The Battle Moves to a New Arena—the Comic Shop

“There are comic book readers who want to be sold to in a definite manner. The reader wants a place where the purchaser is acknowledged as a person, and not someone who is somewhat off key. Comics are a hobby that deserves to be catered to.”

—Carol Kalish, Marvel’s former direct sales manager

By some estimates comic books were headed for extinction by 1984. A lifeline was needed, and it came in the form of a new outlet. Why overprint hundreds of thousands of copies in hopes of reaching newsstand readers when you can sell directly to the people who want your books?

By most accounts the first comic book specialty store opened its doors in San Francisco’s Mission District in 1968. Owner Gary Arlington started the San Francisco Comic Book Company less as a retail venture and more as a place to store his massive comic book collection. More stores specializing in comics soon followed, including Roy’s Memory Shop in 1969 in Houston, Texas. Its owner was a comics fan and opened it when he was out of work and looking for a way to turn his hobby into a career.

“There were few specialty stores, maybe twenty-five in the nation,” says Bill Schanes, who launched a mail-order company at age thirteen in 1971. “They catered to a smaller, collectors’ market.”

These stores had a major impact on comic readers lucky enough to live near one. Entering one was like dying and going to comic book heaven—albeit in some cases a heaven with a serious dust problem, lit with fluorescent lights, and located in a strip mall on the wrong side of town. For the put-upon comic book collector these stores solved nearly all the problems the hobby presented. No longer would he be forced to search drugstore spinner racks. The specialty shops carried all the titles, new and unruffled, and often got them weeks before they’d show up on the newsstands.

As devoted as the customers might have been, the big publishers considered sales to these stores negligible. They barely qualified as a rounding error in a business whose sole focus was the newsstand market.

That would begin to change in 1973. That summer at the Comic Art Convention, a fan gathering held each summer at New York City’s Statler Hilton Hotel, one savvy dealer and a well-timed bribe would change the course of comics history and potentially rescue the industry from certain oblivion.

Sellers at the Comic Art Convention usually dealt in back issues. But Ed Summer, owner of a store on Manhattan’s Upper East Side called Supersnipe Comics Emporium, decided to sell something different. The week before the convention Summer went to see the local newsstand wholesaler and asked if he could buy a few comic books off him—as in, every single comic book destined for New York’s newsstands that week. To grease the wheels, Summer brought along an expensive case of whiskey. The wholesaler agreed, and Summer set up shop at the convention.

“This had never been done, bringing new comics to a convention that aren’t on the stands yet,” says comic dealer Bob Beerbohm. “He set up spinner racks and put out all these new comics, and it was like watching a piranha feeding frenzy, like a cow falling into the Amazon river.”

The astonishing development caught the eye of two particular bystanders: Sol Harrison, DC’s then production head, and Phil Seuling, the convention founder. Seuling was a longtime comics reader who worked as a Brooklyn English teacher and sold comics on the side. He had begun organizing New York City–area conventions in 1968.

Summer’s sales gambit at the convention that day quickly opened Harrison and Seuling’s eyes to the power of comic fandom. Here was a group far more enthusiastic than the casual readers who then still made up the bulk of readership. These people lived and breathed comics, savoring the mythology and hungering for each new issue. They would sometimes buy two or three copies of a single issue at a time, and instead of tossing them or lending them to a friend when they’d finished reading them, they saved them like precious collectibles.

Later that year Seuling went to DC with an offer. He would buy comic books directly from DC, cutting out the distributor middle man, and sell them to dealers and specialty stores at a deeper discount. He would be allowed to order exactly the books in the quantities he wanted—no more random bundles thrown off the back of a truck.

The catch was that, unlike sales to newsstand distributors, sales through Seuling would be nonreturnable. In this channel, whatever product retailers bought, they’d be stuck with, and the publisher would not grant credit for unsold issues.

That single provision went a long way toward mitigating one of the riskiest elements of the business for DC. Returnability meant the publisher never had a decent handle on sales numbers, and the system was rife with fraud. Wholesalers were no longer required to return torn-off covers for publisher credit and were now simply required to sign an affidavit testifying to how many copies went unsold. Instead of destroying those unsold copies, as required, some unscrupulous dealers secretly sold them out the back door.

