HOW MUCH IS DC PAYING?
The thing that bothers me the most in the past week's War of Royalties is the word games that are being played. Some might be inadvertent. Others are evasions. It's driving me crazy. It's not a tough concept, is it? If you make additional moneys on the product creators have made for you, give them a cut.
It's not mandatory. I'm sure the contracts are fairly water-tight these days. You got your page rate, so quit yer complainin'. It's perfectly legal and contractual. It's not like anyone is pulling a bait-and-switch. Marvel's lack of foreign royalties isn't news. Those creators walk in with eyes wide open.
But the question is simple: In this new age of digital comics, how is creator compensation being dealt with? Is anyone being paid? Is it any of our business?
I suppose it isn't. We should be happy with the comics we get to read, and that's that. But in an internet age where everything is socially oriented and we're concerned for our favorite creators and incensed by bad-acting companies, the reality is that there's a natural curiosity that won't be stopped by closed lips. So we investigate it to a certain point. Sure, we'd love the salacious details of exact sales figures and dollar amounts, but I think we know that's asking a bit too much. It's enough to know that our favorite creators - seriously, we've "favorited" them on social networks - are being treated well.
When DC announced their digital comics program with Comixology last week (see Pipeline: Extra for my first thoughts), they made a point to mention that they're letting their creators know right now that they'll be paying them. Information was to be forthcoming within a week or so. Furthermore, they talked about how much the royalties will be worth:
Most importantly, we assure you that your participation in these digital works will be equal to or exceed the participation levels that you currently receive under our additional compensation plan for print.
That's where the confusion begins for me. As it is written, it sounds like DC is paying out the same dollar amounts to creators for digital comics as print. This is huge, considering the digital comics - barring day-and-date releases - are selling at a cheaper price point. Can DC afford to pay out the same royalties on lower-earning titles?
Some disagreed with my reading of it, suggesting that the DC language referred to percentages. If a creator got 2% of the cover price of a printed comic as a royalty, they'd get 2% of the digital comic price point. That does make more sense to me, but that's not the language in the announcement, as I read it. Maybe the key word is "levels" here. Do they mean "level" as in a tiered percentage, or "level" as in "amount of money earned?"
DC is also making a big deal of spending money made digitally to support brick-and-mortar retailers:
DC's partnership with comiXology also includes a first-of-its-kind Retailer Affiliate Program, which will collect a portion of digital revenues to be invested back to and on behalf of comic book retailers in a variety of initiatives.â€¨What shape will those programs they're promising take? This will be interesting to see develop.
Where is that money coming from? Right off the top, that $1.99 comic gives 60 cents to Apple. Assuming a 50/50 split with Comixology, that means DC gets 70 cents per comic. That's not a whole lot of money to spread around to DC Corporate, the Direct Market retailers, and the creators, also, particularly if creators are getting effectively a larger percentage of the sale. If so, DC would be treating digital like a loss leader or perhaps a break-even business to help increase their digital profile until scale issues kick in. Anything is possible, I suppose.
This is but a minor quibble of language compared to the Twitter war that followed.
WAR OF WORDS
Meanwhile, over at Marvel, some took umbrage at DC's press release touting their industry-leading royalty program. Yes, you read that right. Marvel got upset over DC beating them at their own game of hyperbolic public statements. Go figure.
You see, DC claimed to have their plan in place first. ("...we are the first to announce a participation plan for talent, thereby setting the industry standard in that regard.") Some at Marvel disagreed, pointing out that they had planned on doing so for years now, and just the other day actually sent out a letter. So, in legal terms, their paperwork was filed a week before DC's, and they win.
They're not lying, either. Right after Marvel's Digital Comics Unlimited launched in the fall of 2007, Dan Buckley gave an interview to CBR. Here's the relevant quote:
Digital comics will become a part of our incentives package in the near future. We are at present discussing the calculations and implementation of this package. It may take several months to implement. However, the first thing we need to do is make sure that the offering is profitable.
Here's the funny thing, though. Marvel's letter to exclusive talent, which went out last Monday, includes this sentence at the very end:
The incentive plan for digital comics available in subscription services - the Marvel Digital Comics Unlimited service on marvel.com - is more complicated, since consumers are granted access to a great number of issues for one flat fee. Our goal is to finalize a plan by the end of this year to pay subscription-based digital comic incentives.
The end of this year will be three years since Marvel's Digital Comics Unlimited initiative went live. I hope that when their plan is finalized, it includes the statistics for the three years prior to it in their totals.
OF ROYALTIES AND SUBSCRIPTIONS
Now, to be fair, it is a complicated manner. Royalties, generally, are. They're usually based on a comic selling more than x number of copies, and usually only a few sell that much. You're not guaranteed royalties just because your comic made it to print, or even went to a second printing. The concept is that the publishers shares in a large profit with its creators. This is done to compensate the kind of employees that sell large quantities of books so that they stay with the publisher. It also makes anthologies particularly difficult to deal with, due to the sheer number of creators. In today's day and age, it shouldn't be all that tricky. We have Excel. When Isaac Asimov was doing it in the 1960s, he probably used graph paper and an abacus. (Or, he relied on Martin Greenberg.)
Dealing with a subscription-based service like Marvel has is complicated. People pay a flat fee per month to view anything from 0 comics to a thousand comics. How, then, do you divide up the money? I have to believe the programming has been in place since Day One to tally the number of reads each comic has - at least the number of times it's been clicked open, even if not completely read. That kind of statistical data would be invaluable in determining what additional comics to add to the service next and what comics prove the biggest draws. It would also prove invaluable when it comes to doling out royalties.
