During the convention, there was an incident of sorts. Somebody at a movie site wrote about the comics industry collapsing. There was a quote mis-attributed to Jim Lee and all sorts of people got upset. But *something* really was said and we need to talk about it.

This was about the DiDio/Lee co-publisher panel and the reporting on it was a little more scattered than you’d expect for a co-publisher panel. At the time, it seemed like the various media outlets were more interested in fishing for Watchmen information at the Geoff Johns panel. But we had our guy Kyle at the co-publisher panel and here are the relevant bullet points from his live blogging:

DiDio says there are no variant covers on Dark Matter titles.

Every book will be $2.99

He says both of these decisions are meant to keep comics from becoming a dying business. They want the books to be affordable, and the reason they put their top artistic talent on these titles is to meet reader needs and not dissuade anyone from purchasing efforts in this line.

Giving an impassioned plea, DiDio emphatically states that we have to stop the death of the comic book industry. He hopes DC can lead that charge.

So Dan DiDio is your quotable fellow. Nobody seems to have the exact quote, but Dan was talking about trying to prevent something bad from happening to comics.

You know who else had something to say about that? Rob Salkowitz, over at ICV2:

One of the hottest topics in industry conversations I had all weekend was the precarious state of the Direct Market. At the retailer event on Friday, DC said out loud what a lot of people have been saying in whispers: that the problem of oversupply and gimmickry is about to become a crisis for stretched-thin retailers. Big players are worried and openly talking about a crash that could cripple the primary distribution channel for periodicals. Everyone I spoke to was much more optimistic about the book trade, which is great for expanding the audience for comics, but doesn’t solve the problem of getting monthly story installments into the hands of habitual readers.

That’s all pretty consistent messaging, whether or not the word “collapse” was used. People are starting to admit there’s a problem. This is a good thing, because it’s a whole lot easier to address a problem after you admit it exists. If you want to focus on the positive, problems tend to grow until it’s too late to stop the bleeding, and I really hope that isn’t the case here, but this does have the feel of a crisis point.

What’s causing the crisis? For starters, a lot of people are mad at Marvel. Brian Hibbs did a whole column titled “What the Hell is Wrong With Marvel?” DiDio’s emphasis on not doing any variant covers and pricing things at $2.99 is as close to a DC executive is going to get to openly taunting Marvel, because just about the only thing Marvel has going for its pocketbook right now are variant covers and a $3.99 cover price… but there’s some buzz that the variants are losing steam and more buzz that the consumer is getting price sensitive.

But here’s the thing: if you strip out those variants DiDio’s dismissing with disdain and throw out the event comics from both companies, you’re left with sales charts that aren’t all that different. Throw out Batman from DC and Star Wars from Marvel and the two companies’ sales get even closer.

This feeds into what seems to be growing into a serious inventory management problem for a lot of shops. There just aren’t that many legitimate hit comics any more. Titles that sell lots of copies each issue and give the retailers a little wiggle room if they get stuck with a couple copies left over of a smaller selling title.

Ongoing (thus theoretically reliable) titles that are cash cows right now? Well, depending on your definition and the individual shop, you might have one and you might have three. Batman is mostly still selling over 100K in the DM estimates, which used to be the more commmon definition of a hit. Walking Dead is hitting in the vicinity of 80K. Star Wars is selling right around 70K in the DM estimates. In a different environment, you’re happy to see something selling 70K, but 60-70K might just be the top of the mid-list. Except both DC and Marvel are having trouble producing non-stunt comics that sell over 60K. And there are a lot of comics selling under 20K that are going to give many retailers the hard choice of making them in-store subscription-only or risk taking a loss on the title if one or two copies don’t sell. Without the top list to balance the bottom list, the retailers can effectively be gambling on those low performers and too high a percentage of the market is made up of low performing titles.

A lot of stores, particularly the smaller ones, primarily stock DC and Marvel and emphasize the periodical format. Maybe Marvel’s catching more heat, but look at the sales charts and you’ll see both companies are failing them as of June.

