Rocket Bomber - article - 5by8 - commentary - 5by8 - #26: So what’s the target?

originally written for and posted on Comicsnob.com [Dec ’06 – May ’08]

Before we get into today’s topic, an extended aside: Why no column for 3 months?

Those who have been following the site (I think there are three of you now) know that I used to do a weekly column, titled “5by8,” and while in the beginning it was mostly filler — an easy one-off (usually an opinion piece) that I posted on Mondays in lieu of actual content — over time the column evolved past baldly-stated-opinions-disguised-as-pseudofacts into a set of mini-research papers that quickly got out of hand:

for column #25 (the last one) even restricting my “research” to easily-Google-able web pages, I cited 34 sources. It takes a couple of hours just to read that crap, let alone analyse it and type up something that might be informative and entertaining based upon it. And so: the 13-week hiatus of my “weekly” column.

What have I been doing for all this time?

I’ve been slide-rule deep in corporate financial reports, geeking out over the lovely ICv2 numbers (which post monthly), and trying to draw some parallels between graphic novels (and manga) and the rest of the book trade, in an effort to wrap my brain around comic book sales in a numbers-and-dollars-kind-of way. One offshoot of the ongoing research that you’ve already seen is the Pulse column, with its summary take on online sales each week. This has gotten a few links here and there (anyone read Japanese?) so I’m guessing it’s something that people were interested in seeing, even with the limitations of my method. The peer-to-peer rankings are subjective, though. How many volumes does each manga series actually sell — and past that, what magnitude of sales are we going to consider to be a “success”?

As I’ve noted in the past, when developing my own version of weekly sales tracking, actual numbers are hard to come by. Even the excellent numbers available from ICv2 are just estimates, and only reflect Direct Market sales. A lot of what we’d like to know about manga sales is in a no-man’s land — small enough that it isn’t really covered by major news sources, but so important to individual publishers that they horde their own numbers and will never release figures to the general public. Since none of the US manga publishers are publicly traded companies, hell, we don’t even know the total dollar amounts for manga sales unless they deign to share that information with us. We scrape together what info we have. We draw parallels (deserved or not) between the direct market and bookstores, and try to extrapolate from Graphic Novels as a whole to Manga as a category. So far, none of this works — at least not for me; if you have numbers, post ‘em. What I’ve found, though, I’m going to share with you in this column.

Hell, other than the fact that they have taken my 10 bucks a couple hundred times over, no one can say just how much money is being made in manga.

Well…
OK, so individual company profits and margins are still mysterious, but we can look at some overall sales estimates: The Wall Street Journal quotes ICv2 twice, and the numbers cited look pretty good: $640M for the comics industry as a whole; a little over half that, $330M for graphic novels and of that, $200M is the manga. If you were to second-guess the Journal and go to original sources, in this case ICv2’s own press release, then you’d see manga wasn’t given an exact number but a range ($170M to $200M, WSJ cites the high end) and a subtle emphasis on one other fact: the graphic novel format has for the first time overtaken its floppy “comic book” ancestor in sales.

A little more digging (PW reporting on the same conference) will reveal another tasty tidbit: general bookstores sell two thirds of all “book” comics, and their sales are growing at a faster rate than other market players (no one pointed a finger but I’m guessing the direct market). If I may be allowed to add my own interpretation: Comic sales are up, because graphic novel sales are way up, because your local big box bookstores are selling more graphic novels, and you know, manga is a big part of that. (You can spin it however you’d like. Show your work.) (Can’t wait for the 2007 numbers.)

Of course I’m biased. I like the manga, I know the book trade and how it works — that’s why some big corporation pays me a manager’s salary — and one exciting part of my job is getting the hobby to work for me in the workplace. If I can tie larger trends in books to graphic novels (or vice versa) then I can make a little extra bank for my store. If my store makes more money, in turn the soulless corporation may kick in a tiny sliver of extra tinsel for my paychecks. (Ah yes, my meagre paycheck. You wouldn’t believe how much of it gets ploughed back into the store in manga and anime purchases.)

Let’s start there. No, not my paychecks: the book trade.

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–Let’s put the book biz into perspective for most of you, big-picture-type-stuff:
Source: the June 2007 Harper’s Index *

Minimum number of different books sold in the U.S. last year, as tracked by Nielsen BookScan: 1,446,000.
Number of these that sold fewer than 99 copies: 1,123,000.
Number that sold more than 100,000: 483.

Yep. Out of all the titles sold in stores and online, more than three-quarters are either dead or slowly dying an ignoble death, and only .0334% can be considered runaway successes — a third of a tenth of one percent.

