Friday, September 20, 2013

How To Get Ten Million New Comics Readers In Ten Years

Over the past few days, I've talked about the problems that have both created and been created by the niche that the American comic book industry has worked itself into over the last twenty years. From expensive comics to an aging reader demographic to the inability to get the word out about non-superhero comics, there are broad, interrelated problems that all come back to the niche that comics have been forced into due to its overreliance on the direct market distribution system over the past 20+ years. That's going to have to change if we want comic books to survive and thrive. Today, I'll be presenting a roadmap for a distribution system that could help bring in millions of new readers, while still protecting and even helping the local comic book shops that have served the industry and its fans so well over the years.

Artist's rendition of my chances for getting paid
Before I begin, some disclosure: I am a project manager at a company that has developed an analysis tool for e-reader software called Hero Analytics. However, our software is not necessary for this roadmap to work; it would merely enhance an idea that can be successfully implemented with what the publishers already have available to them. While we could potentially be asked to work on a project like the one I'm about to describe, it's kind of a longshot. I just want to be upfront that, while the idea I'm presenting is something intended to help a hobby I love, there is a chance I could see some money out of it. I believe transparency is important.

This post is going to be a long one, so I'll apologize in advance. There is a lot here to talk about, and it needs to be fully explored to make the case that this is the correct path. I understand you may be pressed for time, but it really is worth reading and, I hope, sharing with anyone you know that loves comics. Particularly if they work in the industry.

The root problem, the thing that got the industry into the niche in the first place, is the way that comic distribution is set up in the United States. As I mentioned on Monday, Diamond maintains a legal monopoly on comic distribution in the United States that has led to an increase in comic prices that tracks at about three times the national inflation rate. So the first thing this plan has to do is to maintain or increase the amount of money comic book companies are getting for their material, while simultaneously lowering the price for the consumer. But that's not enough by itself. To really do what we want to do, a very large number of comics need to be not just cheap, but free.

Now, I'm sure a lot of you are saying, "Wait, what?" But I mean what I said there. Free. All of the other
Like this, but every day.
major entertainment choices offer places to go that are free or functionally free for those who want to indulge but are unable to spend money. TV, of course, only requires the ownership of a TV that most people already own, as do movies; you may not see exactly the shows or movies you want, but you've got something to watch at almost every hour of the day. Videogames have free to play games on both smartphones and PC. Music has the radio, as well as software like Pandora and Spotify. Comics don't have anything like this, except perhaps at the library, but the libraries often have very spotty comic book and trade collections. It's also important to note that these free options are both approved by the content providers and easily accessible by just about anyone. One can technically, and with somewhat dubious morality, get comics off of a torrent, but that does nothing for the companies that are paying to produce the content, and it requires the user to spend a fair amount of time searching for exactly what they want. We want the experience to be as easy as turning on your TV and browsing the guide to find something you want to watch.

Of course, it can't all be free. The companies need to make their money in order to make the content, and we want them making new content that is friendlier to young readers, as well as diverse content that will eventually become available to potential readers that are interested in genres besides superheroes. To this end, what I'm proposing is a different way of making comics available to readers.

Just more, you know, unlimited.
To those of you who have used Marvel Unlimited, their basic design is very close to what I'm advocating here. It's a service available on iPad, Android, or through a browser that lets the subscriber read most of Marvel's content that's six months old or older for $10 a month or $70 a year. They've described it before as "Netflix for comics" and that's pretty apt. However, while it's basically a good idea, it needs to go further. Imagine a service like Marvel Unlimited, but with a multi-tiered subscription model. The lowest tier would make all of Marvel's content that is twelve months old or older available for free to anyone that will register for an account with them. A second tier at $14.99 a month would give same day as print access to all of Marvel's catalog.

If you'll remember from the post on the high price of comics, Marvel is probably getting about $1.50 from each print comic they sell. With this new structure, people who have never looked at a comic book before or ones who simply can't afford to pay right now will still have access to a lot of free, well-curated content, encouraging them to steer clear of torrents, while those who want to read more and newer content will have access to a bargain for both them and Marvel: for about the price of 4 print copies, they get access to the whole Marvel catalog, while simultaneously giving Marvel revenues roughly equal to buying 10 comics from a local store.

