The financial risk of making comics is a cold hard issue that affects every business. It is a gamble that is made, based on educated guesses, that an investment will return a profit worthy of the effort and expenses involved. Like with gambling, there is an excitement to the nature of this process that drives entrepreneurs to engage in these risks. It is not for the weak of heart.
I remember having a conversation with my younger brother, Tom, on this subject. He and I were both prone to start up businesses. I had participated in the launching of Comico the Comic Company and he was involved in some real estate ventures. My brother compared our activities to that of our grandfathers, both of which had been active gamblers that bet heavily on ponies, cards, craps, and sports. According to Tom, we had a genetic gambling disorder that was manifested by our affinity for business risk.
Launching Comico, however was not as risky a proposition as publishing comics had been in the past as I discussed in Making Comics is Risky Business: Part 2.
For the first four decades of the industry, publishers bore the burden of most of the risk involved, making all the investments in production and marketing in anticipation of sales made on consignment. Comico had the benefit of distribution in the Direct Market where most of the risk fell on the retailers.
During the late sixties and early seventies, thanks in part to the success of underground comics that were being sold in head shops, a market of comic book specialty shops began to spring up operating out of flea markets, garages and small stores. Phil Seuling, the organizer of the original New York Comic Art Convention ventured into distribution with his East Coast Seagate Distribution company. He had developed a plan to buy direct from comic book publishers with the promise of no returns. For the publishers this meant guaranteed sales.
Though Seuling originally held a monopoly on this market, it eventually sprang into a network of distributers spread across the country. Retailers would anticipate how many copies of each title they would need. Generally they derived these figures from knowing the interest and buying habits of their customers. They would place their order with their distributer of choice, sometimes paying in advance. The distributor would then place their order with the publishers, generally with a deal to pay thirty days after the books were delivered.
When we began publishing Comico back in 1982 we took full advantage of this system. We solicited our original comics, Primer, Az, Grendel, Skrog, and Slaughterman, with Xerox copies of art three months before the books would ship. A month before printing we would know exactly how many books we would need to print and could anticipate if we would profit from the product or not. We knew in advance what risk, if any, we were taking.
Retailers and distributors, however, were taking the chances on an unknown product based on photocopies and promised enthusiasm from young publishers. They knew that comic collectors were excited about acquiring first issues of comics that may one day be a successful feature making that first issue valuable. Collectors were speculators, gambling that their investment would one day pay big dividends.
Retailers ran the risk of not having a comic and seeing their customers run to another retailer. Distributors could not afford to not have the comics available for fear that their retailers would run to another distributor. So when our first comics, which were rudimentary at best, had been rejected by every distributor we were given a golden opportunity when Bud Plant placed the first order of a mere 100 books. We knew that if Bud Plant had books then every other distributer would have to have them. We got on the phones and before we knew it we had enough orders to justify a print run!
Comico enjoyed great success in the Direct Market. Our orders which began at modest numbers of less than 3,000 an issue escalated to over 300,000 a month in the matter of a few years.
Ironically, Comico’s downfall came when we took on the risk of the traditional Mass Market where we took a chance against the returns of the old consignment market. We bet that the recognition value of the licensed properties we produced like ROBOTECH, Starblazers, Jonny Quest, Space Ghost and Gumby would insulate us from returns.
We gambled and lost.
Next week in Making Comics is Risky Business: Part 4 we will take a closer look at the risky business of speculation and why crowd funding is the future for comics publishing.
Making Comics Because We Want to,