Sunday, September 7, 2008

A view of popular culture from the retail perspective, Comics Part II

James Robert (Bob) Smith was a comics retailer for over 20 years. He had shops in Georgia, North Carolina, and South Carolina. Today, he is completely out of the comics industry and works for the US Postal Service in Charlotte, North Carolina. He is a published author with dozens of short story sales, two novel sales, and one movie option sale. He has a website at: JamesRobertSmith.Net and a blog at Til The Last Hemlock Dies.

Russ Stewart was a comics retailer for almost 6 years. He ran a store in Duluth Minnesota. He was also a city councilman, a college professor, and my best friend. He is still a couple of those things. He is currently on sabbatical and will return in Spring to his main job, teaching ethics and logic to people at Lake Superior College.
What made you go into the comics business to begin with?

James Robert Smith: I fell into it, actually. My dad had owned several used bookshops in Georgia and Tennessee. Over the years he accumulated about a quarter of a million back issues. Prime stuff, too, since he started buying used books and old comics in 1965. So the bulk of the stuff he had was Silver Age and later Golden Age. By the time I opened my own shop I had inherited his vast stock of old comics which formed the basis of my own retail business. Then I fell into the sales of new comics when I was around in the early days of direct sales. Over time, most of my sales went to new comics and less and less of my total figures were generated by back issues.

Russell R. Stewart: I've always had a love of bookstores, comic shops, game shops, etc., you know, the fun, eclectic places that have a one of a kind feel to them. I've also worked in a couple different bookstores, so I knew something of the business. Finally, I wanted to create the kind of place that I wish I'd had when I was a kid. Growing up in a small Minnesota town left me only with the local dime store or drug store, which had little of interest to my thirsty mind. So I thought about the kind of place would have wanted to go to when I was, say, 15 years old, and that's what I tried to create.

What were some of the surprises you experienced when you got into the work of retailing comics?

JRS: Hmm... Surprises. None, really. Maybe, in the early days, the sheer sales numbers generated from direct sales comics. Even when most of my sales were in new comics, I still preferred back issues. It was back issue sales that had the most appeal for me. And when you own a retail store that buys and sells old comics, you will generally have about three or four great collections walk through the door every year. Really nice stuff that makes your heart beat faster and your blood pressure rise. The smell of pulp was addictive and the one thing that I miss about retailing are those three or four wonderful back issue discoveries that I would make each year.

RRS: The biggest and most unfortunate surprise was the discovery of a couple of major bookkeeping errors in my first year of business. This set me way back financially and left me in a scramble that I never really got out of. Other than that, I guess I was surprised by the passion that the customers have both about the products and about the store. It was tough to keep them from badmouthing the competition (another local store that we had a good relationship with) or games or comics they didn't like. The Warhammer players and the Magic players seemed like they were in an endless feud. For a place to go to have fun, a small number of people just liked to go their to demonstrate their superiority.

On the other hand, we also had a surprising number of great customers who put in a ton of volunteer hours in the game room. They went way beyond the call of duty on several occasions. One time they painted the whole game room because they knew that I didn't have the time to do it. They even bought the paint!

What are some of the sources of frustration for a person selling comics?

JRS: Well, since I'm very happily not in retail sales anymore, there are no current frustrations from that sector for me. In the last days of retailing, my greatest single frustration was the monopoly that Steve Geppi made of the business. It's very unhealthy for one distributor to control the entire direct sales business. That's too much power in the hands of a single entitiy and I'm convinced that Diamond Comic Distributors is a monopoly that should be shattered and scattered. Nothing good can come of all of that wholesale power in the hands of a single company. Well, nothing good for customers and retailers. Much good for Herr Geppi.

RRS: The biggest frustration was dealing with the monthly comics. With a small store like I had, it was almost impossible to order with any kind of consistency. One month we'd sell through a title, so the next month we'd order more only to find that we'd sell only one or two copies. Once a monthly is on the rack for 90 days, it is dead wood. And of course very little was returnable. That gets expensive and kills cash flow, which is the life blood of a retail store.

