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Newsstand Distribution
2007-05-29 15:37:06

DAZZLER #1

Expanding today on a question asked previously and quoted yesterday, about the demise in large part of what we used to call the Newsstand Distribution system.

In order to understand how everything changed, the first thing you've got to understand is how the Newsstand Distribution system worked (and still works in the case of most publications.) Put simply, a given retail outlet--let's say a Candy Store--would take a draw of a certain amount of comics every week from their distributor. These wouldn't be divided by individual title, or even company necessarily--the order would simply be for 300 comic books. Then, the books would arrive, the retailer would put them on sale for a month, rotating them off the stands when the subsequent issue came in, or after a certain amount of time had gone by. The key element, however, is this: any copies of a given issue that went unsold were returned to the distributor for credit, and would eventually be destroyed.

What this meant is that it was a staggeringly ineffective system, wherein you might have to print two or three copies in order to sell one (and you'd have to pay to transport those copies to and from the retail outlets along the way.) The game was always to print enough copies to achieve sufficient newsstand penetration (since the more copies there were, the greater the likelihood that those copies would wind up in front of some eager purchaser) without cutting into your potential profits. Sales were most often measured not as a flat circulation number of copies sold, but in the percentage of the print run that sold through. So, for instance, a book selling 300,000 copies might be more profitable than a book selling 400,000 copies if the print run on the first was 400,000 copies (selling 3/4 of its print run) and the second was 800,000 copies (selling 1/2 of its print run). This was a huge tightrope walk all the way, with the publishers bearing the brunt of the risk.

At a certain point in the late '60s and early '70s, the system changed a little bit, as different distributors experimented with "affidavit returns"--that is, rather than sending the books back, the retailers swore that they destroyed them, and received credits for the pulped books. This led to all sorts of back-door schemes, where shady customers would declare a box of books destroyed as returns, then turn around and sell them out the back of the warehouse, either to second-tier chain stores or to individual dealers. But the upshot is that the publishers saw no profits from any copies sold in such a manner.

This is why the Direct Market was such a savior to the comic book industry. By the late '70s, with the number of retail outlets carrying comics shrinking (as they didn't generate as much profit-per-square-foot as, say, a Pac Man machine) and the returns on the comics that were getting to market dwindling as returns mounted, it looked as though the entire field could collapse. But there were certain back issue dealers--most notably Phil Seuling, who was the first to broker an arrangement with the big two companies--who wanted to sell new books to their customers as well, and who were willing to buy their copies on a non-returnable basis. This was a godsend, in that, if the Direct Market ordered 40,000 copies, you only had to print maybe 40,500 to account for damages and contingencies--and every single copy was a sure sell.

Nobody was quite sure how deep the direct market really was by the start of the '80s, which is why both Marvel and DC experimented with a few books that were produced Direct-only. And as I mentioned yesterday, the orders on DAZZLER #1 came in at around 400,000, which proved that there was gold in them thar hills (though you wouldn't reach a point where any book could move 400,000 copies on a regular basis--DAZZLER #1 was a fluke, due to its perceived rarity and desirability.) But throughout the '80s and into the '90s, more and more of the industry's business and revenue became tied up in the risk-light Direct Market--to the detriment of the Newsstand Market. A certain amount of effort had always been spent on keeping the Newsstand channels alive, but that tended to decrease over time, as the immediate returns couldn't always justify the expenditures.

The Direct Market also changed the kinds of comics that got sold, and even the types of stories that were produced--and we'll talk about that more in-depth tomorrow.

More later.

Tom B

Woo! Dazzler!
Thanks for expanding on this, Tom -- and answering my earlier DAZZLER question!

Dazzler #1 was a fabulous issue, though. True genius on Shooter for moving to the direct market. 400,000 copies is just amazing!

Thanks for sharing some insight -- and love of Marvel's dyanmic diva (I guess not so much anymore -- boo, New Excalibur! BOO!)!

Posted by Novaya Havoc on 2007-05-01 15:22:10

Huh
It almost seems like - nowadays - you're better off selling to the companies and stores than actually selling to the average person. Granted, if you stiff them hard enough they won't buy from you anymore. But as long as you can convince enough sellers to order your comics monthly from Diamond, or wherever, you're going to make pretty good sales.

