CrossGen Comics Part II

Last week, I presented you with a bold editorial column on how CrossGen Comics was going to save the comics world. Since the release of that article, I have received scores of comments, for the most part very positive and encouraging, about CrossGen's vision of the electronic future for comics. Even my most enthusiastic respondents have been very concerned, however, with what happens to the comics world as we know it today. Despite the obvious huge declines in overall unit sales that the comics market has experienced during the past ten years, there is still a very dedicated readership of hardcore comics fans for whom printed comics are a central part of their lives. The thought that comics, as we know them, might completely disappear is very dismaying to a great many people.

In reflecting upon the comments I received from you readers, I came to realize that I had presented one scenario incorrectly, and created some serious misconceptions as a result. In my closing paragraph I stated that "Printed comics are dead, dead, dead. The corpse is still twitching, but the economics of paper and printing costs are clearly spelling trouble, probably very soon..." That actually is quite true. Where I made a serious mistake, however, is in not making it clear that I do not see the future as being the exclusive realm of only digital forms of comics. In fact, I believe the exact opposite to be true. While declining print runs of new comics are currently spelling inevitable doom for the comics industry, the advent of electronic comics may completely mitigate that problem.

The primary benefit for printed comics from the evolution and creation of electronic forms is the spreading of production costs over a wider base. There's an old saying in the publishing world that the first copy to come off the presses on any mass produced publication is your most expensive copy. That's because all the costs of creating that product have to be absorbed before the first issue is printed. Once you have the presses running, however, and the plates are in place, the additional copies that you print past that first one only cost you (essentially...) paper and ink. The economics of printing are such that you need to run as many copies as you possibly can, as any additional sales past the first copy help defray those original creation costs. The larger your print run, the lower you can drop your cover price. Sadly, however, the inverse is also true. As the average print run of the Top 20 comics has steadily declined (from 200,000 + in the 1980's to less than 50,000 today), we've seen steady rises in cover prices, to the point where comics are now no longer a mass consumer product, but rather the sole province of the addicted and the economic elite. As I stated in my last column, this is a prescription for eventual oblivion.

What if, however, the costs of the original production of all comics could be spread out over two different delivery forms? Wouldn't that greatly reduce the initial input costs for both the electronic formats and the printed versions? That's a point I didn't make clear in my last column, and it is central to my theory that CrossGen's electronic efforts may save not only comics in electronic formats, but also in printed form. I absolutely do not see electronic comics competing with paper versions to any great degree. The two products will end up being so remarkably dissimilar that I believe they will appeal to entirely different audiences. If that works out to be the case, then we potentially have two revenue streams coming in to cover the costs of initial production, compared to today's print-only revenue stream. That can only work to the benefit of paper comics.

Also working to the benefit of paper comics will be the electronic version's ability to reach a far wider audience. While I do not see electronic comics dragging many consumers away from the printed form, I do see the potential for the reverse to occur. Once new comics fans are generated by the widespread marketing of digital comics, isn't it reasonable to assume that many might become fans of the "classic" form of comics? The closest analogy I can easily draw is recorded music versus live music. When recorded music first came on the scene it was viewed as a threat by many popular live musical performers. Especially when it was played for free on the radio. In fact, I recall reading somewhere that one very popular musician of the 1920's refused to allow his recorded music to be played on the radio, out of fear that no one would come to his concerts, or purchase his records. In reality, it's now been clearly shown that widespread radio airplay encourages sales not only of recorded music, but also tickets to live concerts. Music executives are so aware of this critical marketing element that more than a few of them have gone to jail for bribing DJ's to play their music...