Now, I've said "free" several times, but there are some caveats. First, the lower tier will see ads in their reader every few pages; in this way, even their oldest content can still generate revenue for Marvel. The second is that, for both tiers, the company will be gathering information about what their users are reading and how they're reading it, anonymized for their privacy, that allows them to see certain trends. For example, if they wanted to find out what the most readers were reading just before they switched to a paid subscription, they could get a list of the top 10 titles fitting this criteria. In this way, it lets them see not just what their most popular titles are, but also which ones get people to spend money with the company. There's a ton of data that can be picked up regarding user habits in order to make a better user experience, more compelling content, and ultimately more money for the company.

I've talked about Marvel Unlimited a lot here, but there's nothing here that couldn't be done by DC or Image. All of them are already digitizing their content in-house, and we did some analysis at my company and estimated that a small team could have a full system, including readers for browsers, iPad and Android, content servers, registration, etc. ready for a limited rollout in six months to a year, with a full rollout a few months later. It mostly requires someone willing to say "we should do this" and selling it internally to their company. If it's successful, I imagine the other major companies would fall in line within a few years, offering their own spins on the concept, maybe with more or less content, or a higher or lower price point. Basically anywhere that I say "Marvel" in here, you can swap it out for DC, Image, or a number of others.

For now, imagine that Marvel got on this next week, reworking their systems and tweaking their billing. Around the time of Thor: The Dark World's release, they make an announcement of the shift in the service, offering beta sign-ups with priority given to those who have previously been Marvel Unlimited subscribers. Around February of 2014, they do a soft launch of the service to shake out the bugs, and then a week or
two before the Winter Soldier release, they go live. At the Winter Soldier screenings, they've bought ad time to say "Hey, kids, want to read more about Captain America? We have hundreds of Captain America comics and thousands more with the Hulk, Iron Man, Thor, Wolverine, and all your other favorites at Marvel Unlimited! Download the free app..." and so on. You get the idea. They do a hard marketing push from Winter Soldier, through Amazing Spider-Man 2, Days of Future Past, Guardians of the Galaxy, Fantastic Four, and into the Age of Ultron. Maybe Joe Quesada goes onto Colbert Report to announce Peter Parker's return and pitch Marvel Unlimited at the same time. Make a reference to "The Unlimited database" in Agents of SHIELD. You get the idea.

A touch more subtle than this, but not much.
About 100 million people saw the first Avengers movie in the theater in North America, before you figure in all the people that saw it on cable, DVD, Netflix, etc. Assuming that the second Avengers movie does as well, imagine 10% of those people signing up for the free version and reading comic books, carefully curated to recommend things relevant to what was on at the theater at the time. That's 10 million people at least looking at the app, maybe reading a few books, maybe reading a lot more. Maybe 10% of those people will ever be willing to pay for a subscription. That's still a million paying subscribers at $15 a pop, or $15 million a month for Marvel, and it's all their money. No splitting it with Diamond or Apple or Comixology. Now it could take as long as 2020, or maybe even a little bit longer, to see those kind of numbers, but still. That's $180 million a year in revenue. For a compare and contrast, the total singles sales for 2012 across all publishers was somewhere in the neighborhood of $280 million and Diamond got half of that.

If any of this sounds familiar, it's a common strategy in the MMO gaming genre. Lords of the Ring Online launched as a pay-only service, then implemented a free to play model a few years later. It had a free tier that gave access to most content and a pay tier that allowed the users to access the more recent and high end content. Within a month of doing so their revenues doubled, and they had a 400% increase in subscribers. This is a model that can, does, and has worked in the past for other media.

And this ignores all of the ways that a free service enables Marvel to reach out in ways it previously couldn't.
Marvel's offices, circa 2024
They've always been good about supporting the troops and making some free comic books available to them, for example. Now imagine if they could provide as many comics as they want to a group of young men and women aged 18-25 that are often stuck in boring places and tired from the duties of the day. What about literacy programs? Or art programs? Sure, some of the places that need those kind of programs are also lacking in computers and the like, but not all of them; even teachers in relatively wealthy schools love free, ready made materials. And of course, the nature of popular culture means that popularity breeds popularity. Assuming it can reach critical mass, there comes a point where people read comics because everyone they know reads comics; it becomes the norm. The possibilities are almost endless, and as Marvel makes more money and can supply content for more demographics, they stretch out to the horizon.

Now, I'm sure there are some criticisms that are likely to crop up, so I'd like to address some of them ahead of time:

Isn't this a bad deal for Marvel if it converts readers that buy more than 10 issues a month? Theoretically, yes. However, there are a few caveats to that. First, the type of person that buys more than 10 Marvel issues a month is very likely to be a collector and will want to continue to get his physical issues. Some of those may subscribe anyways, simply to be able to read more comics each month. As the reworking of Marvel Unlimited would primarily target new readers, who would never have bought any Marvel comics, they can make it up in volume.

