[Yesterday Diamond announced their plan to team with iVerse to offer digital comics downloads for sale in comics shops. Gievn the hot button nature of this discussion, and the big picture nature of the announcement, Dave Bowen, Diamond’s Director of Digital Distribution, was eager to talk to us to explain more about it. This is a long interview, but Bowen goes into welcome detail on the thinking behind and motivation for this plan. Short version: retailers deserve to be brought into the process.]
THE BEAT: Let’s start out, suppose I am looking to buy the new issue of…let’s say Transformers. I walk into my comics shop. What’s going to happen?
BOWEN: If the comic shop has it on the rack, obviously you’ll probably buy it that way. If they don’t have it on the rack and it is one of the books that IDW has chosen to be part of its program – publishers don’t have to put heir entire line in this program. If IDW wants to put Transformers on the Playstation first, they can do that. We’re going to imprint Plexiglas document stands and give them to retailers. They’ll have a sell sheet for the new week’s books inside and in fact the one I’m looking at on right now has Transformers ongoing #16 as an example. That POP display is one of the ways that the conversation might get started about a digital sale. We’ll also do shelf talkers and header cards for books that are available digitally as well.
One of the things that we really want to see happen out of this is to break down what we think is a barrier to discussion of digital comics in physical comics shops. Print comics are not going anywhere anytime soon. I think that’s fairly obvious. But digital comics are becoming an important part of the landscape and the idea that a customer might be uncomfortable disusing their digital buying or reading habits with their comics shop is, I think, commonsense. It would be rude. I think some customers do it and some retailers are comfortable talking about it. But from talking to retailer we don’t get the impression that it’s common. However, we do get the impression from some very smart retailers that maybe between 15 to 20% of their customers are already consuming digital comics in some fashion. That’s not scientific; it’s just kind of gut. That said, we’d love to see that discussion come out in the open and we’d love to stimulate that. The way we do that is to incentivize the retailers appropriately to participate in the sales process, to give them a direct sales incentive that broadens their shelf and have them handle things like stock outages. Ultimately, what we really envision is infinite inventory availability as a backstop for retail shops.
We’re very interested in long format material. The example that I’m bringing to ComicsPRO has a digital graphic novel on the sell sheet. It’s from NBM, The Library of 20th Century Murders: The Terrible Axe Man of New Orleans.
THE BEAT: Ironically I was just thinking about Rick Geary this morning as one of my all time favorite cartoonists. So I’m there with that!
BOWEN: Right, when we talked to Terry Nantier at NBM for an example he thought would be on the horizon this is one he gave me. He said, Okay we’re just discussing this, but if the trade paperback is $9.99 and the digital version would be $6.99. We also have something called the Digital Plus version, which if you buy the print you get digital additionally. He decided on the fly that $2.99 made sense for the Digital Plus version of a full graphic novel.
Essentially an aggressive retailer could make this a significant part of their customer interaction process. They could use the point of purchase materials, they could initiate discussions. We really think that if you take an example like Meltdown Comics that is absolutely innovative in what they do, I could imagine a couple of years from now or sooner, them having a wifi area of their shop that is digitally enabled and localized. We’ve got some really amazing long-term plans for this.
This is a baby step. And what we did was we looked at the technological lowest common denominator which we could use which was code redemption. And we decided on that as a model because any retailer that can get to a secure website and print out exclusive codes once a week can sell with this model.
THE BEAT: When you talk about codes, you said you needed internet and a printer. How does this work?
BOWEN: The retailer will login using their Diamond retailer login and be presented with the opportunity to create store-specific, item-specific codes in whatever quantities they need. Then we’ll use some approved cryptographically secure method to generate random codes for the retailer to use. And we’ll format those in a PDF which they can then print out. Likely what will happen is, it’ll print easily on Avery 30-up laser labels. So what you have is a sheet of Avery laser labels with a bunch of different books and codes on individual labels. In that case the retailer takes that material and secures it and then when someone wants Transformers #16 they simply ring the sale and give the label or sticker or cut-out to the consumer. We have some idea for a card that would allow you to do aggregate purchases and stick a bunch on there. But we’re looking for retailer input before we design that piece of the point of purchase materials. We think something like that would be necessary.
It’s really very simple. Then the consumer that has that code, which is live, they could literally step out of the line, pull out their iphone or ipad or whatever other device and redeem the code and begin reading the material.
THE BEAT: Otherwise they could go home and download it?
THE BEAT: There will be a Diamond/iVerse run storefront where they could redeem that code?
BOWEN: No, it’s actually application specific. If you’re interested in consuming comics on your computer you would do it through the iVerse website which will be up when this program launches. If you’re an iPad person, it would be your iPad.
THE BEAT: Okay, so when I go to buy my copy of Transformers, or more likely for me, The Terrible Axe-Man, it will go through Hanley’s or Midtown or whichever store I brought it from?
