This past July, Archaia won big honors at Comic-Con International in San Diego when its graphic novel with the Jim Henson Company, "A Tale of Sand," took home the top graphic novel prize at the 2012 Eisner Awards.
After that, the publisher went largely silent.
For the past four months, Archaia shipped barely any titles to comic shops or book stores with the exception of the latest issue of David Petersen's "Mouse Guard: The Black Axe" and a few books released digital-first on comiXology. But for the most part, planned graphic novels and hardcovers from the publisher never materialized on store shelves.
Then last month, the company announced it was returning to Diamond Book Distributors, the book store arm of the Direct Market powerhouse, after only a brief time with book market titan PGW. Since then, things have started to move from Archaia, but the overall question of what happened remains.
This week, CBR News spoke with Jack Cummins --Â a co-owner and until recently VP of Business Affairs at the company who has just been named Archaia's President and COO. In that post, he takes over for P.J. Bickett who is shifting to a role as Chairman of the company. Below, Cummins talks honestly about problems with Archaia's financing, distribution and sales over the past six months and how issues with PGW brought the publisher to a standstill, and he clarifies where the company is at with creator payments, shipping schedules, digital deals and more on the future of titles like "Mouse Guard," "Return of the Dapper Men," "Rust" and others.
CBR News: Jack, your name is going to be new to a lot of readers and people in the industry in general, I think. Let's start with a little background. What's your history with comics in general and with Archaia? And as you're coming on as President and COO, what specific responsibilities will you be taking over?
Jack Cummins: Well, I'll tell you a little bit of personal background. I grew up as a lifelong fan of the space, and as a kid, I read "Fantastic Four" and J.R.R. Tolkien. I've followed this space my whole life and been a comic collector. So for one, I understand and enjoy the product. My background is that I'm an entrepreneur and an attorney, and I've been involved in a number of businesses over the last 20 years. My skill set is taking emerging businesses, helping them get capital and helping them expand their business model.
I've actually been involved with Archaia for the past two years. I became engaged with them in March of 2010 and was hired as outside council to advise P.J. on some potential financing transactions for Archaia. Over the course of the next six months, P.J. and I talked, and I decided to become a part owner and to get more engaged in the business. What that resulted in is that for the last year and a half, I've been the Executive Vice President for Business and Legal Affairs for the company. So I've been very engaged, and to most of our creators and all of our corporate and business partners, I'm not someone new. They know that I've been fully engaged in the business and have been working with them on all our partnerships whether it's vendors such as PGW, Diamond, comiXology or Graphicly or whether it's been key partners like the Henson Company or key creators like Royden Lepp, David Petersen, Jim McCann and Janet Lee or others. To all of these people, I am a very known quantity. They're familiar with me.
What's changed in the last six weeks is that when I first got engaged with the business, P.J. asked me if I would be interested in being President and COO back then. But due to other commitments I had at the time, that wasn't feasible. Over the course of the past few years as I've been more and more involved with the business, I've gotten deeper and deeper into the operations of it. Earlier this year, P.J. approached me if it would be the right time and whether I'd still be interested in being President, and I said "Yes." Part of that was because of something P.J. saw as a need for the business. The business is more driven these days by rights deals, by commercial partnerships and by deals with film and TV studios where our content is in great demand, but also by a need for deeper financing knowledge. So my role has naturally increased.
On the other hand, P.J. also has three small kids under the age of five, and he lives in Chicago while we're centered in Los Angeles. So it's tough for him to meet the demands of the daily operations of the business and also do the requisite travel to show up wherever is necessary whenever it's necessary. So I think there was also a little bit of P.J. wanting to dial down that aspect of the business for himself and reintroduce himself to his kids in all this. For the needs of the business, my skillset dovetailed with what we needed to do as we're pivoting a bit with some aspects, but it also seemed like the right time to make this change where instead of me being in the background while P.J. is out there, P.J. is more in the background as I'm running the day-to-day. We've flip-flopped our roles in that regard a bit.
Any casual observer looking at Archaia from the outside has seen that over the past six months, there have been fewer and fewer books from you guys making it out to the market, and we had heard that during San Diego, you were close to having a shut down due to issues involving sales, financing and other financial concerns. Can you give me some background on what challenges Archaia has faced in the past year or six months and where you feel you're at now in comparison to that?