Won't this hurt local comic book shops? This is very much a "rising tide lifts all boats" scenario. If you've ever watched a movie on Netflix and thought "I have to own that," you already know the answer here. There may be rough patches here and there, but local shops are still the place to be for people who become collectors, and I expect some of the new readers would. I also wouldn't be surprised to see people choose to only register for the free version of Marvel Unlimited, then find the two or three titles they want to follow at their LCS instead. In addition, if this is successful enough, Marvel can begin to supply more trade paperbacks that are akin to collector's edition DVDs, which can help as well, and it's likely that an LCS would see increased traffic for action figures and other collectibles. There could be a whole market re-opened as the new young reader demographic starts wanting less expensive action figures, etc. But that's the type of thing that's likely to take ten years or more to come to fruition. In the interim, the local comic store is going to be fine.

What if the comic book shops boycott anyways? To be fair, there's a chance they could. Marvel saying "you can have access to all of our comics for the equivalent cost of four of them at retail" could frighten retailers. There are a few ways to approach this. First is to basically ignore any kind of boycott; realistically, around 35% of comic sales are Marvel comics, so the retailers can't really afford that kind of a hit to their revenues for very long. Second, they could keep a couple of comics as print-first to show solidarity. These would most likely be books that are fun but not necessarily tied in to larger stories; perhaps resurrecting Marvel Two-In-One or What If? Third, an outreach program by Marvel's marketing department to retailers explaining their reasoning could help to reassure them. Ultimately, it's a smaller concern than I think a lot of the publishers believe it is.

How is Comixology affected? There's still a niche there for it. There are going to be some people that don't want to read even four Marvel comics a month, and Comixology is there for them. In addition, even if both of the Big 2 and all of the Middle 3 manage to make similar services, there are still smaller publishers for which this isn't a viable model, and Comixology continues to work for them. And, of course, a lot of what was true for the local comic shops is true for Comixology - as those young readers grow up and want to branch out into more mature titles, Comixology can provide.

Just for you, Diamond
What about Diamond? I can play a very small violin for them. More seriously, they're still going to be the physical distributor for the industry, so a lot of what was said about the local comic shops applies to them as well. Diamond for good or ill is going to be a large part of the industry for years to come. This is a plan that's intended to minimize the damage their monopoly does, not put them out of business.

But what about ownership of content? It's true that people won't own the content they get access to through this service. If it ever goes away, they will cease to have access to things they had previously read. That's, frankly, okay. As I said, they're getting a bargain price to view a lot of content, and if they really want assured permanent access to the content, there's trade paperbacks, digital purchase through Comixology, back issues at their LCS, and so on. You don't pay for Netflix to get permanent access to their content; you pay to get access this month. This is a similar concept.

What if it doesn't work? Well, then, in a few years, they shut down the program. And, frankly, if this doesn't work, I have no idea what will.

How are you going to get the industry to go along with this? I'm hoping that it's a persuasive plan, and I'm hoping I can persuade all of you that are reading this to forward, share, tweet, and do whatever you can to get it into the hands of someone who can help make it happen.

In my job, I wear a lot of hats, and one of those is analyst. Sometimes that means system analyst, meaning that I try to figure out how to make computer systems more efficient, and sometimes it means business analyst, meaning that I try to figure out how to make businesses more efficient and profitable. Back in January, my wife and I had our first child, and a few months later, in May, I was sitting around and thinking about what it had been like to be a comic fan as I was growing up. By the time I was in high school, I knew maybe a dozen or so folks my age that I could talk about comics with. When she's in high school, I want her to have hundreds; I want discussing comics to be like talking about movies or TV or music, something that almost everyone in the school does. So that night, as a personal project, I sat down and started to analyze the comics business and look at what could be done to get to that point. I had some co-workers go through it with me, and, while they are not as familiar with the comics industry as I am, they agree that this is a sound, workable strategy. I believe that this plan that can be relatively easily, quickly and inexpensively implemented, primarily using resources the publishers already have, with the potential for a huge upswing in revenues and a broadening and deepening of the comic readerbase. It can be done, and it should be done.

I know this has been long, and I thank you for your time, both in reading this post as well as the others I've written this week. I've enjoyed reading your comments and criticism, and hope this posting sparks a discussion that changes our hobby for the better.
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