Tuesday, February 05, 2013

Energizer, Blondie & Batman

This is a "bear with me; this will circle back to comics" post. So bear with me; this will circle back to comics.

An old buddy of mine got laid off yesterday. He's been at Energizer for the past fifteen years. I don't know his official title, but he's an engineer helping in their R&D labs. I know for sure he's got one patent with his name on it, and I think several. I had a discussion with him a year or two back where he was giving me the specs on the computer that he used at work -- I think he said they had installed something on the order of 100 gigabytes of RAM to handle all the computations he had to do. (Point of reference for non-tech folks, a top of the line Mac today, two years later, only comes with 12 gigs and only has the capacity for 64.) So, you know, we're not talking about an easily replaceable cog here, nor are we talking about a low man on the totem pole, nor are we talking about somebody who doesn't know what they're doing or has a history of causing problems.

This wasn't totally unforeseen. Energizer, Ray-O-Vac and all the other commercial battery manufacturers have been having problems in recent years since fewer and fewer devices actually use replaceable batteries. Walkmans have largely been replaced by iPods; you just recharge your iPod, not shove a couple more AAs into it. So when Energizer announced they were going to cut 10% of their work force globally, it was hardly a surprise. My friend said that his location specifically was cut about over a third, and he's guessing that location will close entirely within the next couple years.

Feel free to make your own snarky comments about CEO Ward Klein's $10,000,000 bonus compensation.

If it were my company, I'd be trying to keep as many R&D people as I could to develop some better rechargeables that could be sold to someone like Apple. It'd necessitate a very different business model, and wouldn't happen overnight in all likelihood, but it strikes me as a viable strategy. I've talked about this with a few folks, including my friend here, and they've generally come back with the idea that the CEO is pretty exclusively focused on short-term profits. Strategy doesn't enter into the equation at all because they're not in business with a long-term-enough goal that would require strategy; they're focused on tactics which address the immediate concerns of the here and now. How do you show more profits in a dwindling marketplace? Slash your overhead, of which employees are typically the most expensive portion. Really, this is a pretty common refrain when critics discuss current business practices in general any more. Nothing new or surprising there, sadly.

Now, let's take that bit of cheerfulness and put it next to the current story about King Features providing expensive, crappy service to the Duluth News Tribune. The short version, if you haven't read the story, is that King is charging the Tribune more than twice the rate for "Blondie" as any other comic. Not because it's a better strip, but because the Tribune has been running it since 1937. And when the Tribune tried telling King that they would drop the strip if they couldn't get it cheaper, King just ignored them. No response of any kind. "Blondie" is getting replaced by "Pearls Before Swine" syndicated by United Feature Syndicate not because it's a better strip (even though it generally is, IMO) but because it's cheaper and United actually called the Tribune back.
Now what exactly is the problem here? Set aside whatever your personal opinions are on "Blondie" and "Pearls" -- the quality and style and tone and humor of those strips is largely irrelevant in this discussion because they were largely irrelevant in the Tribune's decision. And you know something? Ironically enough, that's exactly the problem here.

As a syndicate, it's not unreasonable to charge newspapers more for one comic strip over another. The law of supply and demand isn't perfectly applicable here since a syndicate can send out the same strip any number of newspapers, but it does make sense to charge a premium for a product that is more in demand. That's because the reason it's in demand is (generally) because it's perceived as a superior product. So a newspaper should be willing to pay more to have higher quality comics. That makes sense.

But the approach King seems to be taking here is that a newspaper should pay more not because of scarcity or quality but because there's a long legacy there and why would they bother changing now? They're assuming that the Tribune is essentially getting "Blondie" out of habit and that their bluster about canceling is just empty rhetoric. They don't care about quality, they care about how they can play on human tendencies to make a larger profit.

The exact same thought process that Marvel and DC have with regards to their audience. Readers might whine about how Batman sucks and they're going to stop buying, but the sales numbers frequently show otherwise. Why should they stop producing event comics when people keep buying them? Why should they stop creating artificial crossovers when they promote sales of lower tier books? These tactics work. They've been proven to work. Over and over again. Readers can compare the quality of storytelling now compared to 20-30 years ago, but they keep buying. Readers can bemoan how they're not producing any comics for kids or women or minorities, but they keep buying. It's not about quality, it's about profits.

Energizer is looking at its short-term profits and seeing that it can lay off employees they, by all rights, shouldn't. Because it's in their best interest FOR RIGHT NOW. King Features can ignore most of the calls they get about threatening to cancel "Blondie" because its a waster of their time FOR RIGHT NOW. That Tribune story caught people's attention because it's the aberration, not the norm. Marvel and DC aren't establishing life-long readers in favor of getting more money out of the ones they already have because its in their best interest FOR RIGHT NOW.

I bring up the Energize example in part because it's new, but it's perfectly emblematic of the business practices that so many pundits rail against. This is exactly where Occupy Wall Street came from. This is why people complain about big, faceless corporations. I know the Energizer story in a little more detail because I know someone personally and immediately affected.

But how exactly are King Features, Marvel and DC acting any differently? I'm not telling what comics you should/shouldn't read; I'm just reminding you that these places are businesses first and foremost. They're here to take your money, and you can't guarantee that the money you give them will be anything resembling a fair exchange for what you get in return.

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