(Click here to read part one of this essay.)

To learn why Marvel's ambitious initiatives failed, you first need to understand two things: what they were trying to accomplish, and the market conditions in which they worked. Let's summarize both as briefly as possible before moving on:

1. Marvel Enterprises needed to pay down its debts. In 2002, the company was still staggering under a $188 million debt originally incurred during Ron Perelman's disastrous stint as owner. Paying down this debt was clearly a top priority for Marvel, which had no desire to return to bankruptcy court -- by March of 2003, the company had whittled $37 million off of that figure, thanks in large part to movie residuals and licensing deals based on the resulting movies. Comic-book sales couldn't carry the load: Publishing was responsible for just 22% of their income for 2002. For this reason, Marvel needed to keep plugging away in Hollywood, milking every last dollar it could squeeze from the gravy train before it ran out of tracks. This point is more important than most comics afficianadoes realized at the time.

2. To increase its publishing division and be left with a healthy and profitable company once the movie boom did finally run down, Marvel needed new readers and outlets of distribution. The Direct Market, which at the turn of the 21st century was composed of what most industry experts guessed was between 2500-3500 retail outlets, just wasn't going to cut it. According to the US Census Bureau, the United States contains 3,537,438 square miles of land, and even with the most generous estimate this still leaves us with roughly one comics shop for every thousand square miles. Further, the audience in those shops was and is fairly narrowly constricted: An article in the Idaho Statesman ("Comic book industry fights back," Melissa Chee, 7-04-2004) quotes a readers' survey of Diamond Distributors' Previews catalog, which found the average respondent to be a 34-year old male. The article goes on to note that this survey profiled the "dedicated comics fan" rather than the average reader, but one must question the extent of the difference, given that a significant number of consumer orders comes in the form of subscriptions services. While there was certainly room for increased sales in the DM, it had tangible limits. The likeliest points of expansion, therefore, were most apt to be found in bookstores and larger retail chains such as Target and WalMart.

3. Due to current limits in distribution reach, Marvel's core line of superhero comics undoubtedly had great potential to expand their audiences if new retail outlets could be found. Nonetheless, to attract the new customer base that Marvel clearly coveted, the comics that the company published would have to diversify in content.

4. Unless enormous money was spent in developing this new material without thought of recoupment in the short run, the costs would have to be subsidized by sales in the very same Direct Market from which Marvel was trying to expand beyond.

The contradictions were daunting. Marvel needed to be adventurous, but not so adventurous that comics content threatened the movie deals and toy licensing. Marvel had to retool its core publishing product to be more accessible to a general audience, but couldn't do so at the expense of alienating its core readers. These limitations left the company little room to maneuver.

Marvel's expansion into the bookstore market was never going to be easy. With hundreds of publishers all competing for booksellers' attentions and a dizzying array of genres and audience demographics, a company like Marvel -- used to being top dog in the Direct Market -- would essentially have to start from scratch, launching what amounted to a new line of books. Bear in mind that while Marvel already had a ready-made audience for its products, they also had a ready-made place to buy them: comics shops. Success in the booksellers' trade would require the cultivation of a brand new audience, a feat easier said than done. Here's how comics writer Dwayne McDuffie [Static] characterized the prospects for comics publishers generally, back in early 2000:

"[...] Sustained sales growth in the bookstores is going to require something that the little publishers don't have and that the big publishers are reluctant to part with: money, lots of it. To succeed in this (or any) new marketplace, publishers are going to have to hire staff who already know the terrain. They're going to have to start advertising and marketing in entirely new ways. To succeed takes both tons of cash and a serious, long-term commitment to a plan that might not work. This is not a strategy favored by executives who wish to remain employed in the next fiscal quarter."

It was clear from the beginning that Bill Jemas and Joe Quesada were largely making it up as they went along, and their actions sometimes left observers bewildered. A perfect case in point was the miniseries Rawhide Kid: Slap Leather. Marvel was able to generate a considerable amount of publicity when it announced the gay parody to the press, generating media commentary nationwide. Unfortunately, most of this publicity took place in December of 2002 -- by the time the first issue of the series actually hit the stands three months later, public interest in the miniseries had evaporated, and sales on the title were consistently lousy.

Nonetheless, public appearances and the generation of controversy were pretty much the only PR gambits open to Jemas and Quesada. Marvel was handicapped by a distinct lack of the "tons of cash" to which McDuffie refers: According to the company's 2003 year-end report to the Securities and Exchange Commission, "For the years ended December 31, 2000, 2001, and 2002, advertising expenses were approximately $36,211,000, $6,637,000, and $5,777,000, respectively." With a massive debt to pay down, Marvel Enterprises simply couldn't afford to spend the money necessary to make a splash in a tightly competitive new market. The company therefore entered the game operating at roughly a sixth of its former advertising budget -- most of which would be needed for the maintenance of its Direct-Market base of operations. This handicapped Marvel in a fairly fundamental way. For example, in June of 2003 industry reporter Heidi MacDonald covered Book Expo America, the largest tradeshow for bookstore retailers in the United States, for online news-site The Pulse. After noting the heightened profile of comics publishers and the sometimes extravagant lengths to which companies like Tokyopop went to get retailers' attentions -- big booths, giveaways and artists' signings -- she turned her attention to Marvel, describing its presence at the show as "consisting of a single table manned by someone who had been working there for approximately 10 days."