Out of the top 25% (the roughly 323K books that sell between 100 to 100,000 copies) it is hard to say how many earn back their advances, or in the case of manga, turn a profit for their licensees. No one is saying, but I’d be willing to bet the entire graphic novel output of DC, Marvel, Tokyopop, Viz, and every second, third, & fourth tier comic publisher we can think of all fall into that top 25% (they only have to sell 100 copies of each book, right?). That’s the good news.

…going back to ICv2’s numbers, they say there were “about 2,800 book format comics” published in 2006. (Now are those brand new books, new books and reprints, or is it just the overall total? Can’t say from the article. but..) Taking that number at face value and working backwards we find that graphic novels make up just 1% of the 2006 total. Maybe we knew this already, but here’s a little proof: as cool as they are, graphic novels are still just a small small crumb of the overall pie.

It may be enough to note that the book trade is rough. Though the odds on making a fortune from books may be marginally better than the lottery (1 in 3 million, give or take) the “tickets” are harder to come by. I’ll cap this section with a quote from John Steinbeck: “The profession of book-writing makes horse racing seem like a solid, stable business.”

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The numbers are small but growing. Building on the 2006 ICv2 statistics as posted, we can dig a little deeper and find additional sources (in this case not a publication but an industry expert) who can give the numbers some historical background. It’s only 5 years of history, but I’ll take it.

John Shableski told me and a few other trade show attendees this past August that, yes, the category is growing: from 2001 to 2006 the graphic novel market grew from $43M to $330M. In just five years, that’s a lot [a scientific term]. By a very rough reckoning, and assuming a straight line growth curve, over that time period the business doubled once every 20 months. –you can do your own math, of course. And I doubt the industry is still growing at that pace, though I’ll happily be proven wrong when the 2007 numbers come in.

If we’re talking books, Nielsen BookScan numbers are the Holy Grail of sales figures — but they know it, and they have a cadre of snooty French knights to keep us and Arthur (and anyone else who isn’t a paying customer) away from them, on threat of cow-tepult. Some other sales numbers can be found here and there, if you’re Google savvy and the supply of beer holds out. (though perhaps the beer-contingency only relates to my own search heuristics) Even the sites found on Google aren’t giving away the information, though — info is valuable, and they’re saving the good stuff for “members” or “subscribers”. We can get a part of what we need from the sales pitch, though: info-nuggets like the publishing industry being worth roughly $35B — note that’s b-as-in-billions. (Makes me want to break out in fits of throaty evil laughter, tossing around figures in the billions like that.)

The $330M sales number we’ve been using gets a whole lot smaller when matched up to $35 Billion. All graphic novels are, once again, less than one percent (.94, by my math) and even the entirety of the comics industry–$640M in sales, cited above–doesn’t crack 2% of the big book enchilada.

We’ve considered numbers, and dollar amounts, and yep: comics are small potatoes.

…but comics are posting year-to-year double digit percentage gains at a time when overall book sales are largely flat, so it’s no wonder that the larger publishers and their potential manga partners both are always looking for that next big synergistic deal (ref: 5by8 #25.) Graphic novels, manga trade paperbacks, and cartoon archive collections are an exciting part of the book market these days. Just about every publishing house has at least one junior VP looking at not just comics, but how to make a euro or two off of all kinds of comics. (If you don’t, please email me at mblind[at]comicsnob[dot]com and I can have my resume in your inbox faster than a heart attack.)

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If I can be forgiven for stretching an analogy: even small potatoes are important if all you sell are potatoes. There have been grumblings going around the various blogs-of-note, spurred by the intersection of one guy’s bad afternoon and a company’s effort to take vertical integration of their niche a big step forward. Of course when The Guy is a suit at Fantagraphics and The Company in this case is Diamond, ever-beneficent Darkseid to the Apokolips of Local Comics Shops, even two isolated, unrelated events can be taken up by the blogosphere, set up as opposite poles in a thermionic valve and we’re going to see some sparks.

The best redux comes from a pair of–once again–largely unrelated posts on PW’s the Beat & The Comics Reporter. I can wait while you go read.

Other folks can talk authoritatively about comics publishing, and where the industry is headed. (that’s not really in my writ.) There are also a lot of people who can speak to the difficulties faced by independent retailers, particularly comic shops, and how the current “lean boom” looks great but isn’t improving the prospects of your local comic retailer.

…Maybe it could have been avoided; wow, I almost wish someone had said something, like, I don’t know… seven and a half years ago about how the direct market could improve — Maybe someone like Warren Ellis could have posted suggestions to a comic book resource site…

heh.

