Guest Post: Andrew Bayer on Digital Comics Pricing

April 12th, 2010 by | Tags: , , ,

Andrew Bayer is a friend of mine, and he had a few things to say about digital comics pricing, specifically with regard to Marvel’s iPad app. I thought it was interesting, maybe you will, too.

With Marvel’s iPad/iPhone app coming out and receiving gobs of acclaim for its presentation and usability, we seem to have finally gotten to the point where digital comics distribution looks like a viable business. There’s a distribution mechanism, a gorgeous UI, and most importantly, the buy-in of one of the Big Two. There are still big questions to be answered, the same sorts of questions that had to be answered for digital music and still need to be answered for digital books – how do we get the ability to buy a comic and read it in another app, on another platform, etc? How do we get to a standard file format for digital comics? How do we get rid of DRM? Of course, that last one plays into all the others, but the simplest answer there is that we, the consumers, need to prove to the publishers that there’s a strong enough market for digital comics, and a strong enough demand for portability, that they can see that DRM is not needed in order for digital comics to be a money-making endeavor for them. And that brings up the biggest question of all – how should digital comics be priced?

My initial reaction to Marvel pricing single issues of digital comics at $2 was that they were setting too high a price point – that’s been the general reaction I’ve seen pretty much everywhere, in fact. After all, Marvel’s already paid for creative, editors, legal, etc, and while there’s still production/distribution overhead for digital comics, that’s definitely going to be a lot less per issue than it is for physical floppies. So digital comics should be really cheap, you’d think. But if a publisher sets up digital comics pricing with the assumption that all the costs involved in producing the comic other than those specific to the digital edition are already covered by the print edition, they’re doomed. If the digital edition is significantly cheaper than the print edition, you’ll start seeing sales moving from print to digital – the eternal fear of the content companies that the digital version of something will cannibalize sales from the physical version. And if Marvel’s making less revenue for each digital issue than they are for the same comic in print form, then they’re going to lose revenue for every sale that switches from print to digital.

For that reason, the lowest possible price for Marvel to charge for a digital issue is one that nets them the same revenue as they’d get from a print sale of that comic. That’s the only way that digital comics can be a viable distribution stream for the publishers. They have to work under the assumption of a worst-case scenario – what if every print sale turned into a digital sale instead, with no increase in the number of copies sold? If the publisher makes less on each digital sale, well, then that worst-case scenario destroys the publisher, and they can’t take that risk. I’m working on the assumption that $2 hits that sweet spot for Marvel, where they’re taking in as much per digital issue sold as they would from a print sale. That seems about right to me – cut out the printing and shipping-to-Diamond costs, and then strip out Diamond’s cut, and finally the retailer’s cut, with the addition of Comixology’s cut, and $2 is probably the closest round number. Marvel’s not charging that because they’re trying to gouge the digital comics consumer – they’re charging that because they have to or the business model falls apart.

David brought up the question of old back issue pricing on Twitter – right now, Amazing Spider-Man #1 is at the same price in Marvel’s app as the latest issue. Admittedly, that doesn’t feel quite right – shouldn’t prices be different for issues from the ’60s than those from today? But I’d argue that Marvel again has no choice – single issue pricing must be consistent. What business case is there for selling the old issues for less? Yeah, the cover price is a lot lower than it is on a new comic now, but it’s not like you can go buy a new copy of a book published in the ’60s for lower prices than a book published a couple years ago (assuming the older book is still in print, of course). Why should digital comics be any different? Now, Marvel is missing a key feature in their store – the ability to buy an “album” of comics. Say, the first 50 issues of ASM for $30 – just as it’s cheaper to buy an album of mp3s on Amazon than it is to buy each song individually, it definitely would make sense to have similar bundling with digital comics. But Marvel can not budge from the $2 price for single issues, no matter how old the actual comic is – if they make ’60s comics a buck a piece, they’re setting a new floor for digital comic prices. If people can buy a Marvel comic for $1, why do they have to pay $2 for a different one? Marvel would end up facing pressure to drop prices on new single issues as well – and that’s just not viable as a business. There can be flexibility in pricing bundles – $30 could buy you the first 50 issues of ASM, but the same $30 might only buy you the first 25 issues of Brand New Day-era ASM – but I don’t see how Marvel could have the same sort of flexibility in single issues. Whatever you set as the lowest price for single issues, you’re going to end up having as the price for any single issue.

Similar Posts:

Post to Twitter Post to Facebook Post to Reddit Post to StumbleUpon

18 comments to “Guest Post: Andrew Bayer on Digital Comics Pricing”

  1. I don’t know. I can’t call it.

    There’s a lot I’d like to say on this topic, but instead, I will try to stay focused and coherent.

    I don’t know much about price points versus profitability, but I do get the impression that two bucks is right on the edge of what comicdom will allow. Also, I like Kirkman’s Invincible set-up where, I think, each digital ish is $1.99, but the first two digital trades are $9.99 (each containing six issues, iirc).

    I have yet to decide if I will keep this iPad unit, model, or even stick with the platform, but it would suck Mighty Mjolnir to buy all those wonderful digital comics but have no way to consume them.

