ICv2 spoke to DC Comics Executive Vice President of Sales, Marketing, and Business Development John Rood concerning the recently released numbers for November, the third month of DC’s revamped “New 52” (see “Justice League Stays on Top,” and “Comics Turn Positive”).  In a wide-ranging discussion Rood talked about the success of the returnable aspect of “New 52” launch, whether returnability is the wave of the future in the direct market, and the end-of-the-year sea change that has lifted comic sales in to positive year-over-year territory.
There are still some returnable books in November, is that right?
Yes, and some variants too.

Diamond puts a 10% reserve for returns on the rankings and indexes they report, and that could be either high or low.  Do you have any indication of whether that 10% is a good number?  Do you know of anything that would dramatically change what we’re seeing here after the returns come in?
I will tell you that as a company we were somewhat hesitant to do returnability so widely with the first four months and now the subsequent months of The New 52, and it’s been great that the books have been moving and not moving back towards us.  So, in general, returnability has been the right approach to tell the retailers that we share in the risk of this grand plan of ours.  In asking them to sip from a fire hose, in asking them to undo their order patterns that were months and months in the making, I’m glad that the returnability seems like the appropriate gesture.  I’m also glad that while the 10% is the appropriate kind of accounting metric to put into place, we’re nowhere near having to worry about whether that’s in the ballpark.

This takes us a little off the track on this month’s numbers, but we wanted to ask: this returnable program has been really successful, and retailers appreciate, as you said, that you’re behind them and have taken a portion of the risk.  They’ve done the best ordering they can and to the extent that they are off a little bit there’s some relatively minor returns.  Any thought to what it might do to direct market stores and their overall profitability and the sales of publishers if you did this on an ongoing basis?
On the face of it, I think any business person would hesitate to take a non-returnable channel and hurry up and make it returnable.  But, I think there are occasions in our line of business where the seismic changes in month-to-month expectations necessitate that we use returnability.  We tried to do a mixed economy of incentives for DC Comics The New 52, as we’ll try to do a mixed economy for a Vertigo title next year, or the next big thing from DC, or any of that stuff, where we look at all the tools in the toolbox and hopefully aren’t trying to drive nails with our screwdriver.  In other words, when does a title make good sense to be a variant, when does a title make good sense to be deep-discounted, when does a title make good sense to be returnable, when do you over ship.  We’re not going to tear off covers or imbed digital codes, but we’re looking at all the things in front of us to say, can the retailer appreciate it, and can it provide a healthy incentive versus an unnecessary incentive?  But to your question, I hope our business of thousands of local comic shops stays robust so that neither the publishers nor the comic shops feel the need to do a radical change of business terms.

The biggest number that popped out at us in the Diamond release on November sales was that the year-to-date, year-over-year number just turned positive for the year.  If it ends up the year this way, which it certainly looks like it will, this will be the first up year in comic stores since 2007.  Any comment?
Yes, we're just pleased as punch. If the anecdotal reports from other publishers are to be believed then they’re having good months too.  And that’s great.  The best thing that we could have hoped for was that The New 52 would raise all boats, and that smells like it is by industry-wide numbers.  There’s something big happening with a single publisher that when traffic rises (current customers, lapsed customers and new customers), that they’ll stay in the store for a while and buy something else. And there are a lot of great stories and characters out there beyond DC.

Is DC seeing a decay in month-over-month sales of new titles as you normally would going from a #2 to a #3?  Are DC’s sales dropping, or are they holding fairly constant but the pie is growing, in terms of explaining why the share number went down?
Well, I’ll have a different answer if we have this conversation next month.  But right now it seems that it’s a holding idea.  We have some FOC’s for #5s that are greater than #4s on a few titles.  That kind of stuff is obviously as cool to report as it is is surprising to learn, for one person’s answer.  I go back to that answer that I gave you last month too, that what’s weird about winning the dollar share so-called battle is that we have a hell of a lot of books at $2.99. (Although there’s a great book in store that is $150, which customers are encouraged to buy for Christmas and Hanukkah, which is a collection of all the #1s.)  If we were trying to win dollar share, we wouldn’t have all these books at $2.99.  And then for unit share, for all the robust activity we have across the stories and characters of DC Comics and Vertigo, we’re not putting that many titles out.  We’re putting about half as many titles out as the other guy.  So to “win'” and I’ll use that in quotes because we don’t follow this battle, but to again be having this conversation about a so-called unit share victory surprises us as well.  The numbers that we do follow when we look at November for DC is October for DC and November 2010 for DC. And then we look at the overall industry number, that’s important to us as well.  So, back to your earlier question, it’s great to hear great traffic stories from the stores, and great sales stories from publishers beyond ourselves.