Honestly, I’m trying not to laugh, but it’s hard. There’s nothing new about the current “controversy” or “debate” about the direct market. There is a stereotypical “comic book shop” and “comic book guy,” both stereotypes have been around for at least a decade and honestly neither has much to do with customer service and actual sales. (and I can keep using “quotes” until you all get the “point”)

Our business is books: whether you’re a drugstore with a single spinner rack, the proprietor of a mom-and-pop-sized Local Comic Shop™, a big fancy established comics utopia (available in both foreign and domestic flavours), or just the drudge assistant assistant manager slogging it out in a far flung outpost of the Big Box Bookstore chain — then guess what: You sell books for a living.

You can call them comics, or trades, or collections, or whatever — doesn’t matter. If your product is made of more than two pieces of paper and your customer base is using their eyeballs to enjoy it, then you’re selling books. (The trade in trade paperback refers to the book trade, in point of fact.) This is one barrier (one of many mental blocks) that DC and Marvel share with their direct-market outlets: they don’t think of the product as a book. They know their production costs, sure, which includes slave work-for-hire artists and lawyers’ salaries, and printing and distribution, and they may occasionally refer to their output as “books” — but they still think they are selling you Batman or Spider-man. This is why the characters are so heavily trademarked and jealously guarded. This is why there is so much flash and costume and so many stupid variant covers, and so little story.

Newsflash: we’ve already bought into the characters. They are beloved icons. You don’t need to re-sell us on concept, you have to execute on concept and then give us more books. I’m not buying superheroes, I want to buy superhero stories.

(I take that back. I’m *not* buying superheroes anymore. I’ve found this stuff called manga — maybe you’ve heard of it? — and it more than satisfies my jones for story.)

The switch from floppies to paperback books isn’t going to be easy for many comics shops. It means more space dedicated to shelving — and more actual bookshelves — and fewer tables and longboxes. I don’t know that polybagged-cardboard-backed collector’s issues will ever fully disappear, but I’d love to see them relegated to the rarefied realm of Ebay and other auctions, and dropped from daily commerce. Sell us stories, sell us Books — but don’t run a book business just to sell collectibles. If you want to open an antique and curio shop, yeah sure go ahead, but don’t hide behind a cape and then pretend you’re selling anything but dust and nostalgia. Screw resale value and encourage your customers to open things and to read them, and hell let’s recommend a few good stories for them to read while we’re at it. The future of comics is not in the secondary market; let’s put that most hideous hangover of the 80s comic boom behind us, and bury it, once and for all.

Or not. Hell, if you want to stick it out while fans of the spandex age of comics age themselves, into their 50s and 60s and on into that good night, I hope you can see that your chosen market is shrinking. I’m betting on the kids who come into my store and read manga in the aisles without buying it. –Yet. But in 20 years? That sponge might just be nostalgic and itching to buy Naturo volumes 1 through 80-whatever, and looking to pick up (even used) copies so he can read it all again — or maybe his daughter might clue him in that the library still has them on hand — while your copy of Wolverine #1 circa 1982 will be still be perfect, untouched, worth more than ever… and still unsold. And more tragic, unread.

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If you choose to leave comics behind and instead join the wide wonderful world of books, Welcome!
I wish I had punch and cake for you but instead we’re diving back into the realm of retail sales numbers. Since no one is posting sales numbers online, and since the sexy-just-comics-numbers are non-existent, well, I have to sift through whatever is left, and that would be boring (gods, they’re boring) corporate annual reports.
Comicsnob: “We sift through annual financial reports, so you don’t have to.” (SM)

Most of our usual major corporate suspects list revenue from “media”, not books — that is, books + CDs + DVDs + whatever; I don’t care anymore. I’m calling it all “sales”, and if my own purchases are any guide your average fan buys a fair amount of CDs and DVDs on top of his books & comics anyway. Besides, the number we uncovered earlier for the industry was $35billion; I think we’ve some wriggle room.

(Links to the actually SEC filings are at the end of the article, so yeah, if you want to call me on it go have some fun with the raw data. No — I dare you.)

Annual sales, vintage 2006 (media: books, CDs, & DVDs) (in millions)

• Barnes and Noble (BKS)
  overall $5261M
  online $433M
• Borders (BGP) $4113M
• Amazon (AMZN) $3582M
• Books-a-Million (BAMM)
  overall $520M
  online $26M
• Chapters
  overall $768M (809M CA$)
  online $81M (86M CA$)

So there are foot notes — Amazon has no corresponding physical site sales component: all of their business is online. Conversely, Borders (up until recently) ran a co-branded online sales site through Amazon, and so they’ve no real online sales presence. yet. (If they get that up and running, they’ll look much better to investors.) Even with those caveats, that puts the rankings at 1-2-3 B&N-Borders-Amazon, and combined they account for (even fudging for errors) a third of all books sold.

