Most of the time when we discuss comics on this site, we are referring to something called the direct market. This excludes the massive sales found elsewhere (e.g. book markets, manga), but is the primary space for discovering new stories in individual issues and the latest developments from both Marvel and DC Comics. While both of these publishers, commonly referred to as the "Big Two," are linked with multinational corporations and enormously profitable film franchises, the direct market they occupy is a niche in overall entertainment consumption. The total revenue earned by publishers through the direct market in 2018 was slightly above $500 million, and DC and Marvel accounted for almost 70% (approximately $362 million). The third largest publisher was Image Comics with slightly less than 10% and the numbers grow steadily smaller from there with IDW Publishing under 4% and Dark Horse Comics under 3%. While these publishers possess alternative streams of revenue (e.g. book market, digital sales), most rely heavily on sales through the direct market. This means, beyond the Big Two, comics publishers are carving up increasingly small slices of an already small pie; that leads to big problems.
With very few resources and lots of creative individuals dreaming to work in almost all aspects of the industry, the direct market is perfectly staged for labor abuses, mismanagement, and lots of financial shortcomings. It's a system where survival is difficult and almost anything can be justified in the quest for survival. In the past few months alone, there have been multiple incidents of major publishers revealing these exact sorts of problems, and they make for a clarifying pair of case studies. That's why we are going to look at IDW Publishing's second-quarter financials and the flurry of stories surrounding the Lion Forge-Oni Press merge, in order to clarify what sorts of problems arise and whether there might be hope for improvement in the near future.
Looming Financial Woes at IDW
IDW Publishing is the comics branch of the larger corporation IDW Media Holdings, which is required to release financial statements as a publicly held company. They recently produced their second quarter statement for 2019, as reported by Jude Terror at Bleeding Cool, and the reports did not look good with a net loss of $3.7 million. The publishing branch of the company accounted for $1.6 million of that loss.
IDW Media Holdings Chairman and CEO, Howard Jonas, issued a statement restating a plan to be profitable in the year 2020 and focusing on how the company could leverage its many intellectual property (IP) holdings in markets outside of comics. These holdings include Locke & Key, October Faction, and V-Wars, all of which are in various stages of development at Netflix, as well as up to 15 other unnamed properties that warrant optimism.
This could provide shareholders with reason for optimism, but shouldn't be seen as a positive sign for IDW Publishing or direct market publishers. While Jonas signaled a belief that strong, future releases would limit losses for this branch of the company, there was no suggestion of a plan for it to become profitable. It appears that the publication branch of IDW Media Holdings may be seen as a loss leader, developing new IP that can then be transformed into profitable projects in other forms of media like television. While this plan may work for IDW, it does not provide a sustainable publication model for firms without strong ties to television and film.
However, the behind-the-scenes picture for IDW does not provide a strong argument for optimism. The corporate leadership of the company has changed dramatically over the past several years, with multiple reports of strong encouragements to sell the entire company. Additionally, the company is engaged in multiple lawsuits, including a sexual harassment claim by a former female employee and Vice Chairman of the Board, Stephen Brown, being accused of fraud. The cost of this litigation paints a precarious portrait of the future at a company already struggling with its finances, and now facing additional ethical scrutiny.
The Disastrous Oni Press-Lion Forge Merger
While the finances of the merger between Oni Press and Lion Forge, along with its parent company Polarity, announced on May 8th are not public, they have undergone a great deal of ethical scrutiny in the wake of that announcement. The initial announcement in the New York Times focused on how this combination of two smaller publishers would combine strengths and cut costs, but the resulting narrative has not matched this tone. There have been a wide array of stories regarding working conditions prior to the merger, the announcement of the merger to staff, and the resulting layoffs and structural changes made—almost universally negative.
Explaining and reflecting upon all of the problems emerging in the wake of this announcement would require a lengthy article unto itself, and they have been thoroughly reported by Asher Elbein at The Daily Beast. The editors and other staffers laid off as a result of the merger have been primarily women of color and persons with disabilities; this includes the Eisner-award winning editor and cartoonist Christina "Steenz" Stewart from Lion Forge and Desiree Wilson, the only black editor at Oni Press. These choices look particularly harsh considering Lion Forge's reputation as a publisher that prides itself on diversity. Wilson also came forward to speak about the difficult working conditions at Oni Press, being paid only a $30,000 salary to manage 30 comics titles (about three times as much as the industry norm). These extreme working conditions and other stories of disorganization and poor labor relations have been substantiated by multiple former employees. Oni Press has issued a statement disputing any allegations of discrimination or portrayals of a dysfunctional workplace, but has not disputed any specifics.