  2. All reasonable assumptions, particularly the “this is what we can charge if everyone goes digital and the audience doesn’t grow and still retain some kind of profit” which I hadn’t really considered, but should have. And, of course, different books are profitable at different thresholds.

    As for the archival material costing the same as current books, that’s something that isn’t likely to change. Marvel doesn’t charge less for a trade of old Spider-Man stories. In some cases, they put it in a fancy package and charge more, only really having to cough up the cost of the new layout and fancy printing. The content, that which we really think we’re paying for, is a sunk cost for Marvel (okay, maybe they pay royalties). I do see some kind of “album” pricing strategy coming into play, but we’re talking about the infancy of this delivery system.

    The other thing that has to come into this is variety. There’s a ton of books on Marvel’s iPad site (well, around 100+, haven’t counted). But there’s precious few I really want to pay for. Maybe IRON MAN, maybe some others. No books were added last week, and not many are available in terms of complete runs (oh, sure, the Loeb/McGuinness HULK is). Need more variety to keep people coming back.

    Again, though, this is week two of the product and service. I should be patient. But I’m not.

  3. Yeah, the content is still lacking at this point, but I’m assuming that’s because they aren’t just slapping the raw images up there – someone has to go through each page and mark off the panels, the flow, etc… That’ll take a while to do for a decent back catalog, but hopefully Marvel’s got resources dedicated to doing that for both the back catalog and all new issues.

    I’m really curious to see whether Comixology and Marvel decide to do a non-iPad/iPhone version of the app. Portability of the content (i.e., buying a CBR file or something along those lines) would be ideal, but if that won’t happen for a while, the next best thing is support for the app on multiple platforms. I wouldn’t be surprised if Amazon has reached out to Marvel/Comixology in re: the rumored color Kindle, though, of course, Amazon’s vested interest in dominating the distribution channels for the Kindle make that potentially very problematic.

  4. Sure, there’s some translation involved, but at least they don’t have to scan the old materials, as comics are all assembled digitally these days, well at least from the Big Two. I bet the process is pretty quick, though. My guess is you draw boundaries in InDesign or whatever and link them through a custom plugin, then spit out the document file with that information embedded.

    Have you tried the Marvel Comics reader on their DCU site? It’s…well…not as good as ComiXology’s. Was reading SOLDIER X #1 today and kept saying “Geez, I wish I could just snag this from the Marvel Store and read it on a thing that makes reading this stuff fun.”

    Color Kindle will have a *lot* of competition by the time it rolls out, and unless it’s backlit somehow (which I don’t think is the case), it’s going to look anemic compared to the vibrant candy hues of the RGB colorspace. Also, the Kindle, as much as I did use it, was slow and clunky. I had one because not much else did the job well.

    Hmm. CBR reader for the Pad. I should investigate…

  5. EDIT – CBR/CBZ readers all cost money to download, but the content is “free”. Readers with paid content are free. Interesting, if not predictable.

  6. @Matt M.: Any examples? I don’t think I found any apps for viewing cbr or cbz files.

  7. An interesting piece, but some of the logic is unconvincing. If Marvel needs to work under the worst-case assumption, that it will just turn print readers into digital readers without generating any new customers, then why do so in a way that gains them no money for doing so? Why not price at $3 – you may convert far fewer readers from print to digital, but you’ll make an extra buck for each one you do. If you’re working under the assumption that digital will simply convert the print reader, then if you want to price at the same profit you might as well not go digital at all.

    Obviously, Marvel feels that pricing may have some impact on sales, and lower pricing may draw in new readers. There is some theoretical sweet spot for this, something above “free” which draws in a large number of readers while still generating worthwhile marginal profits. Is there risk involved? Of course, there’s risk involved in all business, and they’re likely to not find the exact sweet spot – but to not even consider the impact of pricing and net readership would not be good business, and it would be functional risk as well, risking potential profits.

    Note that I am not claiming that Marvel did not make this consideration; they may well have looked at the possibilities and decided that $2 is their sweet spot, that pricing at a buck would not have drawn in more new readers than it would convert from print. Marvel is also so big a presence that they have to be concerned even at converting customers from print to digital. In print, they have to worry not just about their own immediate profitability but that of their whole distribution system. If Marvel converted half their DM readership to digital and the DM collapsed as a result, then that would result in the loss of a vital source of profit.

  8. West: I’m using Comic Zeal 4 and am pretty happy with it, other than some input hiccups (but I suspect those might be u/i bugs and not due to lazy programming.) Caveat, I do have to organize things with a Comic Zeal client on my desktop and compile the pages into .cbi files for reading on the pad. Flipped through FLEX MENTALLO and have to say that I don’t see much reason to pull out the single issues anymore.

  9. “But Marvel can not budge from the $2 price for single issues, no matter how old the actual comic is – if they make ’60s comics a buck a piece, they’re setting a new floor for digital comic prices. If people can buy a Marvel comic for $1, why do they have to pay $2 for a different one? Marvel would end up facing pressure to drop prices on new single issues as well – and that’s just not viable as a business.”