Of course this doesn't really replace actual customer excitement, but you could certainly put enough hype into a new series to get it in enough places to GIVE it a chance to get it in their faces and sell it to them.

But I'm not a very good business person...I may be way off.

Posted by PseudoSherlock on 2007-05-01 16:08:09

Ahem. Sorry, that last response sounds a bit shifty. I'm just trying to get to the core of the system, even though I don't really understand it. I'm looking forward to some more info!

Posted by PseudoSherlock on 2007-05-01 16:19:51

Price of comics
Hey Tom,

If you're going to do some talking about the business of comics, could you discuss the pricing on comics? I'm not really complaining (though if you want to charge me less...), but why is the average cost of a comic $3-$3.50 when the average cost of a full-color, glossy, 200 page magazine is $6? Is the answer purely in circulation/advertising? I can't imagine the cost of content to physical production cost is significantly more than the editorial content cost for a "normal" magazine? Is it the direct market system? I mean, I can afford to buy the comics I want, but how far away are we from a $5 comic for a standard quality 32 page comic - 3 years? 5? That's probably the breaking point where I start buying only my top 25 comics rather than my top 50 or 60. Just curious what your thoughts are, and where we're headed.

Posted by mcross76 on 2007-05-01 19:43:30

Question for Tom
This is borne mostly of ignorance of the specifics, but bear with me...
Could not some of the returns from the newstand distribution be sold on to comic stores at a very cut price?

If the second sale price was basically the cost of two directions of transport plus printing costs (maybe plus a small percentage) then comic stores would be very happy to stock up back issues from that source. If the direct market sales are restricted to titles that have a brisk trade in back issues, then waste could be minimised.

It seems to me then the biggest cost would be storage of the unsold comics (perhaps a big cost) and the infrastructure to support such a system. Could these things be overcome to help revive the newstand market and (perhaps) help the comic industry as a whole?

Posted by dingogary on 2007-05-02 07:33:24

Very interesting post, Tom! Very enlightening and I look forward to the next installment.

I would like to echo mcross76's question about pricing. As consumers, we have to be a little more choosy with our purchases nowadays, as opposed to even a few years ago. Of course, when I first started hardcore into comic book reading, most Marvel mags were $1.50 or $1.75, so I'm spoiled I guess!

Posted by ljacone on 2007-05-02 07:43:26

Price of comics 2
Hi,

To follow up from the last response (mcross76) this is something I've always wondered about. I've always assumed that the cost of the 'talent' was what made comics proportionally more expensive. A penciler can draw, for the sake of argument, 22 pages but has to make a living, in a market were you can draw commercially elsewhere so you have to pay him a decent living wage for that months work. A writer, be it in comics or the bigger glossy can write more, so say you might get 4 x 22 page comics a month or say 88 pages of magazines text and thus earns less per page but month on month again a decent living wage in the market place were he can go and write elsewhere. Obviously there’s a vastly more complex set of factors, photographers, letters, etc etc in the various types of magazine but I figured that the talent behind comics is what makes them so expensive. Is this the case?

On top of that there’s advertising. Comics, being a story telling form can't carry as much advertising as here aren’t the natural 'breaks' as such. Hence when every Christmas rolls around and we get loads of adverts, we readers all get a bit upset about there being too many adverts. In say a glossy fashion magazine the adverts are actually of more value to the reader as they are more directly connected to the content of that magazine and therefore not perceived as intrusive.

That said Marvel and DC do seem to get some pretty big organisations advertising and can guarantee to provide a good number of readers of a particular type so I'd imagine are pretty good places to advertise for particular products? I mean who in the 70s could expect to see car ads in comics, but now they occur a lot as the average reader gets older and has more money. So how much of production does advertising cover? Would the adverts say cover all the administration, printing and distribution cost, with change or not?

Sorry I’m going on

Cheers

Colin

Posted by ctaylor on 2007-05-02 09:11:45

apologies
you know what I mean

Posted by notapotatoe on 2007-05-04 11:23:31

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