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The History of Online Comics by T Campbell (Chapter 9)

Money Matters and the Modern Webcomic

Much as some webcartoonists would like to pretend otherwise, webcomics are not really an industry apart. They are part of the larger online content industry, and any analysis of their business has to take the business of all online content into account.

Fortunately, online content has been doing well. The dollar-a-word pay rates of the late 1990s have not returned, but neither has the doomsaying of the early 2000s. The data suggest that almost all content’s revenue models are picking up: a la carte, subscription and "traditional" advertising and merchandising. Carat, a media-buying specialist, predicted a 22% increase in global spending on online ads for 2005. Meanwhile, the micropayment-based service iTunes has seized 90% of the online music market, leaving Yahoo's subscription-based service in the dust. Yet subscriptions are now making $2 million a year for Salon.com. Even charity is increasingly an online activity: UNICEF raised $20 million for tsunami relief less than two weeks after the disaster, and 95% of that sum was raised online.

Merchandising, in turn, has to be seen within the even larger business of online merchandise, and that too has shown solid, robust growth. At the end of 2004, the Telecom Paper reported a 119% rise in European online merchandise sales, while U.S. holiday online merchandise sales rose 22%.

What these external successes mean for webcomics depends on how accurately they compare to the elusive webcomics market. Are webcomics most like iTune songs, a few minutes' jolt of pleasure by recognized artists? Or are they more like online magazines, a smorgasbord of features best enjoyed all at once? Or do they more closely resemble commercially supported television? Perhaps they are more like advertisements themselves for toys, buttons and T-shirts? Sometimes like one, sometimes like another? Which then, and under what circumstances? These questions are part of webcomics' ongoing search for a role in our culture, a role which continues to shift as both those webcomics and that culture evolve.

2004 saw a great deal of public attention for two business models in webcomics that had previously received little. They attack "the money problem" from opposite ends. One focuses on a single, four-or-five-figure sum, and the other on profit from the smallest of margins.

Micropayments

The idea of a micropayment is simple. Maybe nobody's gonna pay you a hundred dollars a month for what you want to do. But they might pay you a dollar. And if you can get 10,000 people to pay you twenty-five cents—well, then you're getting somewhere.

In Chapter 7, we touched briefly on the attitude concerning micropayments within the webcomics community. In his second landmark work, Reinventing Comics, Scott McCloud advocated them as inevitable: "Sooner or later, micropayments are bound to come into their own. After all, the cost of any of these operations—old or new—is ultimately just a function of bandwidth and processor speed—and in an industry governed by Moore's law, whatever clever protocols can't solve, sheer computational force eventually will."

As mentioned earlier, many working webcartoonists disputed McCloud's optimism, including Tycho and Gabe and Jonathan Rosenberg. Nor was the debate over micros limited to the webcomics scene—leading Web pundits Jakob Nielsen and Clay Shirky made "cases" for and against them.

It all seemed something of a moot point for a while, because both sides agreed that micropayments in any practical sense had not arrived. As Shirky relates, many, many companies—FirstVirtual, Cybercoin, Millicent, Digicash, Internet Dollar, Pay2See—tried and failed to create working systems that made online transactions for one dollar, or one penny, a profitable proposition for all involved.

It was not until a system called BitPass emerged that McCloud publicly supported any micropayments solution. In fact, McCloud went further, signing on as an advisor to the company behind it. His support led other webcartoonists to adopt and advocate the Bitpass system, including Jim Zubkavich, Shaenon Garrity and Tom Hart, Patrick Farley and many others.

One company, 01 Comics, has even adopted them as its central model. Company founder Barry Gregory says, "I believed when we launched (and still believe now) that an a la carte system with low cost and individual unit pricing, wherein the end customer can pick and purchase the comics they want to read—just like walking into a bookstore and picking out the title or titles that interest(s) them most—will ultimately be a very successful approach for commerical webcomics."

But while all these artists have supported Bitpass, it's an open question whether Bitpass will support them. "We’re still operating in the red," admits Gregory, "and my best guess is that by this time next year there will be less red, but still no black."