DC was torn on Seuling’s proposal. On the one hand, management liked the prospect of finding another more profitable and less corrupt means of distribution. On the other hand, it worried about ticking off the powerful wholesalers to whom it had been selling its products since the beginning.

“The newsstand market kept declining and becoming more problematic,” DC’s Paul Levitz says. “The thinking was, there were a few of these comic shops. They’ll buy some comics. Maybe we can sell another two books.”

Shortly after he cut the deal with DC, Seuling approached Marvel’s circulation manager, Ed Shukin, with a similar offer. After some back-and-forth, an agreement was hammered out, and the so-called direct market was born.

The new revenue stream soon proved lucrative. Marvel rang up $300,000 in direct market sales in 1974, the initial year. That money would continue to grow, and by 1979 that $300,000 had ballooned to $6 million.

“It was pretty clear to a number of us by 1976 or 1977 that this would be a viable part of the business,” says Levitz. “It wasn’t clear that it was going to be the business until the end of the seventies or early eighties.”

Comic books stores continued to spring up across the country (and distributors to serve them), numbering as many as three thousand in the early eighties. These shops provided a much-needed focal point for hobbyists.

“It gave people a place to go where they could talk about this stuff, because the newsstand guy at 7-11 doesn’t care about comics,” says Scott Koblish, a Marvel staffer in the 1990s and current Deadpool artist. “When I started liking comics in ’78 or ’79, it was kind of a secret thing. You didn’t want to get beat up for reading comics, and back then, it felt like you could get beat up. I kept it quiet back then.”

Direct sales began accounting for a larger share of both companies’ output, especially at Marvel. Sales to comic specialty outlets accounted for 20 percent of the publisher’s sales in 1980, compared to less than 10 percent for DC.

Marvel was initially more aggressive than DC in exploiting this new outlet. In 1980 the company hired former DC and Marvel writer Mike Friedrich to oversee its efforts in the blossoming direct market.

“Even though DC was the first one to cut the deal with Phil Seuling for direct only, it was Marvel to be the first to hire Mike Friedrich to manage it and build it,” says former DC editor Bob Greenberger. “DC’s efforts were always a step or two behind Marvel, and Marvel, as a result, was able to go gangbusters.”

DC followed in 1981, tapping writer Paul Kupperberg to spearhead its direct-market efforts. Parent company Warner Communications also sent over a consultant to help analyze data and strategize for this new revenue stream.

Jim Shooter had noticed the direct market’s impact shortly after taking over as editor-in-chief in 1978. He was scanning sales reports and saw a not-insignificant line item at the bottom marked “Seagate” that he didn’t understand. He soon learned that Seagate was Phil Seuling’s company and that these were the copies being sold into the direct market. This one channel accounted for some 6 percent of Uncanny X-Men sales.

To test the viability of the direct market, Marvel decided to release a title that could be bought only at specialty stores, not on newsstands. They quickly determined that it shouldn’t be one of the company’s more popular magazines. Fantastic Four and X-Men readers might send a killer Sentinel over to Marvel’s office in protest if the company released an issue fans had trouble finding at the usual outlets.

In December 1980 Marvel launched a new title starring Dazzler, a musical superheroine who had been created two years earlier via a partnership with LA-based Casablanca Records (of Donna Summer fame). The first issue was offered only to comic shops.

Regardless of the unorthodox distribution plan—not to mention the inherent drawbacks of having a disco-themed superhero—Dazzler #1 sold an astonishing 428,000 copies.

“That surprised me, and I think it surprised everyone,” Dazzler writer Tom DeFalco says. “It was such a giant number.”

Never one to let a competitor’s good idea go to waste, DC soon followed with a direct-only book of its own: Madame Xanadu special #1, released in April 1981. The special, at $1, was priced at double that of a regular comic and still sold some one hundred thousand copies.

The same year Marvel—encouraged by Dazzler’s success—converted three of its titles that were struggling on the newsstand, Micronauts, Moon Knight, and Ka-Zar, to direct-only books.

“At the time the focus was the newsstand. That changed gradually,” says Marvel’s former publisher Mike Hobson.

“When I first started editing at Marvel in 1983 most of the titles came from newsstand, two-thirds newsstand and one-third direct,” says former Marvel editor Carl Potts. “In a couple years that inverted.”

