Friday, June 17, 2011

Crash! Bang! Pop?

(Right image - Mary Poppins - a childhood favorite of mine.)

Jonathan V. Last's post at The Weekly Standard, "The Crash of 1993" works for me since it ties together two of my current favorite subject matters: bubble economics and comic books. The subheading is also quite informative, as it tells us that "As the great comic-book bubble showed, sometimes there's no recovery from a speculative boom".

I highly recommend that you read the article if you're interested, but here's my version of what happened. Back in Olden Times, comic books were considered inconsequential, and mothers threw out comic book collections by the box-load during their annual rites of spring cleaning. However, as baby-boomers started growing up, some of them started to fondly remember their old comic books and started paying some real money for some of the more desirable older editions. During the 1980's, the interests of nostalgic baby boomers, entrepreneurial pre-teens and greedy speculators converged to the point where the resale costs of both old and new comic books spiraled upwards to dizzying heights, all until the Great Crash of 1993 brought the industry back to earth. (One example from the article, aside from collectibles selling for upwards of $80,000 at auctions, "A comic that sold initially for 60 cents could often fetch a 1,000 percent return on the investment just a few months later.")

Of course, there's a bit more to the story than what I wrote up above. I'm vastly oversimplifying things here, but according to Last, distributors had traditionally decided who and who could not sell comics, to the point that there were significant barriers to entry into the retail side of business. But in the early 1980's, according to Last, two distributors (Diamond and Capital City), as part of their expansion plans, ".....were happy to sign distribution agreements with just about anyone". I'll let Last take over from here:
With all of these comics shops sprouting across suburban America, the two remaining distributors took in record numbers of orders every month. Seeing these orders, the publishers thought they were presiding over a massive boom. So they upped their prices and began publishing more titles, adjusting the supply to meet what they thought was demand. In 1985 Marvel published 40 titles a month, and each book cost 60 cents. By 1988 they were putting out 50 titles for $1 apiece. By 1993, they were offering 140 books a month, selling for $1.25 and up.

All the while, the distributors kept standing up new retailers, who kept putting in orders, enticing the publishers to produce ever more books. It was an unsustainable loop, but what made the situation particularly perilous was that in the comic-book business, orders are placed months in advance and unsold inventory cannot be returned. Retailers eat unsold books as overstock. (Rozanski estimates that at the bubble’s peak, 30 percent of all comics being published wound up as overstock.) In other words, the loop was structured so the publishers would get negative feedback only after the industry had gone over the cliff and the retailers started going belly up.

Which is precisely what happened in 1993. By expanding their output to hundreds of titles, the publishers had diluted the quality of their product to embarrassing levels. That, combined with the higher retail prices, drove away customers.

(Besides comic books, I can remember similar boom/bust cycles with baseball cards, Beanie Babies, and practically every thing else that a person would normally throw away after it's been stored in the attic for 20 years. Imagine the shrieks of horror I heard when I took the tags off of Beanie Babies so my kids could play with them without getting scratched! It was actually kind of a relief to me when the whole craze seemed to end by about the year 2000 or so, since my kids had been bombarded with Happy Meal-type toys by relatives who warned them, "Now don't throw this away - it could be valuable some day!" I'm sure I've thrown out a lot of good money in the trash over the years, but I'm hoping I can assign some sort of intrinsic dollar value to being able to maintain a clear path inside my house to the front door.)

I've kind of left out how the traditional comic retail model seemed to favor newsstands and other general merchandise outlets. I can certainly remember that I used to be able to buy (or rather, talk my parents into buying) comic books just about everywhere back in the 1960's, from grocery stores, drug stores, discount stores like K-Mart, etc. I certainly wasn't a stereotypical kid who went through comic books like candy. However, I did savor comic books as though they were special treats, and I managed to amass a small collection which I kept until roughly the same time that I stopped sleeping with teddy bears. Probably because I'm a girl, I did not purchase Superman, Spider-Man, Captain Marvel or Batman comics. However, back during my childhood, a lot of the comics were tied to children's TV shows and movies, and I can specifically remember some Disney-themed comics, as well as old favorites like Peanuts, Dennis the Menace and (my dad's favorite) Beetle Bailey.

Fast forward roughly a dozen years. I entered a comic book store near my college campus, and walked out roughly five minutes later when I found out that all they had were a bunch of comics that were geared towards young male adults who'd forever be dateless on Saturday nights.

Fast forward roughly another 15 years. As a mother with three young boys, I was astonished to find out that it was next to impossible to find comics books for kids in traditional retail outlets. My entire family enjoyed Archie comics, but I was naturally on the lookout for more variety. I was therefore quite interested in a newspaper article that was written in either the late 1990's or early 2000's about a local comic book/collectibles store owner who had apparently been able to buck the trend and keep his business going. I was most interested in how the owner explained how the comic book industry had become more segmented and targeted narrower audiences, The owner also went on to state that it would do his business a world of good if some publishers went back to mass-marketing titles geared to children. Sadly, I never took the time to visit this particular comic book/collectibles store since I didn't think I'd find anything suitable for small children, and the shop went out of business about a year later.

So this is where I'm coming from when I talk about how I'm just now starting to overcome my prejudices against comic books. It's ironic that while I'm just starting to dip my toes into Angel comics, I have not set foot in a comic book shop since the last century. I've bought/been gifted After the Fall books from Amazon, but I'm still afraid to walk into a comic book store. Will people stop talking and stare at me? Do red lights and sirens go off when a middle-aged female customer walks through the door? Will I do something ignorant like inappropriately mix up the terms "comic books" and "graphic novels?" Will a sales clerk more than half my age scoff at me when I ask for a Spike or Illyria-themed title and sneer, "We don't carry those here!" I guess there's only one way to find out.

Closing Thought. Just as I was putting the finishing touches on this post, I discovered a short follow up post from Jonathan Last, "The Crash of 1993, cont." As you can tell from his listing of previous entries, Last seems to have written a lot of comic-themed posts.

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