Posted in: Comics | Tagged: Comics, digital, entertainment

The Coming Digital Inflection Point

Published Sun, 22 Jun 2014 22:00:04 -0500

Project: The Economics of Digital Comics
Creators Involved: Todd AllenCampaign End Date: 7/18/14. Publishing Date: September 2014. Ye Olde Elevatore Pitche: Exploring how digital comics make money and where they fit in the overall comics market.

Todd Allen writes,

I don't really get to engage in idle speculation very often over at Publisher's Weekly, but this is Bleeding Cool, so just pretend you're at the hotel bar at a convention and eavesdropping on me.

You probably haven't been able to avoid the news about Amazon acquiring Comixology. That deal should be closing any minute now and that's when the chaos is going to hit. If anybody tells you they 100% know what's going to happen next, they're lying to you. The two biggest stories in comics right now are what's going to happen with digital and the chaos surrounding DC's move to Burbank (and the staffing needs that are seemingly changing by the week).

Amazon's taking a lot of heat for their hardball negotiations with the book publisher/distributor Hachette. There's a reason it's so hardball. As a result of the price fixing scandal with the "Big 6" publishers and Apple (that's a long story with many sides – Google it at your leisure), those six publishers are required to negotiate their new contracts with Amazon one at a time. So the publishers can't gang up on Amazon, as the courts opined that they tried to do last time. Hachette has the bad luck to go first, so Amazon is doing everything they can to get the most favorable terms to set the tone for the next 5 contracts.

If you hadn't heard, Amazon is more than capable of demonstrating how much of the market flows through them, should they be trying to make a point. It's not tea and crumpets with your vicar.

So right now, a lot of comics publishers are looking at Amazon flexing its muscles at Hachette and doing a little math in their head. Amazon + Comixology… what's that going to be? 80% of the digital comics market? 90% of the digital comics market? Why yes, all jokes aside, they're looking at someone dominating digital distribution the same way Diamond dominates print distribution and there's a knot in more than one stomach.

The consumer, on the other hand, might be happy that Amazon's getting Comixology. Better reading format for Amazon. The potential to get all your comics from one place. You aren't worried about Amazon going out of business and your digital comics going away. For that matter, Amazon likes to discount things, so maybe your comic shop isn't going to be the only place you can get 10% off your new comics. (Which, of course, is NOT something the Direct Market retailers want to happen. Right now the print reader and digital reader are considered mostly distinct markets and they don't want to find out if discounts are likely to change that.)

And here we see that publisher interests, retailer interests and reader interests may not be the same.

Looking at the big picture, the problem that comes to mind here is the "Tower of Babel" scenario. Right now, Comixology is the closest thing to a one-stop shop for the major print publishers. They pretty much have everyone except Dark Horse, who chose to keep their monthly comics on their in-house digital platform. They power the DC App, the Marvel App, the IDW app and so forth. You can bounce around all over the place, choose your own app if you're tablet only and you're still in the same system.

The thing is, if you're a publisher, do you want Amazon powering your company app? Being the official company store? Now, some might. But I guarantee you, every company with an app right now is at least talking out the pro's and con's internally… and watching the Hachette negotiations is not something on the list of pro's. You're going to see at least one publisher move to a different tech provider for their company app/store. I've heard stories. Rich has heard stories. Expect a big announcement sooner than later.

Then you've got Marvel. At SXSW, Marvel fired a shot over Comixology's bow when they announced they were going to start selling new issues on the Marvel Unlimited app (that is to say, their in-house app). They've also been highlighting the "enhanced features" like more AR and sound over at Unlimited, which looks to me like a way to differentiate their digital comics from Comixology's digital comics. My understanding is that Marvel is still under an exclusive contract with Comixology for the new releases. That's why they haven't started selling on their own app yet.

Nobody seems to know what Marvel is going to do when that contract is up.

Are they going to bring all the new comics in-house like Dark Horse and just sell digital tpbs through "normal" channels? Are they going to continue to sell with Comixology (and Amazon, by extension)? Are they going start selling the monthlies in over channels like Google Play, iBooks or iVerse? Is Comixology/Amazon going to continue to power the Marvel app? Is Marvel Unlimited going to replace the Marvel app and the Marvel app goes away? If Marvel pulls everything into Unlimited, they're not splitting the revenues with anyone (past an Apple fee on iTunes) and Marvel does appear to be very conscious of their margins, so I'm very curious how they decide to play this.

I don't think Marvel taking the digital for their monthly comics in-house is good for digital comics. Depending on what you read, you'd be on at least three different platforms to be able to read all your comics at that point. Marvel's, Dark Horse's and then whatever you need to get every other publisher you happen to read. You're talking two formats/readers, at most, with eBooks and a lot of people only use one.

If you look at DC, you see a pattern of expansion and distribution of risk. DC never actually signed an exclusive with Comixology, they just centered the audience for a comics-specific app there. They're already on Amazon, BN, Google Play and iBooks. They've even got some titles over at Madefire, which is an entirely different flavor of digital.

Honestly, the best thing to happen for both the readers and the publishers is an open source format and more places to buy your digital comics. If you look at the music industry, digital downloads didn't really explode until they standardized on .MP3 and stepped away from DRM.

For a standard open source format, ePub is coming along, but may not be there yet. Fixed layout is the term for how this is handled and iBook/Apple is ahead of the pack with some customized hooks for that.

Getting rid of DRM is going to be a problem. DC is Warner. Marvel is Disney. An awful lot of comics are licensed from Hollywood and Hollywood likes its DRM. The major publisher that's stepped away from DRM is Image. Image is selling their comics in PDF, ePub, CBR and CBZ. Which is to say, you just go from Image into the reader of your choice.

You see, if everyone got away from propriety formats, it suddenly becomes much less important who you're buying your digital comics from. Buy it from Amazon, buy it from Image – you're still reading it in the same program and you own the file. It's a lot cleaner. There's a lot more choice. If you like Amazon's shopping experience better, points to Amazon. If you want to support the publisher or creator, buy direct. It's really that simple.

But that's probably not what's going to be happening in the near future. In the near future, we're likely to see either an expansion of options or more companies pulling the monthlies in house. Look to see if Apple or Google reacts. It would not be hard for Apple to step in and they just lost a significant player in the iTunes system. Also look to see if we have a little more publisher activity emphasis with a comics-only player like iVerse. You will recall that iVerse had all the solo apps like IDW before Comixology signed them. We also don't know who's going to be using Diamond's latest attempt to do digital comics. And yes, Diamond digital being a possible alternative to a monopoly has more than its share of irony.

Bottom line, change is coming and this is going to be an awfully interesting year for digital comics.

Now as to why I'm guesting here, I'm doing a Kickstarter for a book called Economics of Digital Comics – it's about how the business side of digital comics works and how it relates to the print side. The previous versions have been taught at the Savannah College of Art & Design, so my credibility might survive knowing Rich. The funding goal was hit in about 19 hours, so this has turned into advanced sales. If you're interested in this sort of thing, go ahead and pick up a copy. The eBook is $1 less than you'll get it when it comes out commercially. A note on distribution: I normally have the print editions available through bookstore channels like Amazon and BN.com, but I don't plan on going through Diamond. If you want print, it isn't likely to be at your local shop unless your retailer picks up one of the bundles on the Kickstarter….

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