On many occasions I considered cutting out monthlies altogether, instead stocking graphic novels in greater depth. In retrospect, I wish I had done that. I think my cash flow would have been a lot better. The shelf-life of a graphic novel is much longer than a monthly. I guess I was afraid of upsetting my base of monthly subscribers. In truth, I wasn't making money on them anyway. I was always too nice to the subscribers, allowing them to build up “holds” in excess of 100 comics. Again, that's dead wood. And often they would decide (typically after 3-4 months) that they didn't really want half of them anyway.

If I had just gone graphic-novel only from the beginning, I think I'd be rolling in dough today!

What did you do to try to modify the system to your own needs?

JRS: Hmm ... Like most retail comic shops I ran an in-store subscription service. It worked well for years, until the comic book implosion of the early 90s. When sales of new comics began to slide precipitiously I had been finding my way into the sales of other collectibles, most notably collectible toys. Honestly, Star Wars toys and Mego figures kept my last store going for about five years!
RRS: I'm not really sure that “the system” can really be modified by the retailer. At least not by isolated, small retailers. A large chain might be able to command enough market share to make some substantive changes in the distribution system.

What role did Diamond play in your business success and then business failure?

JRS: Pardon my French, but Diamond sucks ass. I have nothing good to say about that monopoly, and anything else that I could add might get me into trouble with that corporate mosnter. That said, they weren't the only reason for the collapse of comic book sales. One experience I vividly recall is this:
I had an entire family who read comics and spent a LOT of money in my shop. (This was toward the end of my retailing experience, in the mid-90s.) Every week they would stop in and pick up their in-store subscriptions, routinely spending, collectively, anywhere from $50 to $100 every Thursday or Friday, sometimes waiting until Saturday to get their books. Well, one week they didn't show. Then a second week passed and they didn't show. Third week, no family. Since they got a LOT of books, their holds were piling up. Finally, one day the mother called and cancelled the subscriptions. All of them. Alas. One day, a couple of months later I happened to bump into them in a mall. They were very friendly and we sat and talked for a bit. I finally asked them why they didn't buy comics any more. The answer:
Video games. The money that they were once spending on comics they were now spending on video games.
"Why read about Spider-Man when you can actually be Spider-Man?" the mother asked me.
Why, indeed.

RRS: Diamond is a horrible company to deal with. They have a monopoly on the monthly comic market because they have exclusive distribution rights for all the major publishers, including Marvel, DC, Image, and Dark Horse. This means that if you want to sell monthlies, you have to go through Diamond.

And the system places all the risk on the retailers. Diamond solicits comics before they are printed, and they report their order numbers to the publishers. So Diamond knows they'll sell all the stock that they get from the publishers, because it's all been pre-ordered by retailers. The publishers also know that they'll sell all that they print because it's all been pre-ordered by Diamond. The only one in the chain who doesn't have guaranteed sales is the retailer. So the retailer takes all the financial risk while the publishers & distributors take none. It's definitely a flawed system.

It is possible to order graphic novels, games, and novelty products from other venders, but Diamond's discount policy makes it very costly to do so. They give a bigger discount when you order more product from them. Since a comic dealer has to order monthlies from them, it is pretty foolish not to order your other stuff from them as well in order to enhance your discount. It is a real racket.

This is another reason that I should have only sold graphic novels from the beginning. I would have had a much greater choice of vendors, and I would have had much better control over cash flow.

The reason cash flow would have been better without Diamond and without monthlies is simply this: if you sell monthlies, you get a weekly shipment from Diamond 52 weeks per year. They're all pre-ordered months in advance, and you can't stop them. Your customers expect them on Wednesday.