Both publishers soon became convinced that the direct market was the future of the business. Not only was it a fast-growing element of an industry that had been stagnant for years, but its profitability was unlike anything else in publishing. It was like printing money.

“Over here we have this [old] distribution system that throws away 70 percent of everything we send them and steals from us, compared to a distribution system that’s nonreturnable and has better margins,” says Milton Griepp, former head of a distribution company and now industry analyst. “The direct market was and is the most profitable system for print distribution in the United States for magazines, books, anything.”

It wasn’t long before the company’s ledgers began to feel the effects. In 1982 the direct market accounted for 50 percent of Marvel’s sales but 70 percent of the company’s profits, due to the higher prices on the titles sold in comic shops and the nonreturnable nature.

The unexpected success of the direct market and its hefty profits began to change how both Marvel and DC approached not only the business of comics but also the content of the comic books themselves. Soon the tail was wagging the dog.

“By 1981 the companies were clearly focusing in on what the fans wanted,” Paul Levitz says.

The growing sales and marketing departments at both publishers set out to study this new breed of buyer who differed from the casual newsstand customer. This direct-market customer was generally older. He was more devoted, sometimes buying nearly every title a publisher offered. It became increasingly clear that what sold on the newsstand wasn’t necessarily going to work for comic shops.

“I know for a fact that Marvel was very committed to working closely with the retailers who were selling their books,” says Marvel’s former PR head Steve Saffel. “And this was an interesting problem at times because a lot of those store owners were comic book fans, and to some degree they preferred to support projects they liked—sometimes more than projects they could sell.”

To better lure the direct-market customer, both companies began to tailor their output. Suddenly fannish material once deemed too niche for the broader market was possible. A 1981 Marvel house ad announcing direct-only titles spoke specifically to the growing number of comic book superfans.

“That means these titles are being designed just for you, the discriminating Marvel reader,” the ad read. “For this exciting experiment to succeed we need your reactions and your ideas. Just tell us what you’d like to see in these titles—and we’ll listen.”

DC especially began to launch a slew of sophisticated series aimed at this more discriminating reader, tackling subjects that would have made old-school Superman editor Mort Weisinger choke on his pipe.

Camelot 3000, a twelve-issue limited series released to the direct market in fall 1982, was a futuristic spin on Arthurian legend that tackled heady issues such as gender identity and incest. It was written by Mike Barr and drawn by acclaimed British artist Brian Bolland. Barr had conceived of the tale of the reincarnated Knights of the Round Table after taking a literature course in college.

The Omega Men (April 1983) was another direct-only title that made waves for its adult content—in this case graphic violence and cannibalism. The comic spun out of Green Lantern and featured a rag-tag team of extraterrestrial mercenaries. Its extreme content unnerved some store owners and had a few industry veterans publicly calling for a ratings system to be imposed on comic books, similar to what movies had.

“Most of the complaints come from older readers who seem to cherish an image of DC comics from the 50s and early 60s like, ‘You did all this great stuff back then, why do you have to do more violent comics now?’” The Omega Men editor, Marv Wolfman, explained in 1983. “They want the books to be harmless as they were when no one was buying them because they have these fond memories of books they don’t even like.”

Both companies experimented with different formats. Marvel began releasing a line of sturdy graphic novels—oversized, book-length stories with a $5.95 cover price—in 1982. The first, The Death of Captain Marvel, found the cosmic hero, who’d been created for copyright purposes, succumbing to cancer. The book ultimately sold some two hundred thousand copies.

The burgeoning direct market allowed both companies to begin using higher-quality printing techniques that were not affordable with newsstand returnability. Marvel switched from letterpress printing, an archaic method that offered low resolution and muddy art, to the crisper offset printing. DC followed suit in 1981.

One of the biggest breakthroughs would come later in 1983 with DC’s publication of Ronin, a six-issue miniseries from writer-artist Frank Miller about a feudal-era samurai transported to the future. Miller was a lanky kid from Vermont who, as a teenager in 1976, had moved to New York to break into comics. He’d gotten small jobs at DC and soon became friendly with then-Marvel-editor Denny O’Neil.

“He’s one of the few people I met who I could talk to about the work,” O’Neil says. “We’d go to Central Park and play volleyball for a few hours, and walking out of the park to get some snacks, Frank would ask really intelligent questions about my work.”

