What Does the Comixology Originals Announcement Really Mean? Part 1 – The Implications of New Content

We should probably talk about the Comixology Originals announcement.  There’s a lot of stuff I’ve been expecting to happen since Amazon acquired Comixology – because it’s out of the classic Amazon playbook – and I actually consider this to be 2-3 years LATE in happening.

It’s probably easier to unpack this is two sections – New Content and Print On Demand.

New Content

Amazon built up their eBook sales practice by promoting authors – both new and old – directly uploading material to the KDP (Kindle Direct Publishing) platform.  That goes back to 2007 (although it didn’t really start getting momentum until more like 2009, when they made Kindle into an app for multiple platforms).  Midlist creators took control over their backlist at a time the mainstream prose publishers were starting to cut the midlist.  Some of them made out like bandits by centralizing that backlist and taking a greater cut of the list price.  Many of them were able to continue on by directing their existing audience to eBooks and the odd Print On Demand offering.

New authors showed up and some of them hit BIG.  Buy a new house big.  Mainstream publishers chasing them around for reprint rights and new books big.  (And one of the early breakouts, Amanda Hocking also signed with Dynamite for some comics, so it does end up in our territory.)

Now here’s the problem with KDP and comics.  KDP has a download fee, which I refer to as a tax for not being a publisher.  It’s based on file size and it just screws everything up.  You’re usually better off taking 35% of list price as a royalty than 70% of list price and paying the download fee.  As such, you didn’t see a massive influx of comics through that KDP program.

So, naturally, when Comixology was acquired, I figured Amazon would want to start pulling in some underappreciated talent from the comics midlist and start cultivating their own homegrown talent.  That’s the stuff that brings customers to the site.  Especially if it happens to be exclusive content.

Except that hasn’t happened yet, although perhaps Comixology Originals is here to fix that.  Comics are different from other types of publishing in how extreme the core readership focuses on the publishing brand.  DC/Marvel/Image/etc.  Look at Comixology’s navigation.  It’s not solely publisher-based, but when you get past this week’s new releases, an awful lot of it is either looking at the publisher or what’s on sale this week.  If you’re not part of a publisher with brand equity, that means you’re probably not going to have that many people see you unless it’s your initial week of release or you’re part of a sale.  That’s just how it is.  Comixology does have the Comixology Submit program which somewhat approximates the KDP program, but it doesn’t seem to have created the same stir.

I have yet to hear of an independent creator or creative team being a financial hit on Comixology Submit to a level approaching a hit book at DC/Marvel/Image.  If I’m wrong, PLEASE let me know who it is so they can be congratulated.  That’s something worth celebrating if it’s happened.

One of the interesting things about the Originals announcement was the extreme emphasis on these new comics being available for free on the various Amazon library packages – Kindle Unlimited, Comixology Unlimited, Prime Reading and so forth.

Again, this is playing into an overall Amazon strategy of adding value to the monthly subscriber packages, though it was striking how much the idea of buying a download was downplayed in favor of the Unlimited packages.

You may not be aware how these Unlimited packages work.  I’ve not seen anyone telling tales publicly of exact numbers for Comixology Unlimited, but Kindle Unlimited is an open book – pun intended.

Kindle Unlimited’s current pricing model, and it’s had more than one, is to pay the author for each page read.  How much is paid per page?  There’s a pool of money from all the subscriptions that’s divided up by the pages read in a given month.  That said, the number has been consistently between $0.0044 and $0.0047 over the last several months.  So a bit under half a cent per page.  Which is to say, somewhere around nine cents if an entire 20 page comic is read.  So if 100 people read that 20 page comic in a month, the author would get something in the vicinity of $9.00.

Now, obviously, this works out a lot better if people read a longer work.  If we use a ballpark rate of $0.0045/page, a 300 page novel gets $1.35.  If that same novel was selling for $2.99, it would generate about $2 after download fees, so it’s not AS glaring a price difference for large prose books.  (Although studies say an awful lot of Kindle Unlimited reads are abandoned mid-stream, so if only 20 pages are read, only 20 pages are paid for  – 9 cents worth.)

Unlimited is a controversial thing with authors.  Newer authors like it as a way of getting their name out.  Established authors don’t always like it, as they make more from their existing audience making a full purchase.  Of course, with libraries systems like this, it’s entirely possible most of your unlimited readers would have no intention of spending money in the first place, so it might just be an ancillary income stream.  The catch being, you need to have the content be exclusive with Amazon to be in Unlimited.

Now, if Comixology Originals is paying a page rate and Unlimited is just a royalty stream, it’s all good.

Our friends at Forbes have it that:

Creators selected to be part of the originals program receive royalties and advances, as well as retaining ownership of media rights should the properties be picked up for further development. That’s another area where comiXology is taking advantage of Amazon’s scale and resources to sweeten the deal.

I would assume that advance is functionally similar to a page rate.  Otherwise, let’s see how this model compares with paid downloads.  We’ll assume a $0.0045 page rate for Kindle Unlimited on 20 pages and compare for a 50% royalty from Submit and a 70% royalty closer to an Amazon publisher contract.