One element that lends credence to allegations of mismanagement is the absence of an HR department at Oni Press and the subsequent refusal of the company to even hire an HR consultant following race-based discriminatory comments directed at Wilson by a creator. The many stories to emerge regarding discrimination, poor labor relations, and ineffective communications share the theme of being issues that could be resolved (or ameliorated) by properly trained HR and legal staff. It seems probable that these essential elements of any company may have been considered inessential or unaffordable due to the market in which both publishers operated. With many of the key individuals accused of poor business practices remaining in leadership roles, it also calls into question whether any can expect conditions to improve after the merger.
Symptoms of a Much Larger Problem
The individual cases of struggling finances, sexual harassment, alleged discrimination, poor working conditions, lack of proper HR and legal services, and more found in this pair of recent stories will likely seem familiar to anyone who has paid attention to the business of comics for long, and they there is an underlying theme that connects these specific publishers and their many problems together. As we've previously shown in pieces documenting the sales limits for comics in the direct market and the state of creator-owned publishing lines, the direct market is a difficult place to build a successful business, either as an individual creator or business. There are too few resources being pulled between far too many publishers. Two of the three publishers mentioned in this article were among the top ten for overall dollars in 2018, but their struggles appear dire from the outside looking in. In a system where 70% of an already niche set of consumers reliably belongs to only two competitors, there are not enough dollars left to fund healthy business environments. It appears inevitable that many publishers outside of the Big Two would inevitably face serious financial shortcomings or submit to pressure to cut corners wherever possible, likely both. This problem is only exacerbated in a creative industry like comics where most employees and owners perceive the work itself as a dream, and make more egregious compromises or excuses than they might in another profession.
Regarding concerns for the fair treatment of employees and upholding of labor standards, there is only one acceptable response. Publishers absolutely must be expected to maintain an acceptable degree of professionalism, including dedication to diversity and fair treatment, as is often mandated by state and federal laws. It is inexcusable for any company to fall short of these standards, even if doing so might allow them to sustain operations.
Providing a healthy business environment for employees is dependent on having a sustainable business that can afford such an environment. This is where the shared difficulties facing direct market publishers becomes much more grim. The direct market has been largely stable since recovering from a speculation bubble in the 1990s, but the currently stable level of revenue obviously cannot support most of the publishers operating. In order for these conditions to improve and for stories like those explored above to grow less common, the markets that support these publishers must grow or the number of publishers must shrink. This is necessary for the long-term health and sustainability of many comics publishers, professionals, creators, and stores. The seemingly impossible question, of course, is: How?
Will It Get Better?
There are some possible solutions in the near future. Many publishers, including the Big Two, are seeking to expand the direct market and grow the number of readers purchasing comics directly from specialty stores. Given long-term trends in the direct market, this seems unlikely, at best. Others have taken to a strategy of releasing new IP in the direct market with an expectation that it will be subsequently optioned and adapted for more profitable media. This appears to be a core part of IDW's strategy, one that has yet to produce profitable results and does not make the direct market anymore sustainable, if outside interest fades.0comments
The most optimistic solution is one in which comics publishers seek to grow significantly beyond the direct market, maintaining existing readership while reducing it to a much lower share with other sources of readership from booksellers, libraries, educational outlets, digital outlets, and others. This is a task far more easily said than done. Many publishers, including the Big Two, have been working to expand their readership in these markets for years with limited results. However, it is a task that can no longer afford to be seen as an idealistic possibility, but a necessity for survival. Failing to grow comics readership beyond its current niche status will have even more dire consequences than those already impacting their employees and related businesses.
Conditions are worsening for many working in comics today and that steady degradation of value will result in unpredictable outcomes. The only way forward is for comics publishers to simultaneously uphold a high-standard for labor relations and to expand their readership to sustainable levels. Anything short of this is doomed to failure.