Thursday, December 17, 2009

Bookstores and Returns

In the last week or so, there have been interviews with publishers that among other things, discussed the weight (and debt) of book returns from the mass market bookstore chains. Both publishers explained the heavy losses from the chain stores when unsold product was returned. In both of these cases, the publishers provided titles that have “mass appeal”, which means to the market outside the traditional comic readers. Another way to put it, they weren’t standard superhero titles. In neither case do the publishers indicate what percentage were returned as opposed to what sold through but judging from the affect the returns had on the profitability of the company, you can expect the returns were quite heavy.

I know exactly where they’re coming from. I’ve dealt with book chains in the past and the returns can kill you. Now, ideally, a company should set aside all the sales revenue until the returns come in but that’s simply unrealistic in most accounting systems. I remember we did one book that was packaged in a display dump of 12 copies. Sales were very good but then we got the returns…about 95% came back. About half of those display boxes were never even opened. On the ones that came back returned, most were so damaged that they were essentially unsellable. So, not only were we out the profit but also the printing and the shipping of the books that were returned.

I decided with Transfuzion, I wasn’t going to subject myself to that. I sell books to a number of major book stores (Borders, Barnes and Noble, etc..) but my terms are at a high discount and non-returnable. Essentially, what I give Diamond Comics. I didn’t plan to venture after the book stores because many won’t carry titles without returns and I can understand that. I managed to sell to a couple of stores that were located on different campuses because, and this was surprising, Diamond refused to take their orders. Diamond gave me their reasoning but it still doesn’t make much sense. Granted, selling 50 copies to one store every semester (so, 3X a year for 150 books) may not seem much to Diamond, but I’ll take it.

There are a number of publishers that utilize Diamond as their “book” distributor as well as their comic distributor. It’s a good dynamic as Diamond already has the vendor accounts set up and they are familiar with the product. The publishers essentially have to do very little extra, so on both sides, it makes a great deal of sense. However, this inputs another factor on returns as Diamond has to cover their costs on handling. So on top of getting damaged product back (if you get it back at all), you’re out not just the printing costs and perhaps shipping costs but you have to tack on the service fee that Diamond (like all distributors do) adds, and you’re hit with some sizable bills. Another factor is that seldom can you anticipate when the returns will come through so it can throw estimated budgets and schedules way out of whack.

Yet that is part of the business model in publishing and no one should be surprised by it and the return factor should be built in as far as expectations and the ledger sheet goes. It’s not an excuse unless something unusual happens.

What surprised me when reading about these two publishers, especially the smaller one, was the vehement attacks that many fans, and some creators, laid against the publisher. I totally get what is being said---a lack of foresight on the publisher should not enable them to delay payments to creators, but it just seemed like the comments were so one-sided.

Almost all publishers have cash flow problems and much of this is based on forecasting revenues. Publishers have to engage in advance expenditures. It’s basic business,--- money has to go in to grow a company and expand into new directions and the plan is for the anticipated revenues to not only cover the costs but add profits to fuel the next growth. Obviously, paying the creators is essential in the budget, but you know what, sometimes shit happens. Often times, a publisher doesn’t get paid from his distributor and the revenue stream stops. Now, this is something that doesn’t occur with Diamond as far as I know. With all the ups and downs with the comics market it seems as if they are the only constant keeping the fragile state going.

When I had Caliber, there were a number of distributors that went under owing us money. By the time Transfuzion started, there was only one real distributor but I did sell direct to comic stores. For the most part, I don’t do that anymore because of the uncollectible amounts that are still outstanding. In most small publishing companies, the profit range is so small that if one vendor doesn’t pay, well, that can affect what the publisher can pay out.

Too many fans don’t think of all the aspects and costs that are involved in publishing: rent, communication functions (phone, internet, etc), staff, updated computer programs, ISBN numbers and barcodes., utilities, etc. The problem is that many of these are fixed costs and have no flexibility. Creator invoices, royalty statements, and promotion are not fixed so that is usually what is going to be affected by a diminishing income. It’s not that publishers feel those areas are less important but paying a creator late can lead to bad blood, perhaps some negative press, but the company will survive. Not paying rent or utilities…well, the company can just go out of business.

None of this is to find a way to justify a late paying company but again, when I read those comments, it was insinuated that the publisher was just keeping the “extra money” and stiffing the creators. I don’t know, perhaps that’s true. But from my experience, I only know of a few rare examples where a company purposely screwed over creators. Chalk it up to over estimated sales forecasting or not taking into account all the costs, or even just incompetence, but most of the time, the lack of payment is not intended.

