Marvel's Limited Print Runs Part II

Last week, I began my defense of Marvel's current policy of limiting print runs to orders on hand by pointing out that the Direct Market was based on the assumption that comics retailers would buy comics from the publishers at enhanced discounts, in exchange for taking on the risk of ordering non-returnable. This process promised far higher profit margins for comics retailers over the traditional system of ordering through magazine wholesalers, but also required them to be able to track their purchases very closely, in order to not get stuck with unsold copies.

Right from the beginning, some savvy retailers realized that they could limit their risks by ordering lightly on their initial new comics order, and then quickly placing reorders for issues that sold well. This may have worked out well for comics retailers, but gradually acted to shift more of the risk burden back on to comics publishers. To return the risk back to retailers, Marvel recently announced that they would only guarantee to ship initial orders from comics retailers, and would minimize print overruns. To no one's surprise, this policy change resulted in howls of protest from many retailers, enraged that they would once again have to shoulder the entire burden of risk in ordering Marvel comics.

In point of fact, most of the retailers who are protesting Marvel management's actions, should be instead thanking them. I say "most" because there are a few comics retailers who don't sell back issues, and those few sellers gain nothing from this policy. But for the rest of us, Marvel's actions have led to the greatest improvement in Direct Market operating margins in over a decade. Specifically, there is now a vibrant and energetic market for recent back issues, especially Marvel comics. This contrasts sharply with the past ten years, when back issue comics (especially from the previous couple of years) were almost unsaleable.

Why are back issues so important? Because, quite simply, that's where the earnings flow from in most comics shops. After 31 years of retailing comics, I think I can speak with complete conviction when I say that I think that there are very few comics shops that can generate sufficient operating earnings to prosper without the high margin sales from back issues. Certainly there are exceptions to every rule, but I have found that comics specialty stores that can survive exclusively on the operating margins of new products are very few in number. They are also the same stores that are the hardest hit when publishers (as they are frequently wont to do) fail to put enough new projects in the upcoming solicitation lists to generate sufficient sales to cover those retailer's operating costs.

For the rest of us, Marvel's no-overprinting policy has helped highlight the current ridiculously low print runs of most comics. With fewer than a dozen comics titles currently having print runs over 100,000 copies, and approximately only another 30 titles with print runs over 50,000 copies, comics genuinely have become collector's items once again. Given that most retailers are ordering to sell out within 10-14 days, plus the dramatic reduction in the newsstand market, finding a recent back issue has become a near impossibility. This has allowed retailers aware of the scarcity to reverse years of discounting recent back issues below cover price, and instead resume charging a premium for those same books. In a curious twist, the comics that were being sold as "collector's items" ten years ago are now in gross oversupply and nearly worthless, but comics being issued today have print runs 75% smaller, and are harder than heck to find.

To my way of thinking, we've finally returned to a sense of normalcy in the comics marketplace. When I began selling comics in 1969, new comics were a non-issue for comics retailers. At that time we were all collectibles dealers, and very few comics dealers even tried to obtain new issues. It was only during the early 1970's, when comics shops began to open around the country, that new comics entered the picture. Even then, however, with cover prices of 25 cents or less, the earnings that could be generated from new comics were insignificant. Comics retailers carried new comics because they were a way to generate weekly collector traffic, but the back issues were still what paid the rent.

The situation today is similar, if not exactly the same. At Mile High Comics we find that new comics, trade paperbacks, and toys combine to pay the rent, and other operating costs, at our retail stores. Any earnings we generate, however, result from the sale of back issues. The fact that there is currently an active and vibrant market for back issues has helped us achieve the best operating results this year in our entire history.

To be clear, our experience has not been unique. During in my travels to over a dozen conventions around the country during 2001, I have repeatedly heard from retailers about how this would have been a very mediocre year if not for the upsurge in recent back issue sales. It seems, in fact, that the back issue market is once again the driving force behind the entire comics industry. This is great news, as it means that a long-lost source of potential working capital for comics retailers is once again available. Given that the Direct Market community of comics retailers is still in a fragile economic state from the savage declines of the past decade, it is wonderful to know that many retailers are returning to fiscal health due to the recent resurgence of the back issue market.

Aside from the potential salvation of the entire Direct Market system, the good news for comics fans is that Marvel's no-overprinting policy has also acted to help maintain the secondary market value for private individuals. With practically all recent back issues hard to find, there is actually some possibility that the old saw about "I'm going to put my kids through college with my comics collection" may actually have a chance of being valid. That certainly turned out to be the case for collectors from the 1960's and early 1970's, and print runs were vastly higher back then. I'll bet that in 20 years that comics from today will be flat-out impossible to find.

As for the comics retailers who are still bitterly complaining about Marvel's policy, I would urge them to stop bitching, and to instead work to adapt to the changing circumstances of the comics marketplace in 2001. The pendulum has swung around, and this era belongs to those who can effectively service the back issue needs of their community. Marvel has done wonders to make everyone aware that back issue comics are indeed a worthwhile collectible. Now it is simply up to all comics retailers to alter their business practices to best generate earnings from this wonderful new source of potential working capital.

Next week I'll jump out of the frying pan, and back into the fire, as I return to the subject of Comics Guarantee Corporation.

Please send your e-mails to chuck@milehighcomics.com, and your letters to:

Mile High Comics, Inc.
Attn: Chuck Rozanski
2151 W. 56th Ave.
Denver, CO 80221



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