A similar situation arose with movies and video cassettes. I remember that the motion picture industry fought home video recording and rentals with a passion during the 1980's, until the US Supreme Court finally upheld that recording for personal use was not a violation of copyright. While the recording studios are still searching for a foolproof method to encrypt their works so as to avoid copying, the fact remains that tape and DVD sales are now a critical revenue stream that helps cost-justify the release of the majority of current Hollywood productions. Were it not for those ancillary sales, I doubt if even 20% of the great films we've seen over the past 10 years could even have been made. The fact that costs can now be spread over two revenue streams, however, means that the expensive special effects that movie fans have now come to expect, are affordable. The irony of this trend is that movie theater ticket sales have exploded at the same time that record numbers of digital copies of films are being made. With the advent of enhanced DVD's, in particular, we've seen a trend toward people first enjoying the show at a theater, and then purchasing the DVD to get the extra scenes and background information. The moviemakers are getting rich utilizing multiple formats to generate revenue from the same basic product.

I seen this trend toward multiple formats occurring in other forms of entertainment for many years, and have been encouraging the comics companies to get into gear and explore new production methods to reach the potential huge audience for digital comics. With Marvel management totally preoccupied with fumbling it's way back from the brink of financial oblivion, however, and DC management so technophobic that they were afraid to even contemplate how to evolve comics into a new art form, there has been absolutely no movement forward. This is why I viewed the technology demonstration I saw two weeks ago presented by the CrossGen computer wizards as so astounding. They have not only contemplated the electronic future of comics, but also created a concrete manifestation of digital comics. My instant enthusiasm for the potential benefit of these new digital comics clouded my writing about them, however, so I didn't make clear in my last column that I see great potential benefits from this new evolution in the state of comics not only for the electronic forms, but also for the printed versions.

Another question that I was asked by many of the fans who wrote to me about my last column was how digital formats would impact comics stores. Clearly, no one wants to see the 2,500 Direct Market comics shops go away, especially me. That having been said, I believe that the future is now wide open for rapid evolution. Initially, I see Direct Market comics shops as potentially an effective venue in which to sell the various forms of digital comics (CD's, DVD's, Memory Cards, etc.). Whether that continues depends on the ability of the publishers to place their products with mass market retailers, and to sell directly to consumers via electronic downloads. Clearly, this will be a time of great flux. As long as electronic comics help stabilize, and eventually grow, the market for paper comics, however, it really doesn't matter. This is one of those win-win situations where a technological revolution helps practically everyone. To what extent, however, can only been seen by how consumers react, and that is a great unknown. I certainly am not afraid of this revolutionary change, however, and I don't think that anyone else including fans, retailers, or publishers should think that this is going to do anything bu enhance the potential for traditional printed comics to thrive. How can that possibly be bad?

My final point is to stress that I believe that the success of digital comics will probably go hand-in-hand with the acceptance of "Notepad" type consumer electronics. As many of you have pointed out to me in your letters, being able to hold comics in your hand is critical to your enjoyment of the medium. The Acer Notepad I used to view CrossGen's digital comics pretty well accomplished that goal. It was still a bit big and clunky (about the size of an Etch-a-Sketch), but I have absolutely no doubt that this is the hot new consumer product of the very near future. I come by this belief because I can easily see the application for this product in schools. When a student's entire textbook array can fit in the palm of one hand via tiny memory cards, and can be viewed easily on a machine that will fit in their pockets, notepads will become indispensable. At about $900 today, they're just too expensive for most consumers, but watch for these new devices to rapidly drop in price. When they do, reading comics almost anywhere will become a breeze.

I hope that this second column has helped dispel some of the concerns that arose as a result of the lack of clarity in my writing of my first editorial. I never meant to imply that electronic comics would mean the end of printed comics. In fact, quite the opposite was true. If I gave such an impression, I hope I have made clear in this column that thanks to the wizards at CrossGen Comics I now strongly believe that paper comics, and comics collecting, have a wonderful opportunity to be here for many years to come.

Chuck Rozanski, President - Mile High Comics, Inc.

PS: CrossGen has crafted their own response to some of the concerns expressed in letters we've both received during the past week about the digital comics revolution. To gain some additional insights into how Crossgen is viewing this wonderful new digital comics world, I encourage you to read this very informative letter from Jim Stikeleather, CrossGen's Chief Technology Officer.

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