Fear and Failure

In this month's column, I want to discuss two topics that have been preying upon my mind of late: fear and failure. I'll start by letting those of you who have not been keeping up with my recent spate of traveling know that I have spent about 65 of the last 100 days sleeping in hotels and motels, all up and down the East Coast, and as far west as Ohio. This epic series of journeys has been prompted by the need of my online comics company for hundreds of thousands of additional back issues, with which to fortify our existing inventory of several million comics. By almost any measure you might wish to implement, my buying trips have been an incredible success. I have purchased about 300,000 comics during these past 100 days, all of them hand-selected from various other comics dealer's inventories either at conventions, or in their retail locations. From a purely personal self-interest perspective, I have been having a wonderful time! As a long-time observer of the microeconomics of comics retailing, however, I find myself increasingly concerned about the long-term viability of the comics retailing world. That is why I have spent so much time of late worrying about the fates of those many friends that I have made all around the country who have been carrying the entire comics world on their backs, many of them for several decades. For more than a few of them, their financial world is now crumbling about them, and their businesses may well not survive 2008. This has dire implications for all of us who love comics, so I have felt an overwhelming need to try, one last time, to provide my friends with a solution to their most vexing financial problem: unsold new comics.

If you are a regular at a comics store, the odds are quite high that you are contributing to the problem that may lead to the ultimate demise of your favorite comics retailer. Having recently stood for hundreds of hours in various comics shops picking back issues from their bins, I have had the unique opportunity to watch hundreds of comics fans picking up their weekly new books, at dozens of different shops. One pattern of behavior that I have seen manifested with dismaying regularity is that fans will advance order issues of certain titles from their retailer, and then decide to not purchase them when they arrive. They seem not to grasp the fact that with each new comic book that they refuse to buy, that they are slowly draining away the financial lifeblood of the person that they so desperately need to continue to supply them. The economics of this process are insanely simple. Diamond Distributing charges most comics retailers about $1.45 (plus shipping) for an average $2.99 new comic book. New comics generally have a shelf life of about 14 days, during which they can be sold for cover price. After those first two weeks pass, however, the odds that any given comic book will sell off of the new comics rack rapidly diminishes. By the time a new comic book is 30 days old, the wholesale value in the secondary market kicks into play, which can be anywhere from ten to forty cents per issue, depending on popularity. It doesn't take a Master's Degree in math to realize that losing over $1.00 EACH for every unsold comic left on the rack after 30 days is a financial disaster. Especially in an environment where most comics retailers have come to increasingly rely exclusively on new comics sales as their primary source of operating income.

As much as the problem is easy to define, however, it is almost impossible to solve. I have spent many frustrating hours counseling comics retailers that they need to enforce discipline as regards their pull-and-hold systems. Credit card guarantees of payment MUST be required of all new comics buyers, including those long-time customers who buy the most books. Subscriptions MUST be managed in such a way that if someone chooses to drop a title that they have already ordered, that they still must pick up the ones that the retailer has already ordered for them from Diamond. And finally, if someone wants to order some particularly expensive item (such as a statue or limited edition hardback), payment MUST be received with the order.

OK, I already know what you are thinking. As a retailer, you simply know that your customers are not going to put up with that kind of abuse. They'll leave you immediately, and go buy their comics from Joe Blow Comics, down the street. As a customer, you bitterly resent the idea that you might actually have to pay for everything you order, even if that comic that sounded so good in the Diamond catalog turns out to be an unreadable piece of crap. And how would your good friend who runs the comics store ever not TRUST you to eventually pay him? That Chuck Rozanski guy is a complete jackass for even suggesting such a thing!

Well, whether or not I'm a jackass I'll leave to posterity to ultimately judge. What I definitely am not, however, is afraid of telling everyone exactly what I see going on. In my observations, what I see is that comics retailers are having substantial portions of their traditional business torn away by the Internet. Amazon.com and eBay are decimating their previously robust revenues from high ticket new items such as card boxes, statues, and books, while tens of thousands of smaller online retailers are nibbling away almost all high margin collectibles revenue, including back issues. What's left for most stores is a disproportionate overdependence on selling only items being solicited in the Diamond catalog. I think that most shops could survive in that very limited niche, as the sales volume in new material can be quite substantial. Each and every time that they get stiffed by one of their customers, however, the simple truth is that they have to absorb the entire financial hit. Simply put, non-payment by their best customers is killing America's comics shops. ALL of them. Some are managing the problem better than others, but only those who absolutely demand payment for all items ordered are currently thriving. Even they are far from immune from the consequences of this comics industry meltdown, however, as history has already proven that being the best swimmer on the Titanic is no damn use at all...

So am I Chicken Little, crying that the sky is falling, when it is not? Ask your local retailer what he, or she, thinks. My experience has been that almost everyone in the new comics retailing business is having a hard time right now. That's very bad for all of us, as it is only through the Herculean efforts of the 2,000 comics retailers who remain in business that the new comics industry survives. Over 8,000 less astute (or unlucky...) comics retailers have already been forced to close since 1992. If we lose another large population of comics retailers during 2008, the dreaded specter of our losing the critical mass required to keep the new comics industry afloat comes ominously to the forefront. Think about what life would be like with no new comics. It really could happen.

Earlier, I wrote that I had the solution to this problem. Well, I lied. The basic solution is that most comics retailers have to grow a backbone, and need to demand that they get paid for the comics and other material that they order for their customers. That just isn't going to happen, however, as too many comics retailers have their entire social lives centered around their stores. They are simply too afraid to ask their friends to guarantee payment for the comics that they order. That's the underlying problem with a business dominated by mom-n-pop stores that essentially operate as social clubs. As for most comics fans, they are so used to being able to walk away from the consequences of having ordered something that they eventually find that they don't want, or can't afford, that they cannot fathom that it is precisely their behavior that is destroying the financial underpinnings of their favorite comics retailer. That being the case, how can I possibly suggest that anything is going to change? Sadly, I already know of at least a half a dozen long-time comics retailers who are giving up, and I see their exodus as just the beginning. Our own very healthy back issue business may keep my company going longer than anyone else, but I do have to tell you that the thought that I may be the last one to survive in the comics world brings me no solace. I genuinely wish for a future filled with thousands of different new comics, and sold through a huge network comics shops. Sadly, however, that currently seems as much as a fantasy as wishing for corner newsstands and candy stores to return. Given the current unwillingness of everyone in the process to change, this wonderful world filled with comics might soon disappear, forever. That thought simply makes me want to cry.

So, was that depressing enough? I am genuinely sorry if what I just wrote disturbed you. I'm one of the few people in the world, however, who gets around enough to take the pulse of the entire comics retailing industry. If I did not publicly sound the alarm after all that I have seen over the past three months, I would not believe myself to have been honest with all of you. Things are extremely tough out there right now, and barring some sort of miraculous new comics project dropping from the sky that jumpstarts fan interest, this year is going to be a very hard one for most comics retailers. It is still not too late, however, for everyone to try and change our futures. The comics being published right now include some of the very best graphic stories ever created. If we can just find some ways to improve the finances of our retailer community, the future may well still turn out to be very bright. The day is long past, however, when the survival of your local comics shop is to be taken for granted. Resolving the problem of unsold new issues is a critical first step toward restoring the health of your comics retailer. All that I ask, is that you do whatever you can to help. Our mutual future depends on all of us taking positive actions...

Please send your e-mails to chuck@milehighcomics.com, and your letters to:

Mile High Comics, Inc.
Attn: Chuck Rozanski
2151 W. 56th Ave.
Denver, CO 80221



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