BOWEN: Correct. What happens on the backend is this: when the code is redeemed we then invoice the comics shop and that’s Diamond’s true value in this equation and it took us a while to figure this out, because we generate invoices on a weekly basis for all these comics shops, adding digital items is not a terrible stretch for us. And it is very economical. One of the reasons that affiliate programs and others are challenging is that there’s a micropayment expense of some sort in there somewhere. And we couldn’t figure out how to make that work but this we can do. Invoicing, believe me, we can do.
THE BEAT: Let’s talk about the “plus” model here. Will there be extra material with your publishers?
BOWEN: The Digital Plus version that you see in our PR is simply intended to be would you like fries with that. That is a digital version that is a companion to a physical purchase. It’s price pointed lower as a result, but the idea is that is you ring up Transformers in print the retailer would say hey, would you like a digital version that you can read anywhere for 99 cents. We think that will appeal to a certain percentage of people who would like to be participating in a digital world and maybe want to bag and board their comics and just feel uncomfortable with bit torrents and these other methods. We think it’s kind of an anti-piracy step and kind of a bonus.
When you talk about actual additional content one of the ways that publishers can participate in this, instead of 30-day windowing they could do variant content.
We have a logic problem that we have to work through with this. Why would someone come into a comics shop to buy a digital comic? One reason is it’s the only place you can get it for the first 30 days. Another is it contains material that is not available elsewhere. We think a lot of publishers will take advantage of that.
I’m going to tell you about one that I think is just brilliant that we really hope will happen. When we were discussing this with Bluewater they have some books coming that they are doing with Adam West and William Shatner who are closely partnering on these books. We said can you ask them would they be willing to do a voice reading of the comic book as an audio track.
THE BEAT: I have to admit, I would buy that. (Especially if it was a duet.)
BOWEN: I’d listen to them read their laundry list! That’s one example of the kind of extended content and there are so many ideas that we hope publishers will get really creative with what they want to throw into the mix. We have a list of dozens of different promotional ideas we can implement now. Of course who knows what the technology will allow us to do next year. Right now we can include small video clips if we need to.
THE BEAT: That’s the tip of the iceberg. Obviously you have been working on this for a while and there are some big publishers missing from the list you’re working with. DC, Marvel, Image and Boom have their own programs. Is that the major reason they didn’t want to participate?
BOWEN: We’re still in discussion with a lot of them and we’re still hopeful with a lot of them. The overarching reason you don’t see some names on this list now is that their programs are so complex now that their heads are spinning, honestly. It’s a tremendous amount to manage. Marvel is on 11 different platforms. That’s a lot to deal with. To throw this at them additionally, I think most large publishers right now are thinking how can I consolidate what I’m doing rather than how can I expand it. It’s going to be a tug of war. With all the platforms coming out, the amount of energy that a large publisher could expend on digital comics could be enormous. We have to make a really sound case to these publishers as to why out platform is worth participating in. and we think it’s pretty cool what were trying to do sort of magically enable 2700 retail stores to sell digital goods out of thin air.
It seems counter intuitive when you think about it at first but in reality there’s no reason why your local Wal-Mart couldn’t sell you movies while you’re walking down the aisles. Warren Ellis has done some really interesting things talking about media intrusiveness. We think that digital enablement in a physical market place is actually going to become a bit more common as things move forward.
THE BEAT: There are other models for this, such as video game stores that do in-store downloads, correct?
BOWEN: The best example is what Gamestop does. They have a very aggressive program and they sell prepaid digital download card for things like Farmville. They have kiosks in a lot of their shops and you can buy game levels. They are a model we are really keeping our eye on. The selling of game levels especially is something that intrigues us no end because it’s fairly comparable to a comic book in terms of size and price and complexity. Part of our plan for the future is the sort of stored value card approach and we’re working on the economics of that to make it work. It’s very easy to do if your scale is Best Buy. It’s much harder to do if your scale is 2700 comics shops.
THE BEAT: That was my next question. A lot of your retailer accounts must have an opinion. What has been their reaction?
BOWEN: I would say it’s been broken down into thirds. About a third of the retailers we’ve talked to have gotten it immediately and been excited. We have a beta test group that was very easy to assemble. And they are all into it. They understand the appeal and the mechanics of it don’t bother them at all. I would classify them as generally more aggressive retailers who are sharp and focused on anything that can add to their business’s bottom line.
And then there is about a third that are a little more uncertain. They don’t know how I feel about this and what if my customer goes into the digital wonderland and never comes back. We have some answers for those kinds of question but the reality is that comic shops are a relationship business. Any shop that is concerned about digital comics should also be concerned about how they are managing their customer relations. A really good comic shop you are going to go back to it over and over again no matter how you are consuming comics. You are going to find a treasure or have a conversation you aren’t going to have any other place. Those business we think they don’t have anything to worry about. And to quote Warren Ellis, people are kind of panicking about digital comics in some ways. If you are running a good relationship-based business, digital comics can’t affect you in any significant way.