[aside: This is why the Borders/B&N buyers have clout, and why Amazon can coax publishers to participate in their “search inside” function–and why Amazon volunteer “trusted” reviewers may be one of the great untapped (though ultimately, uncontrollable) resources of comics marketing.]

The online-only portion (at least until Borders re-enters the market, they may/may not bump it up further) accounts for about an eighth of the overall market. This seems a large enough sample (at least to me) which is why I run an analysis every week, but I know any in-depth study of online sales is likely a prime example of bad data yielding bad statistics — so yeah it’s a fun exercise but we need to take the numbers with a grain and a half of salt.

Then again, I just started. Let’s see how the online rankings perform over a whole year. (Oh gods did I just commit to compiling online sales data for a whole year?)

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So far, we’ve looked at big numbers, and talked our way all around the business, and snarked a bit about small chucks of the business, but hell can we figure out how comics are actually doing?

One benchmark that Harper’s helpfully pointed us to is 100k. (the topest of the top one percent)
And I’m a big fan of ICv2 and their monthly numbers, so if we stack one against the other where do we stand? The top comic books (the floppies) actually hold their own, selling 100K through the top 10 and a couple places down besides; the collections and trade paperback originals sell significantly less (a tenth, if that) but the book format comics have a longer shelf life, and the ICv2 numbers only include the direct market (which, we discovered above, is only a third of the overall trade sales, the rest being sold by traditional book stores) so we could easily multiply the results by three, for each month, and we’re going to end up with a nice little stack there by the end of the year. Add onto that the difference in cover price ($15-20 rather than $4-6) and we see why graphic novels outsold comic books — at least for 2006 and presumably moving forward.

100,000 copies is nothing though. I mean, If you’re some Scottish chick with a handful of character stereotypes and a D&D Monster Manual (deepest apologies, Rowling-sensei) then selling 11 million copies or so is a walk in the park.

Rowling is a “lottery winner,” though. An outlier that has little to do with overall sales trends. Selling 100K copies puts anyone in the winners’ circle, and selling even a quarter of that will put a title solidly in the midlist; something like Watchmen sells 25,000 annually through the direct market (and so, likely 75K overall) and if you were a publisher and had a book that sold 1 copy for every three Watchmen you’d be promoting marketing drones to vice-presidencies and having a party too or some such.

(aside: damn, we’re still buying Watchmen at that rate?)

If we were to look at manga (via Mangablog, thanks Brigid) then the direct market is warm, but not exceptionally hot, for this part of the market. If the Wall Street Journal or any of the other sources cited above are to be believed, though, then manga is the new hotness– and I suppose, the ICv2 numbers just indicate that the direct market is missing out.

My own take on sales continues: I’ll be expanding the scope of the Pulse rankings and anchoring it to a calendar week (Sunday to Saturday) and while that does mean some additional work, I do enjoy the exercise. I’m hoping that moving past a top 10 or a top 40 reveals something — deeper trends or at least the “almost made it” titles that we all should be reading but probably missed.

A number of very good sites (alibris, half.com, abebooks, powell’s) can’t contribute much to the online sales rankings, because what makes them good (giant swap-meet like atmosphere for used books) is what makes their site numbers bad for the report. I like the mix I have, but am open to further suggestions: if you know a site that should be included you should drop me a line.

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References:

Comics Shops Debate:
Ms. MacDonald at The Beat
Mr. Spurgeon at the Comics Reporter
Old School: Warren Ellis circa 1999 at CBR

Business news — the Wall Street Journal
Manga Mania
Pow! Romance! Comics Court Girls

Not cited above, but go read it anyway:
Sequart on long term comics pricing, compared to the overall price index

Damn I love the numbers at ICv2:
Graphic Novels Outsell Comics
Comics and Graphic Novels Both Up Double Digits
ICv2’s Top 300 Comics & Top 100 GN’s Index

Publishers Weekly is also right there:
Industry Sales Flat in ‘06
Graphic Novel Market Hits $330 million
Diamond Summit Marks Industry in Transition

The Book Industry Study Group is more helpful than they intended to be: link

Annual Reports:
AMZN link
BAMM link
BGP link
BKS link
IDG link