There’s another problem (for places that aren’t on board with it) that a lot of readers, particularly new ones, are gravitating towards the book format. Call it a graphic novel, call it a collected edition, either name will do. Reasons cited include the periodicals being too expensive, too short a read, the desire to read the complete story (and perhaps the complete story without wonder how long the next chapter is delayed). There can sometimes be a disconnect with DC and Marvel weaving “the story of the universe” in-between titles that doesn’t always help when a book collects a single title, particularly if one or two chapter are part of a cross-over Event. (This last one can be a self-inflicted wound by the publisher.)

Do the book formats of independent comics perform better relative to DC/Marvel sales because they are cross-over free or because indie-friendly stores are more like to invest inventory in the book format? I’ve never gotten a definitive answer, so I’ll just leave that one out there as part of the puzzle.

If we go back to January, the retailers were sounding the alarm bells that a lot of them were not in very good fiscal shape. Now it’s July and it’s not like the sales have gotten better. Particularly on the monthly books. I’ve heard little public comment, and when retailers get quiet, it’s a pretty good sign something’s amiss. What I’ve heard privately is that things were getting worse and now I see Dan talking in this tone and Rob’s account of worried retailers… this is serious.

For the last several years, DC and Marvel have tagged off doing relaunches. They get some big numbers and then they dwindle down more quickly than management anticipates, because it’s mostly short term thinking and repetition. Marvel’s repetition of relaunches has been particularly blatant and it has bitten them. Honestly, it’s been their turn for a reboot for a while now. If they’d rebooted with some real new direction after Secret Wars, I might not be sitting here typing this. Instead, they’re doing “Legacy” and lenticular covers and the buzz is not great.

Who’s to blame for all this? Oh, there’s plenty of blame to go around.

Look at the sales numbers. DC and Marvel have lost audience in those monthly books. Full stop. And DC better make sure Batman comes out twice a month and doesn’t slip into an erratic schedule like Dark Knight 3 or sales are going to be even worse, since that’s the only clear cut hit left. DC and Marvel are not hitting the Direct Market audience like they used to. While I’m surprised so many people have kept their jobs throughout this tank and relaunch/rinse and repeat cycle, I at least I have an idea how they’ve been doing it: telling corporate folks “I have identified the problem and am taking steps to correct it, behold the next relaunch.” Several times in a row. You’d think people would take more care with the primary distribution channel, but that’s where short term thinking takes you.

On the retailer side, a LOT of retailers did not take the opportunity to diversify their customer base and product line. What’s the hottest thing in comics right now? Young Adult and kids’ comics, particularly in book form. Women are a growing market. Books are a growing market. Some retailers have kept up with their trends, widened the demographic they serve and they’re the ones who are probably going to be all right.

But an awful lot of people are worried, especially about the smaller stores with a tighter niche.

So what’s being done about it?

At Marvel, who knows? They’re trying some digital-first titles, which aren’t going to do anything to help the DM retailers unless they can sell the collected editions. “Legacy” / “Generations,” which maybe people start getting excited when it’s on the shelf, but the buzz doesn’t seem to be here now. And perhaps that strong rumor about a real relaunch in the Spring/Summer is true… assuming there’s a strong Direct Market left by then. For now, more and fancier variant covers.

What’s DC doing? Right now it looks like they’re stepping back and thinking strategically about the market for the first time in long time. Perhaps five years, perhaps more.

For the Direct Market, they’re going to attempt to create a new line around this Metal series and emphasize the artists in that line. It’s a throwback to the ‘90s (and there are enough ex-Wizard staffers floating around DC to have the 90s on the brain) and it’s a major change in direction from the interchangeable artists that bi-weekly or 18-issues/month schedules at DC and Marvel have caused. Will it work? Way, way too early to tell. The Scott Snyder preludes to the series all this will spin out of seem to be doing decently. But will anything ongoing sell over 60K or be a legit hit? Ask me in 6 months.

Then there’s the graphic novel initiative, which you could have read about here before the con started. What are Kyle’s notes on that?

