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Costs of Manga

TokyoPop has announced that several of their titles will be sold to the public exclusively on their website. I am pretty sure that this will turn out to be a disappointment for them in terms of sales since online sales for a single book have never been all that great -- even at Amazon.com which is one of the most visited on-line bookstores in the nation. But I can understand why their doing it.

First, a little background. All of the production costs and licensing fees of a book are paid by the publisher. But despite that, the publisher usually only gets about a quarter of the cover price. The bookstore usually gets the book at about half price and the distributor's cut is about half of that half. Thus if a book sells, the bookstore gets about 50% of the cover price, the distributor gets another 25% and the publisher gets the remaining 25%. The publisher's 25% pays for licensing, freelance talent, and all of the salaries and business expenses of the publisher. That means that a publisher needs to sell probably somewhere between 7000 and 10,000 books to simply break even (more if you're selling for a lower cover price). There are a lot of books that don't sell that well, so the publisher needs a few break-out hits to balance out a number of books that are a drag on the company's profits.

Now I have never worked for or with TokyoPop, so this is all speculation, but remember that I've been in a similar position and had to make similar decisions.

Let's say a publisher has a book that they started to try to license a year or so ago. It takes a long time to get production up and running so proposing a contract a year or more in advance is not all that unusual these days. Last year, while trying to figure out whether to license it or not, the publisher made inquiries to the chain bookstores and other influential sources to get a ball-park guess of how many copies they would expect to order. Let's say that the buyers weren't thrilled with it, but they gave guesses that would make the manga profitable in the long run, so the publisher went ahead and proposed terms to the people representing the mangaka based on those guesses.

Fast forward a half year or so, and all the details are worked out on the contract, so finally the editorial department can begin production on it.

Fast forward another three or four months, and the in the last 3/4 of a year, the market has changed. The shelves have been filling up with popular series that have upwards of 20 volumes each, and the more marginal titles are being squeezed off the shelves. And a major buyer says, "Sorry, but shelf space is tight and your new title has just a little too much sex/violence to bet on. We're revising our order numbers way down." (Remember that this is speculation. The chain-store buyers may not have ever had a chance to see the manga or make an estimate before being asked to make their final orders.)

Suddenly the publisher is looking at a book that has already had a pretty big investment in production and advances on royalties for the mangaka. The publisher realizes that now the book won't even make up the printing costs, let alone licensing fees and production costs and business expenses. But the contracts are already signed, and the publisher is committed to putting out the book, so what does one do?

Go back up and read the second paragraph, and you'll have an answer. If the distributor is cut out completely, and the retailer is the publisher itself, then instead of working with 25% of the cover price, the publisher now has 100% of the cover price to work with. Sure there are extra costs inherent with working one's own retail outlet, but they (hopefully) won't add up to 75% of the cover price.

So, how about a discount as Brigid of MangaBlog was looking for? Well, that's the problem with the contract being last-year's contract. A 3rd-party retail outlet can put on any discount it wants as long as they pay the agreed-upon wholesale price to the distributor, but unless the publisher has worked a retail discount for itself into the original contract with the mangaka, the publisher is contractually bound to sell the book to the public at the cover price.

I think Chris Butcher of Comics 212 and Dave Taylor of Love Manga are a little off base when they think that TokyoPop is "biting the hand that feeds it" when it decides to do an on-line exclusive. Every publisher would like to get the books into the retail outlets because that is where the shoppers are. More than likely, the retail chains bit TokyoPop's hand first by deciding on low orders. (Actually, I doubt anybody bit anybody's hand here. These decisions were probably made by looking at the numbers on both sides. I doubt there are any hard feelings on either side over these books.)

In any case, I would like to see TokyoPop's experiment succeed. If a publisher can sell weird and off-beat manga from their site and still make a profit, it means that there is a viable avenue for things like more Josei manga, more quirky seinen manga, more older manga, and more of any other genre that doesn't do well in retail by giving them a way of succeeding on fewer units sold.

I wish TokyoPop all the luck in the world with this experiment.

Edit: My apologies to anyone who thought that the percentages that I listed above were the actual percentages negotiated with the distributors and retail outlets. They are very general ball-park figures in order to illustrate that the publisher gets a much smaller percentage than most laymen assume. You can figure a margin of error of up to 10% on these figures. In my own defense, these are percentages that I would use when trying to calculate whether a manga series we were looking at would be profitable or not. The actual percentages are slightly better for the publisher, but also remember that the publisher eats the returns, so in reality if the book sells poorly, the publisher's cut could be even worse.

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