    Why does Marvel (or any publisher) have a range of prices for their print material?
    Because page length (32, 64,96,144, etc), reprint-or-original material (reprints are cheaper as production’s already been done, and, in most cases, profit’s already been made in previous pirntings), and physical packaging are all vairables!
    As page length & physical packaging are moot in digital downloads, the key factor becomes “original (new) or reprint (old)”.

    Why not do a “window” (say, 60 days) for NEW comics at $2.00, then drop the price to $1.00, while keeping all single back-issues at $1.00?
    In addition, do custom “albums” at $.75 per included issue to encourage “bundling” and volume sales.

    Hell, you can buy dvds (retail, not used) for $4.99 that were $19.99 when they came out just 6 months ago! (Check any Best Buy for proof!)

  10. Intersting points outlined here, but the one that is most open for debate, IMO, is the idea of worst case scenario of only converting current readers from print to digital. The real excitement of digital, to this long time print reader, is it’s ability to potentially draw a whole new group of readers.

    And a considerable group at that.

    If the product can be delivered to a generation of tech savvy kids in a way that they are comfortable with, then I would hypothesize that digital has huge potential to exponentially expand readership. No more need to deal with the insulated world of the LCBS, which is often a huge deterrent to new readers.

    Declining readership has been a key driver of the increase in print comics price. After all, if 500K read a print issue instead of 20K, we wouldn’t have to pay $4 a book. Frankly, if digital can’t increase readership then the comic will just remain on the long path to extinction its already on.

  11. […] Andrew Bayer discusses pricing of digital comics, and why it makes sense for Marvel to charge the same $2 for […]

  12. “But Marvel can not budge from the $2 price for single issues, no matter how old the actual comic is – if they make ’60s comics a buck a piece, they’re setting a new floor for digital comic prices. If people can buy a Marvel comic for $1, why do they have to pay $2 for a different one? Marvel would end up facing pressure to drop prices on new single issues as well – and that’s just not viable as a business. There can be flexibility in pricing bundles – $30 could buy you the first 50 issues of ASM, but the same $30 might only buy you the first 25 issues of Brand New Day-era ASM – but I don’t see how Marvel could have the same sort of flexibility in single issues.”

    This is a terrible argument. At the comic shop some Marvel comic issues are $2.99 and others are $3.99. The reason for this difference is usually because Marvel knows people will pay more for more popular titles, not because of any increased value. Marvel and DC also often put out $1 reprints of old issues to get people into reading a critically acclaimed series. If this works for print, I see no reason why it wouldn’t work for digital.
    Paying the same for old, recent, and brand new comics makes no sense. $2 is sensible for new releases because a comic fan saves money, without hurting Marvel’s revenue, but recent and old comics already collected in inexpensive tpbs or hardcovers should not be sold for $2 because people would not be paying $2 for these comics in their shops.

  13. I don’t have any problem with the $2/issue. I do think however, they should look at the steam model of digital distribution and have occasional sales. What I do mind about the Marvel App is that there is too little of the catalog online.

    This last week particularly, I wasn’t able to to get to the comic shop easily, and would have happily paid even 3$ for a digital version of SHIELD, as there was a lot of buzz on that book. And even the panel by panel experience makes the reading possible on the iPhone. Not to mention that it wasn’t really easy to just browse around for stuff to read.

    That’s the real problem with the Marvel App, it’s too hamstrung to actually compete with buying comics. Because, if the store was up to snuff, I would have bought an ipad.

  14. One thing to keep in mind is Marvel is locked into the iTunes pricing model: their comics have to be sold at a $x.99 price point. That goes to show that Marvel is certainly not interested in selling comics for .99, but if Apple’s terms more flexible there might have been $1.49 comics in the mix.

  15. “Terms were more flexible,” that is.

  16. Wouldn’t a subscription deal, like $10-$20 a month work out better? And a $1 option to buy?

  17. @Eric:
    See Daniel’s comment about the iTunes pricing model. I actually hadn’t considered that when I initially complained (not on here) that I’d have preferred $1.50, especially given that I don’t pay cover price for anything (and I’m assuming most people don’t pay cover price for stuff the read regularly at least). $2.13(after tax) for digital vs $2.39 for a physical copy isn’t particularly compelling. However, if the options are basically stuck with $1.99 or $0.99, I can certainly understand why they wouldn’t want to drop to the lower bracket.

    Of course, the music store does have songs for both $0.79 and $1.29, so this whole line of reasoning is potentially flawed.

  18. One of the biggest impacts of comics going digital is that all comics are now always available and always new. Now comicbook backlist is back in the hands of the publishers and creators. What was only available as a collectible (used) is again a valuable revenue generator for the publisher and creator and an active part of the brand’s trans-media engine. If Steve Ditko had gotten paid a royalty for Spiderman #1 he would be getting paid for each new digital copy sold today. Pricing comic backlist like new titles is good for creators and good for publishers. A classic is a classic and it’s value should not be diminished by the date on the copyright page.