Broken Frontier

Welcome to part three of the discussion on a new distribution model.  In part one, I discussed the barriers preventing comics from returning to a rapidly declining newsstand market.  In the second part, I covered some of a conventional retailer’s (Wal-Mart, Meijer, Target, etc.) needs and how the comic industry can meet those needs.  Check out the Outside the Box archives if you missed either of these articles.  Think of them as free back issues!

Now it is time to continue expanding on the previous discussion by shifting the spotlight onto comic publishers.  Will they need to change to meet the needs of the retailer?  If so, how?

The Publisher

Our last installment covered come of the items a publisher would need to provide.  They would need to co-develop a Scan Based Trading (SBT) system, similar to Soundscan or Bookscan used in other industries.  They would need to co-design a new method of displaying comics.  Most importantly, they would need to provide comics at a substantial discount from cover price and offer limited returns.

Publishers would benefit in return.  They gain contractually guaranteed sales for millions of extra units.  They would have more time before soliciting product, allowing for fewer late titles.  Also, a SBT system would allow the industry to get valuable metrics and feedback on their product performance.

However, the changes shouldn’t stop there.  So what else do publishers need to do?  Well, here are a few items that I think will be important in a competitive retail environment:

1. Discounts: Not only do retailers need to buy comics at a discounted price, they must also be sold to the distributor for a further discounted price. 

2. Barcodes: Every comic sold in a retail environment needs to carry a standardized barcode.  This is essential for any SBT system to work.

3. Rating System: Every comic sold in a retail environment needs to carry a content rating.  This rating would come from an industry standard rating system.  This will help guide the buyer’s decision and also protect the retailer.

4. Limited Product Offering: Not every comic has a home in the retail environment.  Publishers should limit what is offered so that retailers aren’t overwhelmed by product selection.

5. Accountability: The business of publishing comics doesn’t always go smoothly.  When the industry makes a mistake that potentially harms a retailer’s sales or reputation, they need to take responsibility.

At first glance, I’m sure publishers are thinking, “Oh great, more work for me.”  But is it really?  Is it possible for publishers to meet these requirements?  Let’s look at each one in more depth.

Discounts

In part two, we discussed the retailers need to purchase comics at a 35-55% discount.  Distributors will need to purchase the comics at an additional discount, probably 55-75%.  This allows the distributor to make 20% for their efforts.  I actually think it is pretty close to the typical 60% discount given to Diamond Distributors currently.  Publishers will have higher print runs and guaranteed sales.  These two factors may make a slightly deeper discount feasible.

Publishers should also consider using an industry average cover price as the basis of contract sales.  It would simplify purchasing for the retailer, and simplify the contract development.  Essentially, the industry would track the average price of all comics offered.  The average price is the number that gets discounted and determines the price point of the contracts, not the actual cover price.  To the retailer, one comic equals one unit without worrying about cover price.  It’s another way to make it easier for retailers to buy comics.

Barcodes

For a SBT system, each comic must have a barcode to track the product.  Every barcode would be placed in the same location on every comic.  For example, Marvel and DC typically place their barcode on the lower left corner of the front cover.  A standard location helps the cashier locate the barcode at checkout.  No customer wants to stand by horrified as a cashier bends, twists, and flips through the comic trying to find a barcode! 

It is also necessary because many retailers are offering self-checkout lanes and a barcode is the only way to scan an item.  The barcode format currently used by Marvel and DC is one that would work well with a SBT system.  An industry standard barcode format and location is a must for comics to be carried in the retail environment.

Rating Systems

An industry standard rating system for comics is something that has been debated for several years.  There are many good arguments for and against it.  However, I think comics must have a rating system to be viable at a retail outlet.  The industry already does a decent job labeling mature or adult-only material.  Some publishers, like Marvel Comics, have taken an extra step and developed their own ratings system.  However, I don’t think the industry currently meets the need of the retailer.