Indeed, for every attempt that showed modest success, such as a Mary Jane prose novel aimed at teenagers, there were any number of initiatives that made little sense from the outset. Take the company's Tsunami line, for example, which was an attempt to cash in on the manga craze by recreating Marvel's existing superhero tropes in manga form. In February of 2003, Joe Quesada described the rationale for this to the Silver Bullet Comics website's Brandon Thomas thusly: "In the last year it's become very visible to anyone looking at bookstore sales and the demographics at the stores, and even more visually at comic cons, that Manga is exploding and reaching readers comics have been having trouble reaching since, well, since the dawn of comics. To ignore this influx of young readers, especially the young female reader, is just foolish." On the one hand, the line did poorly in comics shops, where the company serialized its titles so as to be able to collect them for bookstores. On the other hand, most of said line was then cancelled precisely because they did so poorly in serialization, despite the fact that it was destined for an entirely different market. (The official press release cites "overall sales that didn't meet our high expectations" as the reason the trade paperbacks were cancelled, leaving the comics pamphlets as the only possible source of said disappointing sales.) Not that the Tsunami line would have likely done well even if Marvel had stood behind its gamble -- quoted in the online news-site Newsarama, comics retailer turned creator Stuart Sayger quipped, "To me, Marvel's product smacked of major record labels trying to capitalize on the punk rock craze of 20 years ago. It was right in front of them, they looked at it and studied it and tried to replicate it, but they never understood it."

So how has Marvel done in the bookstore arena? Accurate sales figures are difficult to come by in any segment of the publishing industry. Even Bookscan, the most widely-used tracking system for consumer purchases among prose booksellers, only covers 70% of the bookstore market, with small and independent booksellers making up a large chunk of the remaining 30% -- a factor that, for example, skews attempts to track how artcomics (which according to Fantagraphics marketing manager Eric Reynolds tend to sell better in independent shops) sell in relation to manga and superhero volumes (which tend to get better representation in the bigger bookstore chains).

Still, where Marvel is concerned, there's one place where one can find a limited set of reliable sales figures: As a publicly-traded corporation, Marvel must file quarterly financial statements with the Securities and Exchange Commission. The House That Jack Built can dissemble like master hucksters to the fan press, after all, but attempting to play the same game with the SEC can make it rain Federal prosecutors. Furthermore, these reports are the basic source of information for both current and potential investors, which means that it's very much in Marvel's interest to put the best foot forward possible. With this in mind, what the reports don't discuss can be just as fascinating as what they do.

While still incomplete for serious purposes of research, therefore, these filings nonetheless provide an interesting snapshot of the company's financial health. Between 2000 and 2004, for example, the growth of total net revenues from Marvel's publishing division, encompassing all markets, was truly awe-inspiring: The company went from net sales of $10.2 million in the first quarter of 2001 to just over $21.6 million in the second quarter of 2004, the latest filing as I write this. Clearly, Jemas and Quesada were doing something right, even if it wasn't necessarily in the realm of public relations. That said, the devil's in the details, and separating out the level of sales between comic-shops and bookstores requires both an attention to language and an artful reading between the lines.

The amount of attention the statements pay to Marvel's growth in bookstores fluctuates wildly, depending (one presumes) upon the company's fortunes from quarter to quarter. The company's first two quarterly reports for 2002, for example, merely attribute sales as being "primarily due to an increase in the sales of comic books and trade paperbacks to the direct and mass [bookstore] markets." The Q3 report for 2002, by contrast, notes that "revenue from the mass market increased approximately $0.8 million to ($0.9 million) in the three month period ended September 30, 2002 and consists of sales of trade paperbacks only." (Meanwhile, "the gross profit percentage for Publishing segment decreased to 47% in the 2002 period from 51% in the 2001 period, primarily due to an increase in reserves recorded for estimated slow moving trade inventory.") The 2002 year-end report is even more forthcoming: "Revenue from the mass market (now including Borders and Barnes & Noble bookseller chains) increased approximately $5.9 million to $7.0 million in 2002 (from $1.1 million in 2001) and consists of trade paperbacks only." This is a fivefold increase, for those of you keeping track. "The Company," the report concludes, "believes that there is still a great deal of growth in this market for these products, and that this is one of the better ways to attract new readers to Marvel Publishing."

Alas, the 2002 year-end report is the last time Marvel would ever acknowledge specific sales figures for the mass market. While the publishing division would for the most part continue to post gains up to the present day, the closest the 2003 quarterly reports come to breaking them down is to note that they were "fueled by increases in sales of custom publishing projects and advertising income." The year-end report for 2003 acknowledges that the mass market accounted for just 12% of net revenues -- a 2% drop, despite an almost $9-million increase in total net over the previous year. The report notes a $3-million increase in Direct-Market sales and a $2.1-million increase in income from advertising, but neglects to be similarly forthcoming in its income from the mass market, noting only that "the publishing business will also continue its long-term focus on expanding distribution to new channels, like the mass market, and expanding its product line to target new demographics, although the Company does not expect these initiatives to have a significant impact on 2004 revenue." This line has been repeated in the company's two most recent quarterly statements. And so things stand.