On the other side of that coin, Lee mentions the “evergreen” books that populate their lineup, like Watchmen, Sandman, etc…and with that thought in mind, they have begun to reach out to creators who have one particular story starring their characters, but don’t have the time to be part of the weekly grind.

DiDio compares this new “mature readers” line, will be in the Euro-style graphic novel size, “allowing the art to breathe”, as he says.

“We realize not one size fits all”, DiDio says, and he states that the success of Rebirth allows them to do that.

This could be a lot of things. First and foremost, it’s DC acknowledging the book trade is growing. It gives them a product for people who want the whole story in one place (or at least a more satisfying chunk of a saga than 20 pages that can be read in 5 minutes). As I said in the preview of this, when you talk about the European album, that’s closer to 3 issues worth of material. If they can make that format fly, it lets them get titles into bookstores faster than the typical 100-120 page graphic novel and helps the cashflow. That’s a potential replacement for periodicals if there’s a total meltdown in the Direct Market.

Going into this program with force and traditional name creators (Grant Morrison and Frank Miller have already been highlighted) might be a way to nudge Direct Market retailers who don’t put as much of an emphasis on books to re-evaluate the format. These are creator names who are going to get BIG orders from the library market and that’s an excellent hedge when starting this kind of an initiative.

Now past that, it depends on what the content is like. This could be an attempt to court the adult readers in a way that Vertigo was in late 80s and early 90s. It could be a way to court readers who want to opt of crossovers and Events, but still have some Superman and Batman. (Metal is most definitely going to be having crossovers.) It might be both. It might be altogether random. We don’t know yet. It will probably be more successful if it’s a legitimate market segmentation with a specific audience in mind.

Again, it’s a new program. It would seem to have a reason, hopefully multiple reasons to exist. It’s certainly worth trying, but now they have to execute. No pressure.

And speaking of market segmentation, DC is also looking to do something with kid’s comics. Exactly what really isn’t clear because they haven’t even staffed up yet. The whispers I’m hearing suggest they’re taking their cues from the very successful DC Superhero Girls program and possibly those prose novels, so they may be looking to the kids publishing industry more than the comics industry. Very interesting if true and a different strategy.

If DC is serious about market segmentation, it’s the most mature move they’ve made in over a decade. Also something that Marvel has not been great at. And that’s the smirk worthy thing about DC’s publishers, particularly Dan, talking about their new initiatives. Comics is a copycat business where one guy’s always copying what the other guy is doing. This is so close to DC looking at Marvel and deciding to do the opposite.

Now, the big question: are comics as an industry going to collapse? No. Absolutely not. What there appears to be danger of is a Direct Market contraction and a wave of stores closing. Probably not the larger stores, either. If store closings start happening en masse, and I truly hope that everyone can hold on until the market gets better, there are basically two questions:

Question one: are any of the 250-300 indie friendly stores going out of business? If not, most of the independent publishers won’t see much more than a blip on the radar. On the other hand, it doesn’t take too many closings to put a serious crimp in periodical sales and necessitate a bigger emphasis on the bookstore market for OGNs or digital serial + print collections.

Question two: Will any contraction have a trickledown effect to cause DC or Marvel to contract their lines? There are a lot of people that think fewer titles from DC and Marvel would be a big help, actually. But those are the players who’d likely bear the brunt of sales losses from most closings and we’d have to see how it would affect their bottom lines. DC appears to be taking steps to diversify their sales channel mix a little more.

If a publisher makes their money primarily in the book channel, they want to keep an eye on what’s going on with Barnes & Nobel and Amazon, but any Direct Market contraction would have minimal if any effect. Although, if the Direct Market publishers shift more resources to the book market, they’re going to have to keep a closer eye on the risks of that market and they certainly exist.

And it bears repeating: DC may have decided to start thinking strategically again, but at a certain point it will still come down to whether they produce a product their audience is happy with.

Want to learn more about how comics publishing and digital comics work? Try Todd’s book, Economics of Digital Comics or have a look at his horror detective series on Patreon.