And of course, it’s not always a one way street. Most of us are aware of what happened with Tundra where Kevin Eastman opened his wallet to pay creators in advance so they wouldn’t have to worry about anything…just do the work. Some millions of dollars later, it’s obvious that didn’t work. I paid in advanced four times and three times I got burned. And one time was from a friend who I would’ve never expected to bail out on me. I work with Desperado often and I know of a few cases where they paid in advance, and also got burned. There, I think they hit 100% burn rate.

It’s not just some creators not doing the work, but their lateness can factor in. If a book is selling a certain amount of copies but then the creator runs late, the book gets cancelled and usually the next solicitation suffers a massive reduction in sales. Well, if the creators are getting paid a certain rate based on the initial sales but then the sales get cut in half (one book I know lost 70% of the sales on the resolicitation), then it becomes a losing book yet the creator who caused the resolicitation and therefore lesser sales, still expects the same rate. You’d be surprised how often this happens.

The point of all this is that nothing is as cut and dried as some people would like to think. Yes, there are “bad” publishers and there are “bad” creators as well. I know of a few enormously talented artists who don’t get work because they’re chronically late. It doesn’t matter how good you are if you don’t produce. I had an offer for a book to be published featuring a certain artist and I passed as I just didn’t want to get wrapped up in that. I’ve been down that road too many times.

I don’t know of any other fields like comics where the “business” is so open to conversation among people who often know little of what they’re talking about, yet they get to voice their opinions publicly. Granted, sometimes these public discussions can bring awareness to some areas, but far too often, they used as a means for a fan to side with a creator they like---not to solidify any factual information but just to “buddy” up---as if the “common enemy” will provide a viable means of friendship.

It sounds like a cliché about there being two sides to every story but the reason some things become a cliché is because they happen so frequently. I know when I read most of the comic “news”, I always wonder what isn’t being told as much as what is.


Anonymous said...

I'll add to that the high costs of licensing a title too. To me, it's a foolish business to be in. There are so many obstacles in place and so much money already spent and tied up prior to publishing. It's a wonder why small publishers still do it. 90% of the shelf space is dedicated in a comic store to Marvel, DC and a smattering of Darkhorse books. I just don't see a store taking any risk when ordering small press titles and I can see them only relying on customer's pull lists to order anything beyond what their cycle sheets tell them.

If small publishers aren't finding the majority of their audience online these days, I just don't really see how they are making it. I can only see the new model being online / build audience / compile trades and then hope to sell to stores based on real sales data. That would be the ONLY way I'd personally approach the direct market again. Where you're not solely in need of it any longer.

Good luck to any publisher that is able to profit though.

Anonymous said...

yeah...but comics are so fun and cheap to make.

my over the top hollywood special effects budget is a $ 6.00 bottle of ink and a $20.00 stack of 11*17 bristol board.

My actors cost nothing. I can travel to anywhere in the world and don't have to worry about shooting expenses or weather

I look at the documentary for the making of 'Apocolypse Now' and I know I'm getting off easy.

There is always going to be tattoo artists, but what happens when tattoo's go out of style?

There is no Sandman movie. you got to go to the page to get it.

Gary Reed, you have made such excellent product. The reason no one buys comics anymore is that they are boring.

I got a big stack of justice league and avengers reborn at the library...I was really gonna try and read them. I was jonesing for some cape. I wanted my fix. but, I opened them up and could read them... no one can read comics anymore... they are a mess.
I took them all back. I was so glad I hadn't wasted my money. Who can read Wonder Woman anymore?
Who wants too?

In ten years nothing Bendis has written will have value outside Hollywood...And Hollywood has no value now. Who would sit through a graphic novel of dark inuendo and shitting Chinese printing?

jestinemagness said...
This comment has been removed by a blog administrator.
Michael Edwards said...

I believe if a publisher is in a rough spot that they couldn't predict, they deserve the benefit of the doubt. Creators are just as liable as publishers are.

As a creator myself, I produce my scripts quite quickly as I realize timeliness aids in the profitability of a comic, and to the growth of a publisher.

But, not to detract from the point. I would hope that things get better for small press publishers. You would think with the advent of the internet, that marketing and such would make it easier.

Gary Reed said...

I don't know if it will be necessarily easier...but it will be different.

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