It's easy to assume from this that Marvel's growth in bookstores has largely hit a brick wall -- but then, you could come to the same conclusion simply by visiting a Barnes & Noble graphic-novel section, where the shelf space alloted to Marvel books has at best held steady and at worst actually lost precious space. (One bookstore manager described Marvel's sales at her location for me as "okay when there was a movie out, but otherwise negligible.") Meanwhile, B&N employees can't seem to add shelves for additional manga volumes fast enough. In the short term, at least, any significant market expansion on Marvel's part will continue to be found in comics shops rather than elsewhere.

If Marvel's adventures in the greater American market suggested inexperience and a limited ability to successfully grow its audience, however, its actions in the Direct Market seemed to demonstrate something bordering on contempt for the very retailers it serviced. With the bookstore market delivering limited dividends, comics shops would have to be milked for all they were worth if Marvel's publishing department was to continue to increase its revenues and justify its existence to upper management. This meant a return to many of the practices that the company had used during the Bad Old Days of the mid-1990s: variant covers, limited series, a flood of first issues and "ordering incentives" that retailers were required to fulfill if they wished to get certain "collectible" products.

Most notorious of such practices, however, was the company's decision in 2001 to again cultivate the speculators' market, announcing that it would no longer print overruns sufficient to fill reorders, but would instead "print to order" based on the initial solicitations via Diamond. Writing for St. Louis alt-weekly the Riverfront Times in February of 2002, Robert Wilonsky noted, "Last year, the company announced it would no longer allow retailers to reorder titles once they ran out, a move that infuriated some retailers, who complained they would be left with unhappy customers unable to find in-demand books. Jemas dismisses the complaints from 'very loud and very incompetent retailers' and insists the policy was adopted to create a buzz: Because key titles are disappearing on Wednesdays, the day comics arrive in stores, Marvel is now creating collectible product."

On the surface, the policy appears to make sound financial sense: Why print more than your clientele orders? Look past Jemas' rhetoric, however, and a different picture emerges. The thing to keep in mind is that publishers don't sell to fans in the Direct Market -- they sell to retailers, who must buy books on a non-returnable basis, and essentially eat any product that doesn't sell. Even in the best of circumstances, therefore, retailers must essentially gamble on how many of a given book they order, and hope that any shortfalls can be made up with reorders. Marvel's move takes even this slim margin of error away from the very people who must bet their livelihoods on how many comics they purchase, month after month. In effect, Marvel hyped new books to fans, and then used the resulting buzz to coerce nervous retailers into ordering even more books than they ordinarily would've chosen. Writing on the Comicon.com message boards, Indiana retailer Matt Hawes summed up what many retailers were saying to one another: "It is at our expense that this policy operates. Marvel sells out, but retailers are forced to risk over-ordering or not having enough. It is the minority of retailers that can order the right amount every time out."

Responding to the inevitable howls of outrage, Bill Jemas issued an open letter to retailers:

"Many retailers take a measured risk in ordering extra Marvel comics. When a book gets hot, they sell copies to their regular customers at cover price but hold back a handful to mark up and sell as collectibles. Just the last three copies for $10 each earns an extra $24 profit. Those retailers do not want Marvel dumping more books on the market and killing their 1,000% margins."

Note the way Jemas refers to fulfilling all consumer requests for recently published comics as "dumping more books on the market," a practice that in more rational retail environments is commonly refered to as "sales." Notice also that Jemas forgot to tell retailers what to do with the product that didn't sell at inflated prices. Perhaps he simply hadn't seen all those Image comics in comics-shop quarter bins, left over from the last time speculator madness ran amok in the Direct Market.

Eventually, the ill-will that Jemas built up with retailers, comics creators and fans could no longer be ignored, and in October of 2003 Marvel announced that Jemas was stepping down as publisher in favor of the newly-created position of "chief marketing officer" -- a job effectively removed him from creative and business decision-making -- and would be replaced by former Marvel Marketing employee Dan Buckley. Still, the practices set in motion by Jemas persist to this day, the company's dependence upon nostalgia, first issues, variant covers and onerous "retailer incentives" continues unabated, and it's now pretty clear that we're in for another glut of titles as Marvel attempts to shore up sales by any means necessary.

Creatively, it's just as bad -- Marvel is hard at work restoring its X-Men line to as close to the 1993 standard as it possibly can, ressurecting every character killed during the past five years, bringing back the costumes and outdated tropes, and even rehiring Fabian Niceiza and Rob Liefeld to relaunch their X-Force title. NuMarvel is dead, and Old Marvel has risen from its ashes. Faced with a dwindling audience, Marvel has chosen to milk them for their extra pocket change. Faced with the future, they've chosen the past - and as Marvel goes, so goes the rest of the Direct Market. God help us all.

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