Not providing royalties on foreign reprints is almost criminal, though it's not unheard of. Disney does the same, and it's what makes publishing Disney Duck comics in the States possible - there's no licensing fees paid per story, no royalties given to the original artists. That makes them cheaper to produce. Just translate and re-letter. This is, likewise, not cool. But at least there's corporate synergy!
I know this is a separate issue from digital, but it does get included in all this discussion. Foreign reprints are almost pure profit for Marvel. Some publisher in another country pays an amount of money to Marvel. Marvel probably just FTPs over some digital files, and their work is done. Editorial costs are replaced by legal costs or the licensing department's costs, but I imagine the profit margin is much higher than printing new stuff. Again, the most popular books are going to get reprinted the most and make Marvel the most. From a business point of view, there's no legal need to pass some small percentage of that off to the creators, but it sure makes a long term kind of sense, in keeping happy creators with your company.
Everything in life is a trade off, though. You don't get much without sacrificing something. For the creators at Marvel, it might be a bigger initial paycheck to offset lack of royalties, or it might just be the thrill of the creative atmosphere. Maybe it's more important to work with certain people or to establish yourself at the Big Two any way possible to sell your personal creations on the back end, off the name you've made at the Big Two.
Still, it seems weird that Marvel hasn't changed its foreign reprints policy after all these years of DC having one. You'd think it would be a competitive factor they'd add in with their exclusive deals, at the very least. Maybe in this new era of competition, that might change.
Perhaps last week's column was a mite bit more inflammatory than it needed to be. It's an oversimplification to say that retailers didn't order Humanoids titles, and so they failed. The Direct Market is a complex thing. Readers are to blame for not putting their money where their mouths are. Diamond is to blame for having a distribution system that fails books that might rely on reorders. Publishers are to blame for publishing crap and asking people to take one for the team.
I hinted to that last one in the column: If Humanoids doesn't produce material that people like, then no retailer in their right mind should order anything from them. It's one of the possible trouble spots I pointed to that Humanoids might have. Over on the Pipeline Message Board, Brian Hibbs mentions Humanoids' lack of publicity as another problem for this new line. He's right; aside from the initial announcement and one or two interviews, I haven't seen much about the books. There's not a lot of excitement being generated here.
I think my major problem comes from this concept that the retailer is the customer of the publisher, not the reader. As a comics reader, who pays the retailer who pays the distributor who pays the publisher who pays all the creators, I find it a little offensive. In a more streamlined digital model, publishers can focus on pleasing the readers more than anyone else.
That is my enthusiasm for Humanoids' experiment to work, to prove to be a model to run around the Direct Market. Because, hey, the Direct Market isn't evil. It serves its masters at Marvel and DC well. The other 20% is practically a statistical anomaly. You can't expect the market to bend to the will of the tiny minority. So let's have competition and a new market and let's play in that space, too.
That said, any retailer who refuses to stock a product strictly on the basis that it's not a standard format or size needs to go out of business immediately for the good of the industry. Such a singular lack of vision for one's business is a sure sign of eventual failure, anyway. Let's just save them a lot of money and a bankruptcy court proceedings and let them back away and go home now.
And be sure to check out the Pipeline Message Board for a message from Humanoids' Editor In Chief on last week's column. They are listening out there. . .
COMPETITION IS GOOD
Maybe what we should take out of all this is that competition is good. We see it benefit creators with exclusivity contracts. We see how coloring was pulled into the modern age once Malibu invested into it, Image popularized it, Marvel bought Malibu and the race was on. I'm fairly certain that DC stuck to as many $2.99 books as they have to give them a point of differentiation against Marvel. (Though even that wall is eroding now.)
The Direct Market doesn't have any competition when it comes to the distribution of monthly comics. If Diamond suddenly has to compete with Comixology, that can only favor readers who'll see a fight for customers. The closest thing we have to this is the mail order services, but they're still in the Direct Market, subject to the whims of Diamond. Even then, there's a scarcity of supply and a need to pre-order and many of the other pain points that the brick and mortar stores lay on a comics reader. The bookstore and library market have been very good to comics - mostly in manga - but that's really only true for collected editions or thicker books, as opposed to periodicals. The digital store front looks to be replacing the long-lost newsstands that everyone but Archie abandoned in the 90s.
As a special bonus, Marvel and DC are going after digital distribution in slightly different ways. They'll be constantly trying to one-up each other in the future now. The war is moving beyond words on Twitter and coming straight to the reader. Marvel announces a one-off Annual digitally at a higher price point than the dead wood version. DC returns the volley with a bi-weekly series with day-and-date distribution at the same price, with back issues being cheaper. With San Diego less than a month away, I can see both camps feverishly piling up the canons, ready to fire more shells back and forth. This can only help speed up the future.
Digital comics are the new newsstand, but with better distribution. You only need a computer, not a bike and a series of 7-11 stores in your local area to peddle to, hoping one of them has the latest "Spider-Man" issue you're missing. It's a brand new world out there. I can't wait to see it develop.
Next week: I'll review a comic or two, assuming more salvos aren't issued in the digital comics world in the next few days. It's time, once again, to catch up on that delightful stack of recently read comics.
I'm over on Twitter for most immediate discussions.