in shipping charges to bring it to their storefront. That means that it's almost assured that every comic shop in America is making less money than they used to, even if their sales haven't declined at all.

Now, most of the comic shop news I follow comes from the most successful stores, in part because they tend to have more note-worthy online presence than less successful stores. So it's difficult to gauge how hard they're actually being hit. I do note, however, that the last comic shop that I used to frequent recently (last week) let the domain name for their web site lapse. They were pretty good about keeping it up to date, but I'd guess they've opted for channeling information solely through their (free) MySpace account for financial reasons.

Comic shops typically run pretty lean operations. They have to; there's just not that much profit in it. I guestimate that an LCS gets to keep around one dollar from every three dollar comic they sell; but that's before their own operating costs and doesn't take in to account any file customer discount they might give you. I expect the actual profit they earn from the sale of a three dollar comic is closer to ten cents. Some quick back-of-the-envelope math then puts the actual profits of any given comic stores total sales of Fantastic Four in a given month somewhere around two dollars. Let me state that another way: if your LCS sells every copy of Fantastic Four they order every month, they earn a net profit of two dollars. Granted, it's a better return than any number of other investments you could make these days, but it's not exactly a way to be able to retire early.

Going back to the shipping dilemma. If it costs an LCS and additional five bucks in shipping charges every week, that means they've just lost all of the profits they used to make on selling Fantastic Four and Green Lantern. They have to sell more just to keep up with where they used to be.

Don't get me wrong; I think a lot of comic shops are poorly run and really have no business remaining open. Simply having a love of superhero comics is absolutely the wrong reason to get into the business. And that's really the key: comics ARE a business and need to be run as such. One of the problems is that so much of this whole industry has been built up by passion and little in the way of business acumen that it doesn't have a terribly strong foundation. That's part of why the industry took a big hit in the 1990s after the collector bubble burst, and why I think it will take another big hit in the next year or so. Passion and tenacity will keep the industry going in some form, I think, but a few more business degrees would help more.

To be continued...

Monday, November 10, 2008

Comics Economics, Part 2

Earlier I took a look at some of the hard data points in comics to see what it might suggest about our economy's current status. Now, I'm going to focus on some more anecdotal evidence.

As I stated earlier, there doesn't seem to be a lot of discussion about the current economic climate among comic folks. But the handful of times I have seen it come up, it's drawn some pretty solid responses. Valerie's post particularly, and even moreso if you focus on the responses to her first point. Here's a fairly typical selection of comments...
"What the Amazing Spider-man/One More Day/Brand New Day taught me is that I can drop any comic title from my pull list and never have to worry about it again. Even the titles where I have compiled in a zombie-like fashion 300-400 issue runs."

"A comic needs to be pretty great for me to justify spending money since I have two daughters that always need new shoes."

"I download everything except for trades I read at my local library."

"I now pirate copies most of my comics but i would pay for digital copies legitmately if they were made available."

"We dropped all pulls on monthly floppies with the exception of Steve Rude's Nexus, which comes out infrequently enough to justify any cost on. We buy trades & GNs now when we can."

Tom's last Five for Fridays brought in some similar responses...
"I would love to have Fanta's big new Luba collection, but didn't I already buy all those stories at least twice already?"

"I've already changed my comics buying habits by... waiting for trades."

"I could see my comics-buying habits change in 2009 in that I... will continue to buy those books that I know that I want, but I will be less likely to buy an unfamiliar book that is highly recommended. Or I will buy it much later, used, from a seller on Amazon."

"The last thing having to do with comics I'd ever give up is... downloading 'em for free off the Internet."

"I could see my comics-buying habits change in 2009 in that I... live in an area with a very manga/graphic novel-friendly library system."

The themes of "waiting for the trade", "reading it at the library" and "downloading illegal copies" were repeated frequently. Interestingly, the "waiting for the trade" and "downloading illegal copies" notions have been floating just on publishers' horizons for a few years now -- well before the economic crisis was seen coming by anyone. Both have been trending upwards, and the publishers collectively, from my vantage point, haven't really addressed either issue in any substantive capacity. But it certainly seems that, if the economy doesn't improve, these issues will become much more prominent.

The "reading it at the library" issue is comparatively new in recent memory, but historically, libraries have seen increased foot traffic during recessionary periods. (Personal Fact #5: My father does a lot of freelance work with public libraries across the state, and has made repeated reference to this after having talked hundreds, if not thousands, of librarians over the past several years.) According the American Library Association's web site, "For the past several years the federal budget has been hard on domestic programs. While libraries have seen increases to the Library Services and Technology Act (LSTA), many other programs that benefit libraries have been severely cut or in some cases terminated. We follow these other programs as well, because libraries are just one part of a much bigger picture that includes education, the humanities, the arts, and many other important societal functions." The long and short of which is: they've got more people coming in the door, but fewer resources to work with.

This is backed up by my father's evidence. He's working with fewer libraries this year than he did last year. Quantifiably. He's also talked with many of his peers nationwide who can definitively say that they're doing less work for libraries in 2008 than they have in past years. On the anecdotal side again, he's asked some librarians about this, and they've repeatedly said that they have to devote more of our resources directly toward the increased number of customers, instead of the indirect services my father provides.

Now, getting back to my how-this-impacts-you idea, what do all three of these (admittedly, still only anecdotal) trends lead to? Well, the primary and most obvious victims are Local Comic Shops. If people are downloading books or going to the library instead of buying them at their LCS, then the LCS will obviously be bringing in less revenue. The same is true for trade paperbacks, too. Even if fans still continue buying TPBs at their local shop, we're still looking at a difference of selling (for example) five pamphlet books for $2.99 each versus $12.99 for a single TPB. That's a loss of $1.96 which doesn't sound like much, but can add up as the trend increases. What this also does is stagger their income streams -- instead of fans coming in every week on a regular basis, they're now looking at once every five or six weeks. Theoretically, this could even out over time, but the transition from pamphlets to TPBs could substantially disrupt an LCS's current set-up if they're not already prepared for it.

