Issue #4

Pay No Attention to the Contract Behind the Curtain

By now, most people reading this column will be familiar with the light and fluffy New York Times article that introduced the world to Zudacomics.com, DC's entry into webcomics. Before we get too far into the topic, I'd like to remind you that you read about DC's web intentions in this column a month ago, and I did call a fourth quarter roll-out.

"Now Todd," you're going to say, "you didn't expect a summer convention announcement." True, but they also aren't announcing the component of the secret project that DC Online Editor Kwanza Johnson is working on, either. They also have scant details available on how this project will really work from a business perspective.

We know that DC's Zuda imprint, each month, will be selecting 10 submitted strips and readers will vote on which strip gets a one year contract. We know that DC/Zuda will reserve the right to outright hire (or perhaps "sign" would be a better term) as many as six more strips, should editorial be blown away by the quality. Past this, we don't know all that much. We also don't have a very good idea what the financial details of this are, as the contract has not been posted. When I contacted DC about the contract, I was told it would not be available before my deadline for this column. Well, it's easier to produce a puff piece for the newspapers if there aren't any details available, but it also means I'm going to have to do some extrapolation based on published interviews for the obvious biggest story of the week.

Here we go:

Who's backing this venture?

Answer: "We'll have the full resources of Warner Bros and DC behind this effort."

This means you should believe them when they say they're looking to build out the Intellectual Properties, in terms of TV, films and video games. It also means you want to pay particular attention to how many of the property's rights you're signing away.

How frequently will the winning strips run?

Answer: "and finally begins publishing 52-episode series by the winner(s) of a competition between those initial submissions in November."

We don't really know the answer, but it sounds like the initial suggested format is weekly, if a one-year contract is 52 episodes. This could very well change and certainly will certainly factor into whether this will let someone quit their day job.

Answer: "Ownership of the IP will be shared, with "a deal that's consistent with the other types of deals we offer for new talent for new properties,"

Answer: "Again, not getting into the specifics, there will be a flat fee for the submissions that are selected for the ten finalists, with no claim on ownership. We're not buying their IP [Intellectual Property] at that point - that's just a recognition for the work they've done and the time they've spent. Once one of the creators is selected, it's a much more complicated relationship with contracts and so on, where there are participations and all of that."

This would seem to indicate you're not actually signing away any rights until you're declared a winner. However we're left with scant direction on what rights the creator retains at this time. Again, I'm going to go out on a limb and guess we're talking about the creator retaining something in the 10-25% range. If you're particularly concerned about retaining control of your creations, you need to understand that if you don't retain over 50% of the IP rights, you do not have control over your creation. You can be removed from it. You may not have control over plot and character direction. You may not have input on licensing and merchandising. That's just how it is, and you need to read the contract language about this. This brings up a few other topics.

Reversion rights are more of a prose author thing, traditionally, but could be relevant here in a new and somewhat experimental venture. With prose books, there's generally a clause that the author regains publishing rights to a work if the book is left out of print for a certain amount of time, if a publisher goes out of business, or sometimes after a set number of years. Over in the book world, there was a recent dust-up on this topic, pertaining to Print-On-Demand's role in keeping books in print.

In comics, this comes up mainly when there's shared ownership and the publisher goes out of business. The participants in Crossgen's Code Red program had some issues with this and there's been at least one incident of a TokyoPop creator expressing regret over the lack of a reversion clause when his series was discontinued and he had minority ownership in a property. It would be, perhaps, comforting to have a reversion clause if the feature is eventually discontinued as a DC/Zuda feature.

This also brings to mind the boons of being an American Idol loser. If you don't win, you can cut your own deal and it's sometimes possible to get a better contract than the winner. If you can garner a following at Zuda, but don't get signed, you may be able to migrate that traffic to a site of your own choosing. Nobody's saying this isn't a great opportunity for exposure.

Now, while I'm issuing warnings on who owns what, I'd be remiss in not saying that some ownership is better than no ownership. This should keep you in profit participation for licensing and merchandising, so if your feature turns into "Men in Black," you might get comfortable. That's all in the eventual contract details and brings up our next question:

How are the creators getting paid?

Answer: "Without getting too much into the specifics of how Zudacomics creators will be paid versus how other webcomics creators are paid - if it's just a percentage of their clicks and thereby a measure of their popularity that determines their payment and comparing business models…obviously, the paying is an important piece of it, not the only piece of it." (

Answer: "Again, not getting into the specifics, there will be a flat fee for the submissions that are selected for the ten finalists, with no claim on ownership. We're not buying their IP [Intellectual Property] at that point - that's just a recognition for the work they've done and the time they've spent. Once one of the creators is selected, it's a much more complicated relationship with contracts and so on, where there are participations and all of that. There will be the equivalent of a page rate - people will be paid for the work they're doing."

Answer: "It's pretty different. For one thing, it's a different sized page. A 4:3 aspect ratio screen is just a different physical dimension than a comic page, so there aren't too many one to one relationships that you can draw between a traditional DC Universe comic and a Zuda webcomic, but like I said, it's pretty compatible with the other deals that we get into with creators. We're not really interested in ripping anybody off - that's just bad business."

