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Can Comics Make The Leap To Digital In A Single Bound?

At the stroke of midnight on September 1, the comic world changes forever. Yes, DC Comics relaunched its entire line with the new 52. But relaunches happen all the time, albeit not on this scale. What will really shake the four-color universe is the fact that, for the first time ever, full official digital versions of DC’s entire lineup will be available for download on the same day and date as the paper editions.

This is a bigger deal than the death of Superman, the new face of Spider-Man, and every major "continuity event" of the past decade rolled into one. That creaking sound you hear is the comics industry being pulled into the future, bit by painful bit.

Why is a media entity as large as DC and an industry as widespread as comics publishing still wrestling with the problems of digital distribution in 2011?

The short answer is that the retail distribution system for comic books is tied up in a fist-sized knot and has been for the last two decades. Starting in the 1980s, most comic publishers discontinued newsstand sales, where unsold issues could be returned for a refund, in favor of a "direct market" system that shipped exclusively to specialized comic book stores on a non-returnable basis.

But it turns out there is a problem distributing your product exclusively through independently owned retail stores run by and for your products’ biggest fans. Despite the efforts of some active and visionary retailers, the odor of overgrown adolescent male hangs heavy over many comic shops, creating a forbidding environment for women, kids, and casual fans who might have an interest in the material but don’t want to put up with old-school comic book culture. The Simpsons character Comic Book Guy and his shop are, unfortunately, too close to the truth to be considered a parody of many actual comic stores. The problem is, if you don’t go to comic stores because you don’t like real-life Comic Book Guy, it’s very tough to buy and become a regular reader of comics.

You would think that digital comics offer a neat way out for the industry. Comics need to expand their audience; the web provides an easy means of access. Tablets are a great way to read comics. Digital delivery does away with the expense of printing and distributing paper copies, potentially breaking the cycle of increasing cover prices without cutting the throats of creators or publishers. Paid online channels like the Apple iStore and Netflix are already well established in the minds and habits of consumers. It even solves the problem of where to keep all those old comics once you’ve read them.

And yet, in the Bizarro-world of the comics industry, all these plusses are actually minuses. Comic retailers are in such dire straits that the loss of even 20% of their regular customers to digital sales would put many of them out of business, taking the entire direct market down with them. Publishers are still dependent on the retail channel, no matter how sick and dysfunctional it has become. They can’t burn that bridge until they are safely across it, but they can’t take more than a few steps without setting it on fire.

Comics publishers—whose staffs often include large numbers of old-time fans—saw themselves as having little to gain and much to lose by taking the plunge into digital. They feared the kind of rampant piracy that has drained profits from the music and video industries, as if they could prevent that by keeping their product in printed format. Even today, they do not believe in their hearts that aging collectors, who constitute the majority of the current comics market, are all that interested in giving up the "collectable" paper issues. They may be right: Digital comics only accounted for 1-3% of all sales ($6-18M in a $635M market) in 2010, according to market-watcher ICv2.

Consequently, most of the big players were reluctant to make their comics available in digital format through legitimate channels throughout most of the '00s, when the opportunity was ripe. This meant that the fleet of pirates who scanned the printed books and put them online, usually on BitTorrent sites, had the seas to themselves. Readers ready and willing to pay for digital comics had no one to give their money to; the publishers themselves ended up creating a whole generation of consumers who expect digital comics to be free.

It took an outside player to bring order to the digital market. In 2007, a startup called Comixology came on the scene with a simple platform to host and charge for digital comics. Starting with a few independent comics and publishers, Comixology steadily gained visibility and soon became the de facto standard for digital and mobile distribution.

Comixology has had only modest success in real terms so far, but there is evidence that they are making some headway in changing minds around the industry. Their affiliate program has drawn some of the sting of transition away from retailers, giving them a way to recoup some revenues from digital comics and showing that the publishers do care about maintaining a viable brick-and-mortar channel for the foreseeable future.

But of course, to avoid competing with retailers, the pricing for digital can’t be lower than print despite the huge cost efficiencies of digital distribution. $2.99 to download a single issue is too high a barrier for a lot of readers, especially those who are accustomed to paying nothing on RapidShare or Torrent sites. Prices won’t drop until there are enough digital readers to compensate for the inevitable destruction of the traditional retail supply chain, and there won’t be enough digital readers until the price drops. The fist-sized knot strikes again.

So here we are in 2011 and the industry is just beginning to seriously discuss real, commercial models for digital comics. It’s a critical moment. If Hollywood money and the bookstore channel dry up before publishers have successfully migrated their audience (and their revenue stream) to digital, they will be stuck with the same dysfunctional retail system and an acutely shrinking, aging audience.

Will DC’s move signal the beginning of the next era for the comics industry, or the beginning of the end? In classic comic cliffhanger style, we’ll have to wait for the next issue to find out.

Rob Salkowitz (@robsalk) is author of four books on the future of technology including Young World Rising and Generation Blend. He is working on a new book on the future of pop culture for release in 2012.

[Image: Flickr user RachelFujita]