This is can be a real problem for cash flow, because if sales are slow you want to slow the orders, but with Diamond, you're pre-ordering so far in advance that it is virtually impossible to be responsive to fluctuations in the market. Sometimes we'd have to skip a weekly game order so that we could pay for our comic shipment, even though the games would have sold better and been more profitable.

I'm getting frustrated writing this! In retrospect, selling monthlies really looks idiotic. I'm trying to imagine what I was thinking at the time, and I'd have to say I was engaged in some serious self-deception. I kept thinking “ things will turn around.” They just never did, and I was unwilling to make the only decision that could have saved my business: stop selling monthlies.

What would you suggest could be changed to make the system work?

JRS: I think I already mentioned shattering and scattering Diamond. Plus leveling some massive fines on the major investors and owners of that corporation. Squeeze them dry. If there were a number of competitiors in the field of direct sales, it certainly couldn't hurt, and would likely lead to a diversification of the comics industry. More companies, more genres, more creators. Just my opinion, but I'm convinced I'm right.

RRS: The comic business needs to remake itself in the image of the book business. When I buy a novel, I don't buy a chapter at a time, I buy it all at once. It should be no different with comics. I think the stand-alone comic shop will largely die out in the next decade or two. The reason is that as the graphic novel industry matures and becomes more like the book industry, major book retailers will more fully stock graphic novels. This is already occurring. Big chain bookstores can sell graphic novels at their discounted prices and still make money because of their sales volume. And notice that they don't sell monthly comics!

The other reason the stand-alone comic business can't really survive is the difficulty of selling back issues. Once upon a time, if you wanted to read a story arc from a few years back you had to scour comic shops for back issues. Now you can either pick up a graphic novel or buy the whole run on eBay for a fraction of their cover prices. And of course you'll probably buy the graphic novel from a bookstore. That leaves the stand alone comic store selling back issues on eBay for pennies on the dollar. This is not a good business model.

So in the long run, as high quality graphic novels continue to be produced, more bookstores will expand into this product area. I think this will be good for the industry, and bad for the stand alone stores.

Knowing what you know now, what would you do differently?

JRS: Well, there's nothing I could do, really, to have stopped Diamond Comics Distributors from becoming a monopoly. And, yes, it's my considered belief that the Diamond monopoly was probably the single greatest cause of the comic book implosion of the 90s. Yes, you can lay some of the blame on comic speculators from the card hobby, but far worse than that was the collapse of the direct sales distribution system into the hands of a single man. I think there was a very brief moment when a handful of the most influential comics creators and publishers could have made a stand and ensured that there would still be a number of distributors. But none of those people and companies had either the courage or foresight to put a stop to that hideous occurance. Diamond absorbed everyone else, and there you have it. Probably the worst single thing that ever happened to the industry. Frankly, because of that, I'm glad to be out of comics retailing. I try not to put any money into the hands of Steve Geppi.

RRS: I think I've already spelled that out: Don't sell monthlies.
How did downloading of comics from the web affect your business?
JRS: I was gone well before that happened.

RRS: I don't think this had a noticeable affect, but I think over the next few years this will be the preferred way to get serialized stories. It is the ultimate in low production costs. The trick is to get people to pay for things like this!

Everyone knows that retail stores deal with theft, it is an unpleasantly common occurence, did your store deal a lot with that and to what extent did it affect your success or failure?

JRS: Yes, there was always theft. Some theft hurt. Store break-ins were the worst, but insurance kept that from being too hideous a problem. Petty theft bothered me, but never threatened my retail existence. In addition, I had the reputation for physically beating the shit out of folk that I caught in the act of stealing. Any adult I caught stealing got my foot up their ass. And, no, I'm not kidding. Any kid I caught stealing got carted off by the cops.

RRS: Stealing was a huge problem, both with customers and employees. I'd recommend installing a good security system right away. I never really had a good system, and yet I still caught people stealing literally hundreds of dollars worth of product. I hate to think about how much just walked out the door. This is another advantage that online retailers have. It's hard to shoplift on the internet.