Answer: "The short answer is that we're not basing page rates or anything like that off of page views. It's not that whimsical. The contract itself will spell out the different participations for the different levels, so it's not going to be page views online that will determine if the creator made five dollars this week or ten dollars, it's a long-term game."

Answer: "Well, it's hard to compare this to our typical rates. It's a bit different. Without getting too into the technical specifics, a traditional super hero comic book isn't shaped like a monitor, so instead of a page based rate it's more of a screen based thing. But, in general, our deals are compatible with other DC deals."

That's a bit to go through isn't it? And it doesn't address profit participation, licensing or marketing, either.

It sounds like the rate will be proportional to a print page rate. That would be more than fair. I'm eyeballing that 4:3 aspect ratio and thinking it would be considered either 1/3 or 1/4 of a print page, or that you would stack 3 or 4 of them to make up a page in a print comic, roughly speaking.

Let's say the cost of producing a page of comic art is $500 for a book without a lot of name creators (at DC). That's writing, pencils, inks, letters and colors. Might be a little high, might be a little low, but it's a ballpark figure. If the pay is proportional, it would logically follow your individual webcomic would net you a flat fee in the $125 -$167 range.

Now, not accounting for extreme popularity could cause some bad feelings here, this being a flat fee. Do not let anyone give you the newspaper strip analogy when talking about this. Newspaper strips, by and large, are straight participation. The creators get a take based on the number of papers carrying the strip and the amount the paper pays is determined by how high their circulation is. So on the one hand, if you have a breakout hit, you would be denied the royalties a break-out hit in print reaps. On the other hand lets do a little math with ad income. Let's take three different ad rates, a $0.50 CPM (stinky banner ad run of network rate, possibly higher than what you'd see with Google AdWords on comics keywords), a $1 CPM (better run of network banner rate) and a $5 CPM (solid targeted banner advertising). How many pageviews would you need to earn out those projected fees on your own?

Cards on the table, you aren't going to be getting that $5 CPM unless you're established and meet some target demographic requirements beyond "general entertainment." ("Penny Arcade" has a hardcore video game buyer demographic pull, for instance.) You're more likely, especially starting out, to be in the $0.50 CPM - $1 CPM categories and getting 125,000 people looking at a single comic page is not so easily done. The caveat here, is if DC can pull down a high CPM, they're could make some decent money past your fee. I can see where this could lead to some griping.

However, if that's how it's going down, it isn't necessarily a bad deal, especially if you're an unknown creator and wouldn't even be sniffing at that kind of traffic or ad revenue.

If those rate projections are correct, a 52 installment contract gives a winner between $6500 and $8684. Better keep that day job.

That also does not take into account any merchandising and licensing, a major revenue stream for many online comics. This will probably be governed by the percentage of ownership retained, so you'd be covered - just watch the percentage involved. And at this point, it should be considered that 52 webcomics would make for a very skinny trade paperback. 52 pages in a Garfield-style book. 18 pages of a standard monthly comic book, if stacked 3 to a page. Are we looking at an upcoming anthology? Too early to say, but worth thinking about.

The next question is, if these webcomic rates are really going to be proportional to standard print rates, are we going to be seeing established print creators take a swing at this? Presumably, there may already be some people in this category working on Kwanza's mystery site.

If you follow journalism news, you will have heard of "citizen journalism." Simplified, this is when normal citizens, or non-journalists, start reporting local news that the traditional media doesn't cover. Many times, this is the purveyance of bloggers or sites like http://www.chitowndailynews.org/. This can blur the line between professionals and amateurs. Many established journalists are quite flustered by citizen journalism as it can cut down on their financial options and prestige. Others accept it as a current trend. Either way, citizen journalists sometimes don't get paid and sometime reap in those Google Ad funds (though more often this is with technology and political topics). When the citizen journalists start to make money, the professional journalists cry foul even harder.

"Citizen Cartoonists" have been around for quite a while. It's the basic premise of www.webcomicsnation.com. Generally speaking, its popularity that turns a "Citizen Cartoonist" into a professional webcartoonist (or print, as that line blurs as popularity increases). If this talent search is really paying proportional rates, that would be extremely egalitarian. It also serves to further blur the line between professional and amateur. This may not be a bad thing, depending on your perspective, but it's going to be really interesting to see if the pro set gets frustrated by attention paid to this talent search and Intellectual Property development lab. Or if the rates are much lower and it really is a cheap place to develop and test market new ideas.

Everyone involved says the contract details will be spelled out plainly and they want to be very upfront about things. I take some issue with hyping this without really telling what you're hyping, but that's how the initial publicity is being done. A normal PR playbook would suggest the actual contract will be unveiled closer to the October launch date to drum up more interest in submissions as they open up.

Transparency is a beautiful thing. Read the contract details. If you do not like them, do not enter. Do not enter under the premise you're going to be the runner-up and walk away with your I.P. You might accidentally win and be locked in.

That said, if you're looking for exposure, this should be a good opportunity, other business considerations still hiding behind the curtain.

Todd Allen is the author of "The Economics of Webcomics, 2nd Edition." He consults on media and technology issues and is an adjunct professor with the Arts, Entertainment and Media Management Department at Columbia College Chicago. For more information, see http://www.BusinessOfContent.com. Todd even did a comic. Sort of.

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