The other third of the market that we’ve talked to is, I wouldn’t say they are necessarily closed, although some are closed to the idea of digital at all. But some of them simply have easier ways to make money. There is a gentleman I spoke with who has a 12,000 sq. ft. store in South Carolina with a massive inventory of Golden and Silver Age and he’s at all the major shows. He makes $6K on a Golden Age book. Picking up what is in relative terms a small amount of money for him is not very motivating. I don’t blame him.
So they kind of break down that way. The middle third is the one we need to work with in terms of encouragement and education. We’re going to have to teach them how to sell these things and teach some how to get the Comics Plus app.
THE BEAT: I think you touched on something that’s a problem in that it’s a pretty tiny pie here. Each digital download is being divided up, creators, publishers, Diamond, store. A lot of middlemen. We are talking about pennies here in some cases. Is there a way to expand the sales for digital comics? If they are moving at small levels this is still going to be a very small amount of income involved. Do you have a way to make it a form of outreach?
BOWEN: We do. We think the outreach is inherent in the model and not our model, but the digital model in general. I do agree with the assessment that digital comics are the new newsstand. I agree largely because I’m hopeful that it’s true because the old newsstand certainly does not work in terms of driving people or creating new readers. It hasn’t worked for a long time.
Where we think we can expand is in longform content and making enormous libraries of that those available. As an example, look at The Treasury of 20th Century Murder. When that book comes out in print I would wager that only a relatively small number of very good shops are going to carry it for the rack. And that’s a shame. And it is because the direct distribution model puts such a burden of risk on the retailer. When we take that out of the equation with the digital version what we hope will happen is that we retailer will successfully sell the digital version and think, hey, I can probably sell this in print too. That wasn’t very hard. Maybe I’ll start stocking that. We think there’s a chance to expand in that fashion and some of the things we’re going to do in the future are more interesting in terms of growing the market. We want to do some thing with localization, along the lines of Foursquare and we think that that might be able to drive some event-based promotion.
One we were discussing with a publisher. Let’s say that there’s an issue of True Blood with exclusive content you can’t get any other way and it’s a preview a new book. The first chapter and it’s the only place it’s available. It’s an add-on to this digital comics. That I can see people coming into a comic shop for out of the blue once the word has spread and there will be people who have never been in there before. It’s up to the retailer to have True Blood trades and other things that can hook them.
The beautiful thing is that every time we engage with a publisher or a retailer there are questions and some of them are really hard. I love those because we learn more from pain than from anything else in life. [laughs] And our program is so much better now than it was 6 months ago because we’ve had retailers and publishers pick away at it. There are going to be ideas that we would never have dreamt of that they are going to want to implement. We are in this and we will do whatever we can do to add value for the retailer. That’s the entire purpose of this exercise. If we had wanted to be the kings of digital comics we could have done it a year ago. That’s not what we want. We want retailers to be empowered to join in the process.
THE BEAT: What is it that iVerse brings to the table that makes them a good partner for this?
BOWEN: Part of it is that they came to us. I’ve spent more than two years paying close attention to the digital comics market and looking for a way to add value for comics shops. The closest we have really come prior to that is the Starbucks card concept, where we print out a bunch of redemptions and presell those to retailers. Which lacked elegance in some ways. iVerse came to us and said we want to do this with you, we want comics shop to be enabled to do this. We love comics shops and want them to be successful through the transition to a percentage of digital comics sales occurring. Their initial model was based on a QR bar code on the outside of a comic. We said we’re not sure publishers are going to be able to do this and then we started to explore other options and came to the code redemption model as the one that’s the most implementable. What we learned along the way is that iVerse is a very good partner. They are patient, they are technically incredibly capable. They are not as flashy as some of their competition but technically they are superb at what they do and we just felt very comfortable knowing that they were the ones powering the solution. We needed a partner for this. I recommended right out of the gate Diamond not try to create this capability in house.
THE BEAT: [laughs] Right!
BOWEN: It is hard to do. iVerse has updated their core OS for their IOS platforms three times in the past month. That’s how fast you have to move in order to keep up with the changing technology. Diamond is a lot of things– we are very good at getting books everywhere and collecting money and getting people paid, but we are not that fast. We needed a fast partner. And they are. They are motivated. The fact that they are probably second in market share is a good motivator.
THE BEAT: This is rolling out in July?
BOWEN: The first books will be available in July for the solicitation cycle.
THE BEAT: And you’ll be discussing it at the ComicsPRO meeting his week?
BOWEN: Absolutely. We have a more extensive presentation we’re giving at ComicsPRO and we’ll of course make that available to retailers after the fact. We’re wide open for input and discussion. We’re at that wonderful point right now that we’re not so far in that we can’t change some things and so we really welcome publishers and retailers to throw ideas and input at us. It’s all helpful in the end. We do not believe that we know even a significant percentage of everything about this space. It’s too complex and too big.
THE BEAT: We’re all moving forward together learning and growing.
BOWEN: One thing I will say: one thing that differentiates our effort is that we don’t have an exit strategy. Diamond is comics. We’re in this for the benefit of the retailers more than for any other reason. Not because we think Diamond is going to make a bazillion dollars. We want retailers to have a way to use this method instead of being innocent bystanders.