McCloud himself has conducted the most publicized, and perhaps most successful, use of Bitpass to sell a webcomic with his three-part The Right Number. Anyone who purchased a "copy" had the right to read the Flash file online 16 times or download it. According to McCloud's blog, its first episode sold over 2000 copies in six months, respectable at the 25-cent price tag. As of November 2004, total sales were 2914, for Part One, 1566 for Part Two.

That gives a gross revenue of $1140, or $969 after Bitpass's cut. Three-figure earnings disappear quickly for a father of two in California.

Jon Rosenberg, one of the early challengers to the idea of micropayments, is soon to accept them for two minicomics. However, these minicomics will first be available to freelance subscribers. Rosenberg regards his participation in the model as more of a point of honor - "We're going to be keeping up our end of the bet with Scott McCloud and offering some content via Bitpass" - and less of a central investment. "I'm hoping they work out well, but I'm not expecting micropayments to be a major revenue stream for us."

Rosenberg continues to put his faith in one of webcomics' more traditional revenue streams: merchandise. "We're going to continue to build out our merchandise offerings, expanding on current stuff like buttons and T-shirts, publishing one or two new paperback collections, and, hopefully, adding some new items (expect to see a Diablo action figure at some point this year)."

Robert Khoo, the silent partner who helped turn Penny Arcade from a struggling hobby-comic into a thriving business, also distrusts micropayments - "I don't think that is the most efficient means of generating revenue. Micropayments will cannibalize the advertisement" —in other words, using micros will make ads nearly worthless to advertisers.

McCloud's eloquent arguments for micropayments as a driving force in future commerce remain cogent. iTunes and related musical entities are bearing many of his theories out. But webcomics, at this writing, are not.

Donation-Driven

It started with a throwaway comment by Randy Milholland of Something Positive ("S*P" for short):

By the way—I FUCKING HATE MY JOB! I work in Medicaid billing—so I bill poor people. ANYWAY, an ex-roommate has suggested I try to see if I can get enough donations to mach a year's salary (about 3 or so bucks per reader) and if I do, that I quit my job for a year and focus on comics. S*P, other projects—basically, I'd be your bitch for a year. I'm really thinking this over. Lemme know what you think.

The first 24 hours told him exactly what they thought; he received $800 in donations. The final tally was something over $4,000, certainly not a year's salary but impressive. Then, Milholland says, in May 2004:

I dared my readers to put their money where their mouth was, and give me a salary so I could just stay home and work on the comic full time. My reasoning was more to shut people up. Instead, I got $4,000 in a day. By a month's time, I had my salary matched. I promptly gave notice at my old job.

(The donation amount, not fully disclosed, exceeded $22,000.)

To say other comics took notice of this would be a severe understatement. A wave of donation drives swept through the comics field, many of them surprisingly successful. Perhaps that success came in part because those asking for donations were individuals, not faceless collectives… "microclaimants," if you will.

Goats raised $10,000. Sluggy Freelance raised an undisclosed sum that paid Pete Abrams' salary for the year. Clan of the Cats got just enough subscriptions to its bonus strip to keep going, and Scott Kurtz got his readers to pay for his Mac mini. And most impressively, The Norm, a former newspaper strip turned Web-only, raised over $62,500, not meeting its stated goal but making more than enough to justify its current business model, at least for 2005. Here is the catalog of services The Norm website offers for various levels of donation:

$25 = Access to the full site and 10% discount at the Store
$50 = One copy of The 12 Steps to Marriage
$75 = Greeting Cards—set of nine
$100 = One-year subscription to The Norm Magazine (six issues).
$250 = One signed museum print in color
$500 = One signed original
$1,000 Professional sponsorship = Free advertising in The Norm Magazine
$2,500 Corporate sponsorship = Free full page advertising in The Norm Magazine and on TheNorm.com
$5,000 Executive-level sponsorship = Official sponsorship of the TheNorm.com and TheNormStore.com

Certainly, readers have complained about these drives. In one recent thread, a poster known as "Rampart66" cites their personal nature. "When you throw your personal life into the mix (I guess to sell subscriptions out of pity) it leaves a bad taste in my mouth… I'd consider subscribing to a comic based on quality, not a sob story." The unusually large donations suggested by TheNorm.com, combined with a spam campaign by a third party named "Adam," inspired dissent and thread titles like "Keep the Norm Alive!" and "Let the Norm.com die." But despite those complaints, TheNorm.com's drive is probably the most successful to date.