You said the decay pattern is less than it normally is as issue numbers get larger; can you quantify that at all?  What’s a normal drop off, and what’s the difference between that and what you’re seeing?
I guess a couple of things.  Back at the road show, when we tried to introduce this idea to retailers, we anticipated that we’d be having a conversation about cancellations after five, six issues.  So the fact that it is going to be far later than that, that it is going to be discussed and announced in 2012 instead of 2011 is really great. It’s really surprising.  But to your question about specifics, anybody can kind of get a sense of natural decay of a given title as it goes from issue one to issue eleven.  Far more often than not across these 52 titles, that trajectory that we predicted is much flatter.  Again, in some cases going up, which is just defying gravity.  The law of diminishing returns as it was.  Or the fact that we’re not in as much in the publicity and advertising world was going to suggest that we would have huge fall-off on these titles.  We’re not having that yet.  We’ll have it, but so far not nearly at the trajectory that we predicted or we calculated for.

You mentioned the New 52 Collection and that’s kind of an interesting book because it’s not traditionally the way you collect things.  You collect story arcs; this is all the books from a specific period. How did the orders come in on that, and how’s the response looking?  I know it’s just shipping.
We’re going to get more detail over time, but you’re right, it’s an interesting item to have on your coffee table, in part because at eight pounds it might knock your coffee table over.  I think for obvious reasons the national global readership will be far more interested in collected editions when we do volume one beginning in May of next year of all these titles.  But we couldn’t have such a monumental redirection in DC Comics The New 52 and not commemorate it in a big volume, to give somebody a chance to have all of those there.  The fact that folks are willing to pay for a $150 book tells me that we might be coming out of our recession.
Well, you know the retailers are, you’re not sure yet if the consumers are yet.
Right!  We’ll soon find out.

So what kind of numbers did you get?  Can you talk about that at all?
It’s a cool book.  I can’t talk about numbers.

Did it go into bookstores as well?

That will be interesting too, to see how that goes.  Any changes to what you’re seeing in digital?
I know you’ve led a charge about getting more specifics out there, and I don’t want to give up on that notion, because I think your points are fair, that you’ve made elsewhere, about can we get some more transparency from the publishers about their digital specifics.

What I can tell you is that the percentages are holding.  If a given title is having 5% of its physical sales additive in digital, that’s holding.  If it’s 15% on another title, that’s holding.  There haven’t been variations in percentage of physical, as these titles come from #1 to #2 to #3 to #4.  There will be some false positives when new platforms and products get added.  As an example, Kindle Fire, whether it’s our collected editions and graphic novels or whether it’s comiXology’s app on the Kindle Fire.  There will be new digital platforms and new digital devices that will provide a false lift to those digital numbers of ours as well.  What continues to puzzle me – not puzzle me, but what I find interesting – is that our highest performers in digital – again, as measured as a percentage of physical – are your iconic characters like Superman and Batman, but also your iconic publishing franchises like Detective and Action.  They are just holding strong in what seems to appeal in digital readership.

You said you might get a false lift when you add new devices; why is it a false lift?
It’s just not apples to apples.  It’s a different month born of new platforms or new partners.  It’ll be a lift, but I’m trying to look at on a single given partner or single platform where are we going directionally, and it is identical in its trajectory to our physical direction.

That’s very interesting. And you’ve talked previously in past months about how surprising it is that sales patterns on specific titles for example are so dramatically the same between the two channels.  It’s looking a lot like very similar tastes.
Very similar tastes--we are affirming anecdotally and then in what research we’ve done that it’s different customers with very similar tastes.

You used the examples in your discussion there of 5 to 15% of print sales as digital; is that kind of the range you’re seeing?
It’s not far from the range, but I use it just as examples.

What about newsstand--anything new going on there?
No news there as of yet.  And we’re enjoying some good subscription lifts, but it is such a small piece of the pie.  And it’s not a business we’re at in earnest.  Obviously newsstand provides a marketing value in having those titles in places where one might not have seen them before, but there’s no business news that we’ve noted.

Going back to digital, one vibe we’re getting is that the availability of day and date comics may be taking some share from piracy.  Do you think that’s happening?
It did in the music business.  When you have a compelling interface the market in general, legal and otherwise, is willing to pay up.  And so, I can probably find these songs somewhere other than iTunes, but I keep going back to iTunes.  The only thing we have there is anecdotal.  Obviously Warner Bros. and DC Entertainment follow piracy issues quite closely but we haven’t done anything in research or have heard enough anecdotal to say that in our particular world of comics or specific to DC's The New 52 piracy has gone up or down or anything like that.

Here’s hoping that all the great publishers in our category can beat the system by having compelling product with great partners – be they the physical partners in our local comic shops in the direct channel or through digital interfaces that are less wonky than the world of piracy.

For last month's interview on this topic, see "DC Execs on October Sales, Part I."