The most painful thing was catching friends stealing. I hired a buddy part time. This guy was in my weekly RPG group, and I considered him to be good friend. Well, my manager told me he thought my friend was stealing. I was pretty skeptical, but when confronted with the evidence, I had to admit it was happening. I had my manager fire him because I just couldn't bring myself to do it. The guy called me up right away with a bunch of BS excuses. I basically told him how disappointed I was. We also kicked him out of my game group.
What would you like to do now in the world of comics if anything?

JRS: I still make pitches to various comics publishers from time to time (I'm a published author and I have an abiding love of comics). I have a certain amount of disposable income that I like to spend on back issues that mean a lot to me. I've almost completed a run of all of the Ditko-created issues of The Amazing Spider-Man. I buy other back issues from time to time. Purely reading copies. No investment grade stuff for me. I like to read them, and I let other people read my old comics, too.

RRS: I still love the comics medium and I'm interested in scripting a story. I've got a plot kicking around in my head. I'm studying the comic greats to learn about pacing, dialogue, layout, etc. I'm going to script out a few issues and then try to hunt up a penciler. Who knows where it will go? I'm excited to give it my best shot and see what happens.


Brynna said...

holy crap that was a long article. Interesting view.

Derek Handley said...

Great interview. I used to want to open a comic book store, but I never had the capital. It's interesting to read this as a what-might-have-been for myself, and as a look at the change in the business in general.

Steve Chaput said...

Like lots of fanboys I had that fantasy of actually owning a comic shop if I won the lottery. When a friend of mine actually opened up a bookstore (the non-comics kind) and ended up bankrupt, the reality of the situation put a damper on the dream.

Interesting interview.

HemlockMan said...

Yeah, my advice would be to stay away from retailing. It's pretty much for the corporations, these days. Unless you have very deep pockets and don't mind throwing money at a shop for several years while it establishes itself, I'd suggest you forget about it.

Also, there's no novelty to a "comic" shop anymore. The world is accustomed to them, now. They're old news.

One option, however, is to deal comics on the side. Start small and build as a comic dealer at local comics and collectibles shows, do some selling on Ebay. That kind of thing. I have a number of pals who do that and do well at it.

I don't even do that, though. I've had my fill of it all.

Alan Coil said...

Diamond didn't cause the crash in the mid-90s. Diamond didn't become a monopoly due to their own management and greed. They became a monopoly because of a series of events that started with the takeover of Marvel by corporate raiders. That takeover resulted with Marvel buying the Heroes World distributing company and taking all Marvel accounts away from the other existing distributors.

Diamond's monopoly situation has been investigated at the Federal level and found to be acceptable. I think the reasoning was that the industry is so insignificant that it didn't matter.

Splitting up Diamond is not a logical solution because the size of the industry is so small. Diamond used to have several smaller distribution centers, but couldn't make money that way, so they consolidated to a very small number of centers.

Blaming Diamond for the failure of any particular store doesn't leave room for discussion of how so many other store are still open and flourishing.

The move to end monthly comic books and go entirely to full-length-story books in hardcover or trade format is happening. It will be the main means of publishing for most smaller companies in the very near future, although the giants may take a couple decades or so. Love and Rockets, published by Fantagraphics, has just made that move.

HemlockMan said...

"Alan Coil said..."

What a pro-corporate shill.

Alan Coil said...

hemlockman, say that to my face and you're likely to get punched---twice if I'm in the mood. My stating of rational facts and opinion should not be an invitation by you to take shots at my integrity.

HemlockMan said...

Kick-Ass lives!!


Henry R. Kujawa said...

What Alan Coll described is EXACTLY the story I heard from multiple sources at the time it was happening.

MARVEL has always been a company run by EVIL people.

And except for brief periods here and there, DITTO for DC.

I'd be glad if they BOTH went away and made room for everybody else.