For example, a business like WalMart is very concerned with their public image.  They don’t sell CD’s with explicit lyrics.  They don’t sell NC-17 movies, or movies that have a lot of gratuitous sex and nudity.  Even for the R-rated movies they do sell, the purchaser is required to be 17 and they do ID.  They do whatever is necessary to protect their image. 

For a retailer to carry comics, they need some protection mechanism.  Chain retailers aren’t comic experts and they probably never will be.  Comics are viewed as a product for children and adults, so retailers need to be sure they aren’t selling anything inappropriate.  A standardized rating system would be a good litmus test of content for retailers.

The industry must establish a standardized rating system and apply it to any comic offered to the retailer.  Publishers will be responsible for applying the correct rating.   This rating must be clearly printed in a standard location on the front cover of every comic.  A definition of the ratings should be incorporated into the new comic displays to explain their meaning to consumers.  This will help protect both consumers and retailers.

Limited Product Offering

The industry publishes a large quantity of titles but not all of them are suitable for retail outlets.  A retailer doesn’t want to be overwhelmed with choices each month either.  The best way prevent this is to limit what titles are offered.

In part two, we discussed that the first limit is based on sales.  Initially, only comics selling over 10,000 issues to the current direct market would be offered.  This instantly reduces the product offering to about 150 titles.

The next limit is based on the standardized rating system.  If a retailer must ID its customers to sell comics, they become a much less attractive product to carry.  If comics with mature or adult content were excluded, the product offering is reduced to 100-125 titles.  Titles rated mature should not be eligible to participate in the new retailer distribution model.  This means retailers could reasonably sell any comic offered them to any customer, without needing to see ID.

Finally, a publisher may choose not to offer a title to retail outlets.  The publisher may feel that a title won’t sell, or hasn’t sold, in the retail market.  A publisher is always able to exclude a title from the new system for any reason.

With these limitations in place, the retailer has a variety of titles and genres to choose from, but not so many to be overwhelming.  This is exactly where the industry needs to be to meet the retailer’s needs.

Accountability

When business is done by contract, the promised product must be delivered at the specified time.  If the supplier can’t do that, then there are penalties.  The comic industry will need to accept these penalties when they occur, and ultimately improve to the point they never occur.

Publishers need to provide their product on the scheduled release date.  They need to ensure the content of their titles receives a consistent rating from month-to-month.  They also need to make sure they are applying the correct rating to their product.  These are the areas where the retailer will hold publishers accountable.

When publishers fail to deliver in any of these areas, a retailer’s business can be harmed.  History shows that comics not available on their release date experience diminished sales.  If a comic rating changes every month and is occasionally mature, a retailer will have to skip the mature issues.  The result will be angry customers and possible lost sales on subsequent issues.  Or if a publisher can’t apply the correct rating, the retailer may end up stocking material that damages their public image.  All these scenarios are harmful to the retailer, and ultimately, the comic industry as well.

A new distribution system needs to hold publishers accountable for these types of mistakes by allowing retailers to return those products for a full refund, outside of their normal allotment.  I feel that the industry is capable of rising to the challenge.  Most books do ship on time and have consistent content.  I also think most publishers are competent enough to apply a rating to a comic if a standard existed.  And for anyone in the industry not capable of meeting these needs, publishers will need to be ready to take a hard-line stance against them to correct the situation.

Summary

So, will publishers need to change?  I think the answer is yes.  However, I don’t think they need to change that much.  Nothing I’ve discussed here is that hard to implement if publishers have the desire.  Publishers are already on target with discounts.  Developing standardized barcodes isn’t much of an obstacle either.  I think publishers already understand the types of material that might sell well at a retail outlet, and they know that flooding that outlet can do more harm than good. 

I think the two things publishers will need to work at are accepting accountability and developing an industry standard rating system.  Neither are insurmountable obstacles.  They will just require some collaboration, understanding and compromise.

While talking at length about retailers and publishers, I’ve mentioned the role of the distributor several times.  In my next installment, I’m going to elaborate on the role of the distributor in this new model.  Would the retail distributor be the direct market’s current distributor, Diamond Comic Distributors?  Whatever you answer, don’t be so sure!  See you next week.

- Will Norris