And all that means that it's going to be more difficult for comic retailers to remain in business. If the recession continues throughout 2009 and into 2010, as many economic experts (including my company's CEO) are currently predicting, I don't doubt we'll see more than a few comic shops go bankrupt as they try to weather the storm. Because their costs aren't going down. They still have to pay the rent and utilities; they might be able to cut back on staff, but most of the shops I've seen run pretty lean already. Maybe one or two employees beyond the owners, and they are usually only part-time in the first place. So their costs aren't going down, but they're revenue streams are. Same expenses, less income with which to cover them.

So if the anecdotal evidence I'm citing here is at all indicative of the comic population at large, comic shops are really going to be hurting over the next 12-18 months, as reader look to sources OTHER than their Local Comic Shop.

To be continued...

Comics Economics, Part 1

I can't imagine there are many (any?) of my readers who don't also regularly read Tom Spurgeon's blog, but on the off chance that you haven't seen it: Tom posted a piece early yesterday morning citing why he's been talking so much about the economic crisis amid the generally positive (Tom used the word "giddy") outlook many comics fans have recently adopted in the wake of the presidential election. While I don't frequent message boards as much as I used to, I do read more blogs and I'll agree with him that I haven't seen much internet chatter about the economy from comics folks. As Tom points out, it's a frightening and depressing topic, but he's quite right that we should be discussing it more openly and directly. (I have to admit that I've been pretty remiss in addressing the topic as well. I think with one exception, I've only tangentally alluded to the recession at best.)

It's an interesting dilemma. One of the reasons people enjoy comics is for the escapism, but without addressing the world we're escaping from, there's a chance we might not be able to continue our brief escapes to Dogpatch or Metropolis or Nova Venezia. So, I'm going to see if I can't join Tom to help get the ball rolling with some frank and earnest discussions about the current economy.

Let me start with a few personal facts about where I'm coming from.
  1. My B.S. is in graphic design, but I got an M.B.A. a few years ago. While my concentration was in marketing, there was still lots of economic theory there. I can navigate a balance sheet pretty well.
  2. My day job is with the financing arm of one of the world's largest corporations. We provide the financial backing behind things like your Walmart credit card. The company has maintained its AAA credit rating throughout this whole economic mess.
  3. My own finances are tight these days, due largely to additional costs brought on with my divorce from earlier this year. I've essentially got half the income to continue paying for the house and all the utilities, plus payments on a loan I had to take out to pay my ex-wife for her half of the house's equity. It's not an untenable situation, but I had to make some hard cutbacks shortly before the economy went south. On the plus side, I have zero credit card debt, my car (a fuel-efficient Civic Hybrid -- the smartest purchase I've ever made) is paid for, and I make sure everything I buy these days is paid for with cash (well, debit card, technically).
  4. My girlfriend has an express interest in personal finances. She maintains her own financial blog, and has a solid understanding (or as solid as anyone can have these days) of the financial pressures rippling through the economy.
Now, forget about all the garbage you've heard about how this whole mess got started. The practical, how-it-impacts-me perspective is what concerns us here. Because, frankly, even the financial experts don't know what the hell is going on. (The CEO of my company -- again, AAA credit rating, one of the largest corporations in the world -- spoke to a group of us, and the best he could come up with was, "Shit happens." Actual quote. The guy is a financial wizard, and the best explanation he can devise was "Shit happens.")

So what does the financial crisis mean to me?

Well, let's look at some data. Here's the estimated sales numbers (courtesy of The Comic Chronicles) from the past several months of Marvel's and DC's top-selling, event-driven titles.
Secret InvasionFinal Crisis
April250,213N/A
May182,390144,784
June175,670126,034
July175,423N/A
August165,871123,815
September164,393N/A
Although there's a downward trend for both, that's not atypical of any title, and hardly surprising given some of the critiques I've heard/read of both events. Also, since both titles' sales declines began before the current economic crisis, neither would suggest that any economic downturn.

Of course, this is something of a lagging indicator since we don't have any data yet beyond September -- when the economy as a whole tanked. And we're also looking at the most popular books, which are probably the least volatile. Looking down to the lower end of things, how about we take a look at (the arbitrarily selected) Witchblade from Image Comics and Lone Ranger from Dynamic...
WitchbladeLone Ranger
April16,51515,071
MayN/AN/A
June14,768N/A
July16,711N/A
AugustN/A12,900
September15,06412,892
Again, not great numbers, but not unexpected. The biggest drop is seen in Ranger but only after a several-month gap between issues. For all intents and purposes, these numbers all look pretty normal.

Here's another indicator that comics aren't in much trouble. Marvel's stock price...You can see that the lowest their stock price has dipped recently ($29) is still higher than all but the highest peaks of 2007 (the highest being only $30.91).

Time Warner, the folks who own DC, don't look quite so hot...But as you can see, they took their big hit between 2000 and 2002. They did dip below $10 a couple times in October, but that was from only from hovering around $15 for most of this year. A hit, certainly, but not a devastating one. Furthermore, Time Warner does own a few other things besides a comic book publisher, so their data isn't going to be 100% applicable to a comics discussion anyway.

So far, this seems to suggest evidence of the notion that comics are recession-proof. Of course, anecdotal evidence suggests exactly the opposite, as I'll look at in my next post.

To be continued...