In last week's column, I wrote that the percentage of comics sold in comics specialty shops grew from 6% in 1979, to approximately 70% by 1987. While this was a remarkable achievement in terms of an industry switching from one form of marketing (newsstand distribution) almost entirely to another (Direct Market comics shops), it also set the stage for the greatest collapse in sales in the entire history of the medium. The reality of the situation is that the overwhelming success of comics shops during the 1980's is one of the main reasons why we're seeing such poor new comics sales today. For those of you who are long-time readers of this column, you probably are already aware that I believe that the main reason why comics shops were able to rapidly supersede newsstands during the 1980's is because Direct Market comics distributors delivered comics to specialty stores approximately one week earlier than local newsstand distributors (ID's) supplied their accounts. Given that most hardcore comics fans are quite impatient to read the next issue of their favorite titles, this one-week shipping advantage quickly caused most avid comics fans to shift their business into the rapidly growing comics specialty stores network around the world. While that sounds like a great development for the Direct Market, it actually ended up destroying the entry point of most new readers. While most comics specialty shops do a great job of servicing their existing clients, the distressing truth is that many shops inadvertently (or sometimes blatantly...) give the appearance of being private clubs, where only the already initiated need apply. Newsstands, on the other hand, are quite egalitarian, offering everyone the same access to new comics and magazines, in a usually very family friendly environment. As a result, the vast majority of the base of comics readers existing in 1980 began their purchasing of comics through a local mass market outlet of some kind, and only later shifted their loyalty to a comics specialty store. Once the exodus of readers into comics shops began, however, the economics of carrying comics were destroyed within the newsstand market. Like most consumer goods, comics have to generate a certain level of sales per square foot in order to justify the space a store allocates to them. With comics this implied required rate of return is even higher than most goods, as younger comics fans are notorious for leaving stacks of comics laying next to the spinner rack in mass market stores, thus costing the store additional labor to keep the comics area tidy. With sales of comics melting away into the much more efficient Direct Market specialty stores, only the most dedicated newsstands chose to keep comics available after 1987. Where this really becomes a problem is that it created a completely false sense of profitability for the publishers. While it was seldom that a newsstand sold more than 30% of the new comics they displayed (they were able to return unsold copies for full credit at the end of the month...), comics specialty stores were a guaranteed 100% sell-through, as they purchased on non-returnable basis. Freed from the enormous printing costs of publishing three comics for every one that sold, and also being able to eliminate the administration costs of issuing credits for returns, the publishers suddenly found themselves awash in profits. That was the good news. The bad news is that all those unsold copies sent out to the newsstands were the #1 method by which the publishers reached out for new readers. Eliminate newsstand sales, and profits boom in the short term, but new readers become quite scarce. Without new readers the only way to keep profits growing is to steadily raise cover prices. Thus begins the vicious cycle of having to raise cover prices because unit sales are declining, and then having sales decline even further because cover prices are rising. This self-reinforcing negative trend is why we presently have comics with a cover price of $3.00, that the publisher is lucky if they sell 20,000 - 30,000 copies (compared with 100,000+ copies on every book published in 1979). Simply put, were it not for the potential additional future revenue from trade paperback sales, new comics as we know them would already be long gone. Having been one of the people who started the decimation of the newsstand business, I often feel more than a bit guilty when I see how few young people are reading comics today. In many regards, those of us who built the Direct Market during the early 1980's at the specific expense of the newsstands should be held in some measure culpable for the destruction of the comics industry. That having been said, however, the flip side of the argument is that the newsstand market for comics was already disintegrating in 1979, so we helped stave off for twenty years the inevitable replacement of printed forms of entertainment by the newly created electronic forms. I can argue the issue both ways. The fact remains, however, that because of the dearth of new readers in the comics world, that we now are now in a crisis from which it is going to be very difficult to extricate ourselves. Difficult, but most certainly not impossible. To be continued... Mile High Comics, Inc.

Attn: Chuck Rozanski

2151 W. 56th Ave.

Denver, CO 80221