That's a great question. There's no question that the company was in a really tough spot for about six months. Last year, we changed out book market distribution from Diamond to PGW. PGW is a great company, and they're known for working in the book market worldwide. They're a large company, and we got into the relationship with both us and PGW expecting great things of it, but unfortunately for a variety of reasons, that relationship didn't work out. That contributed, in part, to us having a lot of challenges because our revenue decreased in the book market even as it was increasing in literally every other segment of the business. In the book market, we ended up having a very difficult time with it. It really ended up effecting our business, and in June, we ended up having some discussions with PGW about whether it would be good for us both to move on.
Obviously, at that point if you're looking to change distributors, you're not looking to ship a bunch of new titles out simply for the distribution to change in another month or so. So, that did delay a lot of our books. What people perceived as a slow down was, in fact, a slow down. Some of that was caused by the book market, and some of that was caused by the fact that when we decided to make a change, it was a deliberate choice to wait a few months so we could hit the ground running with Diamond, who everyone knows we decided to go back to for the bookstore market.
I know that there had been books that were already printed, solicited and ready to go when all this started, and we'd heard that a lot of them were held up in warehouses while distribution was sorted out. At this point, has that product made its way to the proper places to land on comic and book store shelves, or are you still getting material together in order to put it onto the market?
It's a little bit of both. The exact timing of the change from PGW to Diamond was September 1, and Diamond is now out there doing our solicitations in the Direct and book market, and they hit the ground running. The fortunate thing for us with Diamond is that they're already familiar with our catalog -- both our frontlog and our backlog -- because they're our Direct Market distributor. So there's a nominal learning curve there. What we did was that simultaneously when we shifted from PGW to Diamond, our shareholders put in additional capital. Right now as a result, we've got our Fall and Christmas slate rolling, which is in various stages of the distribution channel. We have some material that is imminent to arrive in the next few weeks, and we'll be having new books that go from already ready to be delivered to just now finishing printing to ones that will finish printing in the next few weeks ahead of Thanksgiving. All of those should be out in time for the Christmas and holiday shopping season, so you will be seeing, I want to say, approximately ten new books on the shelves between now and the end of the year.
On the other side of the equation, Archaia is available digitally through comiXology. We've had a lot of industry talk about how that market impacts print sales for periodicals, but as you are more focused on graphic novels, has digital had a significant impact on your books or a significant sales base period?
Yes. I can tell you unequivocally that Archaia's experience is that digital works, it helps, and it does not in any way cannibalize our print sales. Our first digital distribution was with Graphicly. That was a ground-breaking relationship, and we were exclusive with them for a year. We've since added comiXology. And I can tell you that with Graphicly, they're a partner of ours, and as they look to continue to evolve their business model, we'll continue to partner with them. We are in constant discussions with them on how to best utilize their new set of services. ComiXology has been a fantastic partner of ours. We really appreciate the attention we've gotten from David Steinberger and their company, and they've done a lights out job. We've seen our revenues in that market radically take off, and we couldn't be happier. Given the success we've had with comiXology and given the fact that we see Graphicly as a partner we want to continue to do business with, we are seeking over the next year to expand our digital offerings as much as possible. We're looking at ePub, we're looking at iVerse, and in what would be part of our deal with Diamond for distribution, we're going to be involved with them as they evolve their digital distribution options. And we're also looking to foreign markets to digital distribution as we're also looking to expand our relationship with comiXology. In other words, we're being very bullish on all things digital. We think it's a vibrant, necessary and exciting part of the business. We see it as addative if not synergistic with our business.
I also wanted to ask where Archaia was at with its creators. A publisher that focuses on graphic novels often offers up the majority payment after publication, and there had been talk of delayed payments during the past six months. Has that situation been worked out?
First of all, it all begins with the distribution and getting the books done. As I mentioned early, we've gotten that worked out, and so now we've been in communication and having face-to-face talks with our artists and our creators. Yes, I'll be candid and say that we did get behind in our payments to creators in particular over the summer because of our problems with the book market and how that affected our cash flows. But we've got everybody caught up, and we're implementing new systems for payment. I expect that on a forward-moving basis, we should have most of these issues substantially resolved.
You can always run into minor glitches or delays here or there, but in terms of having more of a widespread issue, we believe that's a thing of the past. And in terms of our creators, we're working with Royden Lepp to get the sequel to "Rust" out before the end of the year. That will be in bookstores before Black Friday. We're working with Jim McCann and Janet Lee on the sequel to "Return of the Dapper Men." We've got David Petersen's long-awaited next installment of "Mouse Guard: The Black Axe" scheduled to come out this spring. So we're very excited about that, and we think we're going to be an even better company for creators to bring their most original content to and to make the best original graphic novels in the industry. I think that's a statement I can easily stand behind because we've got the awards to prove it.