Prominent figures in webcomics have their concerns about the business model’s long-term viability. Those figures include Robert Khoo—"If that's what you have to do to keep your business, do it… but if you have to do that, you don't really have a business"—and the man who started it all, Randy Milholland:

Here's the thing -- a little over 1% of my actual audience donated. The average donation was $5. Now, for a comic like Goats, which has a considerable audience, a donation drive has the chance to be successful because, again, around 1% of the audience being kind is still a lot of people. When you have a smaller webcomic trying the same thing, the turnout is a lot different. They might get 20% of their audience donating, but if that's only 80 people, it doesn't take you very far.

Milholland also considers the donation drive an event, not a never-ending revenue stream, "a card you play only once."

But in a larger sense, the whole webcomics field is playing. Readers of one webcomic are often readers of many webcomics. And the cartooning community won't stop using a successful model just because one or two cartoonists feel that it's tapped. They'll use it until its performance proves conclusively that it's tapped. You never know how far you can go until you try to go a bit further than that.

Ultimately, the most important contribution that donation drives make to webcomics may not be an enduring business model, their subsidization of particular strips or even the evidence they provide of webcomics' value to readers. Their use has led to an ongoing discussion of webcomics as financial entities, not just passing amusements. That discussion has come complete with earning reports, some of them quantifiable—$10,000, $22,000, $62,500. For an individual, basic accounting and statistics are always the first steps in building a business. For a community, they are the first steps in becoming a true industry. And becoming an industry may mean the passing of the Golden Age, but the maturation of an art form.

Conclusions

Some information about webcomics' financial picture will always be difficult to gather. Many webcartoonists are reticent about their revenues, and about what part of their revenues was most or least successful. Since no webcomics have stockholders to answer to—a situation unlikely to change in the near future—they are under no obligation to disclose earnings to the public. Furthermore, the careers of Vincent van Gogh, Paul Gaugin, Jerry Siegel and Joe Shuster are proof enough that artistic fame doesn't always translate into business aptitude. Many of the most financially successful webcomics, including Sluggy Freelance, Goats, Penny Arcade, The Norm, Ctrl-Alt-Del and User Friendly, have someone other than the artist to help with aspects of the business. It is entirely possible that the best business model for webcomics appears to be one of the worst, because its most prominent users don't know how to maximize their profits.

What is certain is that those most financially successful webcomics are continually diversifying their revenue streams. They have solid grounding in the “old school” of advertising and merchandising, but are quick to embrace new ideas. When PVP began selling special advertisements that used its own characters to make commercial endorsements, Ctrl-Alt-Del and Something Positive quickly followed suit. Making money in a competitive fringe marketplace is not easy, and requires courage to try new things and honesty to assess how well they work. For the "webcomics industry" to become and remain viable, its best practitioners will need to apply those values to their business—just as they already do to their stories and art.

Here we end our survey of the business of webcomics, and turn back to those stories and that art. Where have all these changes and experiments led the art form of webcomics in the last few years, and where might they lead it in the next few? We'll answer this question as best we can, and speculate as much as we dare, in Chapter 10 of the History of Online Comics.

T Campbell is a writer of webcomics and the editor of the subscription webcomic site, Graphic Smash.

Re: The History of Online Comics by T Campbell (Chapter 9)

Minor correction: as the news item clearly states, Mac mini rather than iMac.

Re: The History of Online Comics by T Campbell (Chapter 9)

In case you got here from Penny Arcade, you may want to know that I wrote Tycho back with this...

"Good point. I'd still say S*P got the ball rolling because so many webcomics followed its lead, whereas PA's donation drive was more of an early bird. But PA's drive is probably worth mentioning in the next edition."

Yes, this is a living document...