Why Digital Publishing Won't Save Comics (Yet)

I was pondering the state of digital comics the other day. As much as I love traditional dead tree publishing, there are kids today growing up with iPads in their hands for whom paper holds no such charm, and it is there, if anywhere, that comics might recapture something resembling the mass market it (foolishly, IMO) ceded when it withdrew from the high street and supermarket to the specialist comic shop.


Before we get to the nitty gritty, I think it's important to define some basics, especially since we're going to be talking about a business model.


Firstly: how much is a comic worth?


Here are some numbers -- these are for illustration purposes only and are chosen as much for easy maths as for accuracy, but aren't a million miles from what you might expect from a low-to-mid-level indie publisher in the US:


Script: $50 per page
Pencils: $80 per page
Inks: $60 per page
Colours: $50 per page
Letters: $10 per page


That's based on each contributor making about $10 an hour for working on the book. That probably stiffs the writer a bit, but I imagine they'll be used to that by now.


That makes $250 to produce a page, meaning that a 24-page comic contains $6000 of work. If the book makes less than that for its contributors, then the creators would have made more money flipping burgers at McDonalds. Now, as an individual, you might be fine with that. Your book might be a labour of love, you might be happy just to have it in front of an audience. As an individual, that's no problem. As a model for a business, never mind an industry, I think we need to be paying our creators more than McDonalds.


Second: we need to define a couple of terms, most importantly, what I mean by publisher in this post. By publisher, I mean the person, group or organization with the legal right to publish a work. In a self-published work, this will mean one or more of the creators; in other circumstances it may refer to a publishing company in the more traditional sense.


I'm going to talk about how money from digital sales flows to the publisher. If that's a different legal entity to the creators, then there's a different mechanism by which money passes to the creators, but that's a discussion for a different day.


So… you want to get your comics onto a digital platform. Phones are, let's be honest, a rubbish medium for reading comics, so we're mainly talking about tablets. Right now, we're talking about iPads.


Unless you have access to a friendly iOS developer to do write you a dedicated app to serve up your content, you're going to need to go through one of the comic apps that already exists. I believe the deals on offer are broadly similar, so I don't want anyone to think I'm singling out a specific app; let's refer instead to GenericComicApp. You know the sort of thing: the publisher submits their comic to GenericComicApp and people can buy the comic through their phone or iPad using the App.


As for the specifics, let's take Mark Millar's word on this since, if there's anyone in the industry today who knows how to make money from comics, it's probably Millar, who wrote:

1. Apple take 30% right off the bat.
2. In the case of Wanted, Comixology then splits 50/50 with the publisher.
3. Then the publisher pays the agent and creative team out of the remaining cash depending on their deal.

(Note: I remember Mark making a post about this on the Millarworld forums, but I can't find that post for a direct cite, so I have lifted this text from Andy Yen's My Day Will Come blog.)


Mark refers to Comixology, but I don't believe their deal differs in any significant way from GenericComicApp.


So… crunching a few numbers:


Let's say that, as a publisher, you're really invested in the future of digital comics; you've got no print overhead and no returns so why not price the product aggressively and try to pick up casual sales. Let's say that you price your book at $0.99.


Apple take 30% right off the bat, leaving $0.70 (rounded up for easier maths).


Publisher and GenericComicApp split that 50/50 and get $0.35 each.


Remember that there is $6000 worth of work in this book, so simply ensuring that the creators make their money, before we've even thought about profit for the publisher, you need to have sold 17,143 digital copies.


That's a lot. You're not going to shift those sort of numbers without some promotional activity, which is going to cost money in itself and drive up the number of copies needed to turn a profit.


Of course, you can drive the number of copies needed down by raising the price, but I'll say right now that I believe $2.99 is too much for a 22 or 24 page digital comic unless you're adding value over and above the normal comic page (I always like Infurious' rather ingenious approach). $3.99 for a single issue is, in my opinion, impossible to justify.


So, let's stick with that $0.99 number for now.


Let's back up for a minute, though, because I think there's something distinctly iffy about that illustration. Let's think about traditional distribution for a moment -- I worked in the newspaper and magazine industry for years, so I know a bit about this…


Traditionally, the publisher approaches a wholesaler/distributor (pretty much always Diamond for US comics but there is more plurality in the wider publishing industry). In return for a discount on the cover price, the wholesaler agrees to distribute the publication to as many retail outlets as the agreement covers. The wholesaler will usually want a discount on the cover price ranging between 45% and 65%, call it 50% for easy maths.


I sell my publication to the wholesaler for 50% of the cover price, let's say $0.49 on my hypothetical $0.99 cover price. The wholesaler sells the publication to the retailers for 75% of the cover price, say $0.75 netting themselves 26 cents profit on each copy. The retailer sells the publication at cover price, $0.99 which is $0.24 over what they paid for it.


Now, let's go back and think about that digital model again.


In that model, Apple is the retailer: they provide the merchant services, the servers, the bandwidth and, most importantly, access to their shopfront which is arguably the most trusted channel in the world for online purchasing of content.


GenericComicApp is the distributor. So why are they loading the cost of the retail mark-up onto the publisher?


What should be happening is this: publisher approaches GenericComicApp and sells their comic to them for 50% of the cover price, netting the publisher $0.49 per sale. GenericComicApp then distributes to the retail channel at $0.99. The retailer, Apple in this case, takes 30% of the cover price, $0.30, leaving $0.20 per issue for GenericComicApp.


Using this model, you need to sell 12,245 copies, nearly 5,000 less to cover the work done by the contributors.


Obviously, you can see why GenericComicApp would rather run their business in the way it currently works, but this is essentially screwing the publisher by loading both the wholesale and retail mark-ups on the publisher when, in fact, each 'link' in the chain from production to sale should only be concerned with the sell-on price to the next link in the chain.


Even Diamond, of whom I am no fan, follow this model and they, at least, have to warehouse stock and move physical product around. GenericComicApp doesn't even have those overheads: a couple of iOS developers retained on a freelance basis to keep the app maintained is hardly going to break the bank.


Let me phrase that as simply as I can: at least some online comic distributors have fashioned a business model that is even less favourable to publishers than the one Diamond uses, despite having lower overheads.


If even Mark Millar can't make money from digital comics, then we're doing it wrong.