Well, one area I don't think anyone has expected to change for Archaia is the Editorial end of things. Mike Kennedy has been Publisher and Stephen Christy Editor-in-Chief for a while now, and there's been a lot of acclaimed projects coming from you guys. But what do you see as the #1 change that needs to be made on the business side of things? Were there things in the size of the line or the flow of releases that needed to change to help make things more smooth and profitable?
Actually, that's a perfect question. Yes, we are going to make some adjustments. I think in the past we've tried to be very ambitious about printing many, many original titles. One of the things we've learned is that no matter how big you are -- Marvel or DC, Image or Dark Horse, Archaia or a smaller shop -- everyone has a finite amount of resources and budgets. At Archaia, we've decided that going forward, we're going to be more selective about the number of titles we put out in a year. We want to back the titles we do put out even better than we have in the past. While our quality has always been there, I think one thing we can do better is allocate more marketing resources per title by doing less titles. That's a long term strategy I am implementing, and it's something we're working through now. In the months ahead, I think we'll be even more clear in terms of how we're doing that. We'll know for sure by the end of the year. But we think we can do better. No question about that.
You've mentioned a few returning projects or sequels. Are there any brand new projects that you think will catch people by surprise or have even gone under the radar over the past six months?
I don't know how many things have gone under the radar as my man Mel [Caylo, Archaia Marketing Manager] has done a good job of getting the word out on our projects. But I think there are some books that once people see and hold the hardcovers will be very excited by. We've got a book called "Iron" coming out which we think is going to rock. We've got "Cursed Pirate Girl" coming as well which rocks. Next year, we'll have a book coming called "The Joyners" which is in 3-D which comes from R.J. Ryan and David Marquez. That is going to be a phenomenal, ground-breaking book that people will look at and go, "Wow. That's something different." I was talking to R.J. the other night, and what he's put together...well, cool is an understatement.
We also have a few partner projects which will think will be awesome. "Dark Crystal 2" is coming down the pike. That will probably be released in December or January. We're excited about that as it extends the mythology of the "Dark Crystal" story, and we're working closely with the Jim Henson Company to look for brand extensions within that property. You can expect that "Dark Crystal 2" will not be our last "Dark Crystal" project. We are also totally excited about our partnership with Meteor on a book called "Hawken." That's a tie-in to a video game that's gotten tons of press, and that's going to be a cool, cool book. We're excited about our partnership with Meteor Entertainment. They're a great company we're doing a lot with in New York, and "Hawken" will probably not be our last project with them either. We hope to have more announcements with them in the next few weeks. And we've also got a few surprises that we hope will get your attention very soon.
But we expect that by the end of October and early November, you'll see that we've got a lot up our sleeves.
Overall, do you feel like the problems that were getting in Archaia's way over the past six months are behind you now? And do you think those problems were unique to you as a company, or are they something that has the potential to plague any comics publisher?
The best testament for when we're totally past our issues is as soon as we'll have those books totally in the stores. That's when we're excited and we'll know we've got it. We're just about done working through this tough period, and I think that a month or so from now is when we can officially put it to rest and check the box in terms of our issues.
But in terms of the industry, I absolutely don't think we're unique at all. I think that creators and publishers need to work closer together and realize that there are trends and dynamics, challenges and threats and that are mutually shared lines of interest. We can look at these as threats or opportunities. A threat is constant upheaval in the book market and uncertainty about the long term health of book stores and where they're going. The Direct Market seems like a constant. Diamond is a very reliable presence in what they do, and we're happy about that. Digital is viewed by some as a threat, but in Archaia's experience, it's more an opportunity. I think that publishers have to meet the opportunity and find ways to evolve with it. At Archaia, we feel like that is one area we've got to be much, much more aggressive with. We're going to be looking at things like enhanced eBooks in the future and other projects like that, and you'll be seeing how Archaia meets the digital challenge. I feel like that's an opportunity, and it it's not managed properly, it's also a threat. We feel like it's opportunity, because we're getting in on it in every direction, but if you fail to do that, it can be a threat.
I feel like all of these are constant challenges in publishing. They're challenges that everyone deals with in this industry just like fuel costs, market changes and the cost of paper for printing. Any fluctuation in those markets can be a direct threat and can minimize or wipe out the profitability of any single book. These are things that are sort of macro issues everyone has to find a way to deal with.
But the industry as a whole has to look at how we're trying to grow interest in the book market and with broader consumers rather than simply trying to pitch things to the Direct Market over and over again and relying only on that for our survival. I think for this business as a whole to thrive, the question is, "How can we meet a bigger consumer need?" And that's a long term question for the whole industry.