John Turitzin, Marvel's general counsel and EVP of the executive office, presented at the Cowen & Company 37th Annual Technology, Media and Telecom Conference in New York last week. You can find a link to his presentation, which includes audio and his slides, here (it was at 1:05 p.m. in Holmes 2; registration is required).
I initially posted a comment from, and a link to, a report on the presentation from someone who was there, but he's since deleted his report. So I thought I'd revisit the webcast and quote it directly.
During the presentation, Turitzin gave an overview of Marvel -- a "cash machine," he called it -- and the various ways it makes money, from publishing and licensing to the more recently added Marvel Studios division. Like I said on Friday, one of the more interesting portions came when a comic fan in the audience asked about recent cost increases on some of Marvel's more popular titles from $2.99 to $3.99.
"We’re always testing our pricing on our comic books to see to the extent to which it is inelastic, and we can increase our profit in that business," Turitzin said. He added that different books have different price points, noting the most popular titles saw a price increase, while the lower-selling monthlies, as well as the comics aimed at kids, did not.
"We’re just looking to maximize our profits for that business while not alienating our own fan base by making them feel that they’re gouged, which I hope you don’t feel," he told the fan.
When asked if Marvel would consider lowering the cover price if revenue started to drop, Turitzin said, "Our goal is to maximize our revenue, and if we’re not maximizing revenue then our pricing is wrong, and we have to take a look at that ... so you can hope we see that attrition, and our prices come down."
In regards to the price increase from $2.99 to $3.99, here's a little history: Earlier this year, Marvel raised the prices on four of its best-selling titles. Dark Avengers actually debuted at the $3.99 price point with its first issue in January, while Hulk followed in February. New Avengers and Thor hit it in March. Jumping ahead to August, if you look through Marvel's solicitations, there are nine monthly comic titles priced at $3.99 -- Ultimate Comics Avengers, Ultimate Comics Spider-Man, Uncanny X-Men, Dark Avengers, New Avengers, Hulk, X-Men Forever, The Punisher: Frank Castle Max and Wolverine Weapon X. Most, but not all, of their mini-series are also priced at $3.99.
Dan Buckley, Marvel's president of publishing, addressed the increase at in February at New York Comic Con. When a fan asked why certain books were seeing a price increase, Buckley responded:
Those are hard decisions. We've been struggling with pricing for about three to four years. Yes, things have been costing more across the last year -- for us also. When you're looking at the line, you try to see how to keep a bottom line and still give people what they enjoy. There's only four titles that got moved. We have to look at the stories we put into it and make sure they've got the value you guys want. Some things have to carry a lot of the titles that are out there. One of the thingsthat happens a lot in this industry is usually people drive the price up on books that don't sell as well, and that often leads to the deaths of those titles very quickly. It's a balance of economics, of value, of what you guys demand. That's how we get there. It's not a straight forward formula, I'm not going to act like it is. We don't want the whole line at $3.99 because then we'd be down to about forty titles. I wish I could give you a more straight answer but it's really [complicated].
Mr. Buckley said the company was facing rising costs in everything from travel and entertainment expenses to paper, ink and distribution.
Mr. Buckley felt that, because of comic books’ origin in the world of pulp and disposable entertainment, the effort that goes into their creation is sometimes underestimated.
“Comics are a legit form of entertainment, and there are highly respected and well-paid individuals creating them,” he said. “People have an affinity for nickel and dime comics from the 1940s, but we’re competing with video games, film and television.” He added, “We need to keep the talent on the books to make them work.”
Turitzin was talking to institutional investors, so his message was focused on how profitable Marvel is and how the company tries to maximize revenue. That same message, though, doesn't stick as well with Marvel's customers -- particularly after we've been told prices increases were because of rising costs for talent and other expenses.
"Just had a listen and it seems strange that he says the price rise is to maximise profit, no mention of rising costs as we’ve been told by other parts of Marvel," said commenter Union Jim in response to my initial post on Friday. "I hope this gets picked up more by the comic press."
"They openly think that comic fans are so addicted there is absolutely no possibility of enough people dropping the comics at $4 to lose them money on it," said Somebody in response to that same post. "As a result, they’re pushing it and pushing it to see where the limit is, and will only reconsider if sales drop enough that they’re making less money per issue.
"So, get ready for $5 comics, ’cause here they come …"