So I'm reading Brian Hibbs' latest "Tilting at Windmills" and, as always, he provides one of the more well-reasoned responses/thoughts from the comic retailing side of the industry. And it prompted a number of thoughts.
1) I've done some numbering crunching of my own -- based on the decidedly limited and very rough financial data I have -- and came to a similar conclusion that any Marvel/DC comic would need to sell about twice as many copies digitally as a print version to make the same amount of profit. However, my take on that is more positive because that means the latest issue of Daredevil would only need to sell around 70,000 digital copies to earn the same profits it's earning now. Hibbs is certainly right to note (in the comments over there) that we absolutely do not yet have a model to say whether or not that's likely, but that's exactly the point of this experiment they're doing with Iron Man Annual. To get at least some sense of what those numbers might look like.
Personally, I think 100,000 downloads of a comic like that is totally realistic and possibly even quite conservative over the long term. But that's mostly just a guess on my part.
2) I want to emphasize my over the long term comment. One aspect that Hibbs did not bring up is that digital comics, by the nature of their not requiring any actual shelf space or the need to be reprinted ever, have a decidedly longer shelf life. Right now, Marvel doesn't make any money if you hunt through a slew of long boxes and buy a printed copy of Marvel Two-in-One #21. They made their money on that comic back in 1976, and they don't earn anything else on its current re-sale. But a digital version of the same issue, even 20 year from now, will be that much additional profit.
(Yes, I realize that that particular issue would have a bunch of legal rights tied to that make reprinting in any form unlikely.)
The shelf life of a new comic now in a comic shop is 30 days with most of the sales happening in the first 7. A digital comic extends that, effectively, into infinity with no extra work on the part of anyone. We're not talking initially impressive sales numbers, I'm sure, but rather we're talking about a long tail model.
Again, I'm not saying that guarantees anyone could sell 100,000 digital copies of any given comic. I'm just saying that the sales model will likely be very different, and not one that can be realistically calculated in even a few months.
3) Let's assume for a moment the worst case scenario for retailers: Marvel and DC do same day releases on their digital comics at the same price or lower. Further, let's assume that every single current reader switches to digital immediately. Obviously, this would have a HUGE impact on the current retailers and they would almost all close within a month. Let's even assume that they don't pick up a single additional customer via digital channels.
What we've just created is a situation in which the current distribution model is gone entirely. No brick and mortar retailers. No Diamond. And because of that, as noted in point one, Marvel and DC would effectively halve their publishing income. For the major publishers, printed comics earn more money than digital ones if we're comparing equal volumes.
You know what that means for Marvel? That means that, in a three month period, their operating income (for our purposes here, that's effectively what they have left after paying all their employees and rent and whatever) goes from $37 million to $32 million. (Numbers here based on their earnings statement from Q3 2009.)
Think about that.
If the entire comic distribution collapsed right now, Marvel would still have monthly earnings -- not sales, mind you, earnings -- of $10 million. Ten million dollars. Every month. Without a single sale at a single comic book shop anywhere.
Now, I'm not about to suggest that Marvel is going to do that. $5 million is a fair bit more than a drop in the bucket! Nothing to sneeze at, and not money to throw away idly. But my point is that Marvel (and presumably DC, but I don't have anything close to current financials for them to check) make a good chunk of their money from things OTHER than comic books. Yes, they will absolutely take a financial hit if there was a sudden and dramatic sea change like that, but it also should be noted that comic books are NOT critical to their business. Comic books, for them, are self-funded research and development. An immediate and comprehensive switch to digital would mean that they're not as well funded and they would probably have to cut their lower-selling titles, but they will carry on without any comic shop retailers.
That situation is highly unlikely to play out. No industry collapses THAT completely THAT quickly. But the moral here is that Marvel and DC inherently have a VERY different perspective on digital comics than retailers. Whatever they're telling retailers, no matter how sincerely individuals at those companies want the direct market to continue, they do not have their livelihoods on the line and will make business decisions accordingly. Publishers are not retailers. Publishers don't need the direct market the same way retailers do. They are two VERY different animals and there is absolutely NO REASON to expect that publishers will act in retailers' best interests.
This isn't meant as a critique of Hibbs' thoughts. I don't think anything here really contradicts what he said at all. I just think that these are some aspects of this digital push that have not really been discussed, and think they should be.