A Comics Journal History of the Direct Market, Part Three

Posted by on February 17th, 2010 at 5:20 AM


From Cyber Force #3, penciled by Marc Silvestri, inked by Dan Panosian, Marc Silvestri and Trevor Scott, and written by Eric Silvestri; ©1993 Top Cow Productions, Inc.


The final element necessary to turn the Image frenzy into a massive speculative boom was Wizard Magazine. Wizard can best be understood as the Comics Buyers Guide on crack cocaine; while the Guide had always served as a price guide for longtime collectors, it also served as a reader’s guide and nostalgia review as well, catering to both the mainstream industry’s readership as well as collectors who bought back issues of decades-old comics out of a fondness developed in their childhoods. Wizard was different. It catered exclusively to the newest and youngest readers, excluding anything comics-related that didn’t fall into its immediate sphere of attention, and from the very beginning it kept the speculative market front and center. Wizard was above all else a price guide, as John Davis told the Journal:

[…] Wizard was a big factor in the speculator market. Wizard hyped books as being hot and collectable and investments, and that gave rise to the big boom we had in ’92, ’93, and all the younger readers were coming and reading Wizard; Wizard was aimed right at them, it was telling them exactly what they wanted to hear, that there was a lot of investment potential in these new comics. That also coincided with the start-up at Image and Valiant, which had been going on for about a year, but suddenly Valiant started to take off and we were being told that Valiant comics were hot and going up in value. A lot of these younger readers became mini-investors and sales were greatly inflated. One of the examples I always point to is Turok #1, which came out in the Spring of ’93 and sold to retailers 1.7 million copies. I’d be surprised if 200,000 of that actually sold to customers.

Superhero-comics publishers naturally responded to the sudden increase in collector sales by increasing the number of titles (and consequently the number of “collectable” first issues) and increasing their print-runs. Crossovers, miniseries and cover gimmicks proliferated at an ever-expanding rate, and for a while, fans ate it all up.

In the midst of all this, Marvel Comics — owned and directed by Wall-Street-financier-cum-corporate-raider Ron Perelman — did a little proliferating of its own. In early 1993, Marvel purchased a 46-percent interest in a company called Toy Biz, then owned by entrepreneur Isaac Perlmutter, securing an exclusive contract with wunderkind toy designer Avi Arad in the process. It was the start of a number of acquisitions that would eventually turn the venerable comic-book company into a media empire, with trading-card company Fleer added to the portfolio later in the year.

It’s possible that, had all the companies involved kept publishing at a steady and regular pace, the boom could’ve been kept in motion for years before the inevitable bust occurred, driven as it was by an excess of speculators and a smaller minority of the very readers needed to fuel the demand for back issues. Unfortunately, the process became accelerated by a slowdown in production from the single largest producer of fan-favorite books: Image Comics. From the third installment of Michael Dean’s Image history:

Of the six partners, McFarlane, who had discontinued his work for Marvel earlier than the others, was the best-prepared to begin turning out issues for Image and the last to run into deadline problems. “Nobody knew the success we were going to have, but Todd was ready for it,” Liefeld told the Journal. “He was stockpiling comics material. I went from X-Force one day to Youngblood the next day. Jim Lee went straight from X-Men to WildC.A.T.S. But Todd was coming off the bench with fresh legs. He had six issues out to our three or whatever, and he never hesitated to point it out at shows. He was the most dedicated to his product, he’d say. ‘I’m the guy who’s giving it to the fans.'”

Even McFarlane, however, reached a point where he was forced to use fill-in issues by other creators in order to catch up. And, as he became increasingly distracted, eventually all of McFarlane’s comics became fill-in issues by other creators. According to Marder, “Todd always had the most discipline, but it’s hard creating comics while being asked to meet with toy manufacturers and pitch movies.”

Image began to get later and later in the release of new issues, and their solicitations failed to reflect this fact. Titles would ship months after they were supposed to ship, causing instability at the retailer level. By the time some books hit the stands, fans had lost interest in what they had previously ordered through their comics-shop subscription services; the sell-through rate for such books was atrocious when compared to books that shipped on time. In April of 1993, only two of the 13 titles Image solicited for the month actually shipped on schedule. According to Capital City’s Internal Correspondence, Image held the last-place position amongst the larger publishers regarding on-time shipping in 1993. Writing for the Journal, Eric Reynolds added up the figures and estimated Image by and of itself put the industry’s maximum sell-through rate at 88 percent — that assuming the rest of the industry shipped on time and sold through at 100 percent.

Compounding the problem was the lead-time between when retailers ordered their books and when they actually received them. By the time it became clear that the first issue of a given series would be late, the second and third issues had already been ordered. During the latter half of 1993 the market began to slow down considerably, as retailers found themselves sitting on increasing piles of unsold comic books they now had no hope of selling. Here’s Jim Hanley, owner of New York City chain Hanley’s Universe, from Eric Reynolds’ summary of events in TCJ #166:

With the massive speculation that went on in 1993, we blinded ourselves to how much risk there was. Early in the year we started to realize how much exposure we had on Image product, because that’s what was selling in the largest numbers. The problem that most people complain about — the books being late — they complain about the wrong aspect of it. When books start shipping late, you end up ordering four, five, six issues before you see sales, and that’s where the greatest danger is, especially books selling in large quantities. We finally said, ‘wait a minute,’ and added up all of the Image orders we had outstanding and it was something in excess of $500,000 in retail.