Cover Price	Royalty Rate	Revenue	# of complete Unlimited Reads
$2.99	50%	1.495	16.61111111
$2.99	70%	2.093	23.25555556

 

So 17-24 reads equal the revenue from one sale.

Probably not something you want to base your primary revenue stream on unless you’ve got a large and popular back catalog.  2 million pages read in a month would net you around $9,000 (depending on the month’s exact rate).  That’s 100,000 reads of a 20 page book.  Or 10,000 reads of a 10 part series.

Comixology Unlimited might have a better per page payout.  Feel free to enlighten me on that.

Is there a comics audience on the Kindle Unlimited channel?  I’m not sure anybody knows yet, but it’s definitely an experiment worth trying.

If we go back to that original Amazon eBook playbook, we see some similarities in who’s coming over to play.  The initial invites seem to largely be well-regarded midlist creators.  Some would say under-appreciated creators.

The immediate risk to the publishing community is if Amazon can put their weight behind things like Elephantmen and raise its sales.  I’ve heard mystery authors talk about Amazon putting their promotional weight behind novels and getting better results as a functional exclusive than they were getting from traditional publishers.  If the midlist folks start getting better results, you’ll probably see the bottom of the pecking order clamber to move over and some slightly higher profile folks look into it.  Especially if there are page rates (excuse me… “advances”) involved.

Something to consider: how many creators with low selling print books make more money off digital than they do off their print sales because of the high cost of low print runs?  How many lower echelon Image creators would make more money if they forsook Image’s listing fee and print serialization, if Amazon could promise them a better digital royalty rate (say, Image’s discount… but without Image keeping 20% off the top)?  Of course, that assumes that Comixology Originals can establish themselves as a reliable brand in the eyes of purchasing public or starts pulling in a new, non-brand-obsessed audience from the Amazon side of the readership world.  I would not just assume someone could move a book from Image’s listing to Submit and keep the same sales figures.  Branding still counts.

And consider what Richard Starkings said in the original press release:

“Once I realized Elephantmen sold more digitally than in print, I suggested to my friends at comiXology that we create a brand new Elephantmen series exclusively for digital readers,” says Elephantmen creator Richard Starkings. “And yet – for those who’d rather hold a print version – you’ll still be able to order a Print-on-Demand paperback collection as soon as it’s complete! I’ve seen what Amazon can do with Print-on-Demand and it’s absolutely unbelievable!”

If I were a publisher, I’d be keeping an eye on how this initiative is doing and exactly who signs on to it.  It’s not necessarily the first wave that might cause problems, it’s what happens if Amazon starts stealing too much of your talent.

If I were a creator, I’d want to see what the terms are and watch the performance.  At this point, it’s not something that’s likely to tempt the Saga’s and Black Hammer’s of the world, but creators selling under 3K in print?  That might be the starting point.  At some later juncture, a creator is going to want to have exposure outside the world of Amazon, especially in print, however, the reality is you’re not losing that much exposure at this time if you’re fiscally comfortable as a digital first comic in an Amazon exclusive.  They have pretty strong market share.  Additionally, for creators, this and crowdfunding are the obvious hedges and fallback plans in case of disruptions in the Direct Market.

For retailers, this is a mixed bag.  The initial wave looks to be peeling off low selling books that most stores don’t care or barely carry, or creating something new.  I suspect some retailers might actually ENJOY it if a few low selling books moved to digital and they didn’t have to deal with worrying about whether they’d sell through.

If we’re honest, and I’m not sure everyone wants to be honest about this, the way a lot of publishers are conducting business right now is better suited for Amazon than it is for the majority of comic stores.  If you’re selling 30-40 low circulation titles each month, there are no inventory issues with digital and Print on Demand like there are with retail.  To a large enough store, this doesn’t matter, but mid-sized and small stores are getting buried under a mountain of low circulation titles that either need to be pullbox/special order only or have the shelf copies under tight inventory control.  I’ve heard plenty of retailers complain about it, but I don’t know that many of them have thought of it in the context of “would I rather have it just move to a different market?”

This isn’t a threat to the retailers, yet.  But it’s the first step down a path that could end up putting more squeeze on them.  That squeeze could happen in different ways.  Amazon could start pulling creators and titles that are large enough to make a blip on the retailer’s radar.  A Comixology Original becomes a breakout hit and the trade paperback is only available at Amazon.  (Oh, you thought retailers were mad when B&N had an exclusive Ultimate Spider-Man reprint collection… wait until they have to tell multiple people a hot title is only available to order on Amazon and you’ll see some real seething.)  An expansion of Print On Demand is actually a bigger threat to retail, but we’ll get to that in a bit.

So what is Comixology Originals, today?  It’s an experiment.  This is where we sit back and, to paraphrase Al Swearengen, see what kind of juice they have.  Can Comixology promote this line effectively on their own site?  Can Amazon’s algorithms and product placements drive sales and reads across the rest of the network?

If they can, this is going to get VERY interesting.  If not, some creators are getting paid short term and there’s nothing wrong with creators getting a paid gig.

As for the Print on Demand offerings, that is another can of worms that’s been opened and we’ll talk about that in Part 2.

Want to learn more about how comics publishing and digital comics work?  Try Todd’s book, Economics of Digital Comics