Industry analyst Mel Thompson, quoted in the same issue, described the net effect of over-ordered, chronically late titles on retailers:

The negative impact is immeasurable, but look at it this way: Your typical undercapitalized, unknowledgeable retailer walks this cash-flow tightrope. He usually writes a check to his distributor on Friday for his new books, but deposits money made from those sales the following Monday to cover the check. When five late Image books arrive unexpectedly, they cause a negative chain reaction — they upset the retailer’s already precarious weekly budget, causing him to go over[budget] for books that will probably have a poor sell-through because they are late. Although he may make enough to cover his distributor bill for that week, the usually poor sell-through on a late book coupled with the discounts retailers often give subscribers means that they will probably have no money left over to pay rent, utilities, employees or any other overhead.

The final nail in the speculator market’s coffin was a miniseries called Deathmate, a variant-covered title which featured a crossover between characters from the Image line and that of Valiant, which after a takeover by investors and the ejection of Jim Shooter was now called Acclaim. While the series originally captured a high degree of anticipation among buyers, it shipped so many months after its due date that the buzz surrounding it had evaporated in the interim, again leaving retailers holding the bag.

In early 1994, the market’s second speculator bubble finally burst, and the following year the hemorrhaging was ferocious. By year’s end a contraction of the marketplace, averaging 10 percent per month since June, had left several publishers (notably Continuity, Defiant and Eclipse) showing signs of wobbling. Shops closed left and right; from a 1993 peak of roughly 9,400 comic-book shops nationwide — possibly even over 10,000 — audits by distributors Diamond and Capital City found that number down to between 6,100 and 6,500 shops still standing in August of 1995 — roughly one-third of all North American retailers closed their doors and went out of business.

Fans had begun abandoning the Direct Market in droves. Looking back from the hindsight of October, 1995, Milton Griepp described the phenomenon in Capital City’s industry newsletter Internal Correspondence:

The young males that have been frequenting comic stores over the last decade have left the market or changed their purchasing patterns, and our industry has been less successful at attracting new recruits among prepubescent and pubescent boys than at any time over the last twenty years. I’ve heard more than one retailer use the phrase “We’ve lost a generation” to describe what has happened. This lost generation seems to have come into specialty stores in huge numbers in ’92 and ’93, attracted by the publicity surrounding the death of Superman and the excitement around the new Image and Valiant lines. Unfortunately, much of their interest was related to the lottery-ticket aspect of comic collecting — “How much will this be worth next month?” This interest dissipated as quickly as the presses could be cranked up to print more copies of the books with the “hot” designation, and new kids are now entering the market at a much reduced rate. As one of our reps put it in a report to headquarters, “The kids in baggy pants with their hats turned back don’t think comics are cool anymore.”

In the aftermath of the Image-inspired crunch, retailers, publishers and distributors alike found themselves looking to each other to excercise restraint, hoping for more modest, normal industry growth. In October of 1994, Marvel offered a brief outline of its plan to restructure for the following year, called “Marvelution: The Art of Change” for public-relations purposes. The company began to decentralize its editorial structure, and cut significantly the number of both the titles it published and the employees on its payroll. In November, the notoriously market share-obsessed company purchased Malibu Comics, boosting Marvel’s market-share roughly 5 percent to a total 40-percent share of the market. It simultaneously acquired a trading-card company called Skybox, which along with its ownership of Fleer strengthened Marvel’s dominance of the card market.

Image Comics, meanwhile, hired cartoonist Larry Marder away from a position in Moondogs comics-shop chain in an effort to bring itself into something laughably resembling a professional production schedule. The efforts soon began to bear fruit, and Image finally began shipping books on time.

For a while, it looked like it was going to work; by the end of 1994, the precipitous drop in industry-wide sales had finally started to level off, and it looked like the worst was over. What followed next, however, made Image’s disastrous shipping schedules look positively benign by comparison.


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2 Responses to “A Comics Journal History of the Direct Market, Part Three”

  1. Tim Tylor says:

    Much thanks for reposting these – it’s been a fascinating read. Is there any chance of a Part Four in the future? There must be something worth saying about the last ten years, even if they haven’t had as much drama. How have graphic novels and bookstore competition affected the DM? Has the internet changed things seriously?

  2. Mint City says:

    Thanks for the interesting story. Having lived through these dual nightmares (speculator crash and distributor wars) I can attest to the difficulties retail stores had in trying to survive day-to-day much less try to look forward to the future. This was about the time I realized that there wasn’t a future in comics retailing and obtained a teaching certification. From about 1997 on (I sold the shop in 2002) I had less than a focused attitude on the shop, thus did sales fall on top of the BS you described in your story. What is interesting is that I did supplement my sales with Magic cards, toys, and other material that kept the store alive; regulars maintained that I “sold out” yet the shop remained open so that they could still make their weekly purchases. I still have all of my Heroes World invoices from the transition and the “newsletters” make for some interesting reading today! Thanks for the travel down memory lane, as distressing as it was to live it at the time.