Miller was soon assigned to draw Marvel’s Daredevil with #158 (May 1979). The book quickly became the talk of the industry and its young creator one of its biggest stars, especially within the direct-market and the hardcore fanbase. Miller, like Jack Kirby and only a handful of others before him, became one of the few whose name on the cover was enough to guarantee sales. The direct market had the power to make stars of its creators, and the creators were starting to realize it.

“Who the creators were on a title didn’t make any difference until the direct market got up and running,” says Marvel’s former publisher Mike Hobson. “The direct market made heroes out of the creators.”

The shift changed the way creators were compensated. Since the beginning comic book artists and writers had been paid shoddily. Most collected a page rate—a one-time fee for each page produced—and rarely received any money beyond that. Even when their work was reprinted, they got nothing. No money from movies, toys, or all the other items produced as a result of their creation. As writer Arnold Drake once said, the comics industry was like a brothel, with the publishers acting as the madame and the talent as the girls.

“These companies won’t do anything until you stick a knife in their side and make them bleed,” says Neal Adams, who’s been on the front lines of the creator-rights fight since the 1960s.

DC’s new publisher, Jenette Kahn, had made it a priority to begin offering royalties soon after her arrival in early 1976, but the business—and DC—was in such poor shape that no money was available. That changed in a few years, in part due to the direct market. She believed it was morally right and felt DC would get better work if creators participated in the profits. DC hoped to get more books like Daredevil, which the company considered a prime example of what happened when talent was passionate about the work. The royalty system would also, fingers crossed, serve as an incentive for Marvel’s artists and writers to jump ship to DC.

“In 1980 we figured out how to pry the money loose from our budget,” Paul Levitz says. “We had interesting debates about who deserves more and how to do it, since the industry had no history of doing it.”

DC’s royalty plan was announced in November 1981 and would pay a creative team a percentage of sales above a one hundred thousand sales threshold, with 2 percent going to the writer, 1.4 percent to the penciler, and .4 percent to the inker. (The paltry inker percentage was due to the fact that DC’s editor Dick Giordano was an inker himself and didn’t want to be seen as favoring his own kind.)

The new plan meant quite a bit more money for creators—assuming they worked on hit books, that is. DC’s best-selling title that month, The New Teen Titans #12, sold 217,000 copies at a 60 cents cover price. Under the new royalty plan writer Marv Wolfman would pocket an extra $1,404, penciler George Perez $982.80, and inker Romeo Tanghal $421.20. And because Wolfman and Perez had also created some of the characters, they split an additional 1 percent.

DC’s plan spurred Marvel to action. “We’re not going to just sit there,” editor-in-chief Jim Shooter told the press at the time.

“I didn’t think they wouldn’t [follow],” Giordano fired back. “As a matter of fact, I welcome them to the group. I welcome the competition.”

Shooter had been working on his own royalty plan, but implementing it had been held up for various reasons. Marvel’s lawyers were wary of offering participation because they worried it might imply that the writers and artists owned their creations. The company also had trouble figuring out how exactly to structure the plan.

“I got mine approved first, but the Marvel bureaucracy slowed it down,” Shooter says.

DC’s announcement finally forced Marvel’s hand. Less than a month later Marvel unveiled its own royalty system that was virtually identical to DC’s.

“Marvel was crying poor,” Denny O’Neil says. “They said they couldn’t manage to give out royalties because so many people worked on every story. They couldn’t manage the bookkeeping. When they had to do it, it’s amazing how fast and easy it was.”

“Jim was able to push through a matching plan in about a month, which was great for them, great for the creative people, a little frustrating for us,” DC’s Paul Levitz says.

One of the obstacles Marvel faced was that its titles were selling many more copies than DC, meaning it would be on the hook for higher royalty payouts than its rival. Marvel paid out $2 million its first year.

“It really cost us a fortune,” Shooter said at the time, before taking a shot at DC. “We don’t have Daddy Warnerbucks to fall back on.”

Under Kahn DC amped up its efforts to poach Marvel’s talent.

“When Archie Goodwin was [editor-in-chief in 1977], we came up with this idea, because we had all these artists coming up and showing portfolios,” Shooter says. “I said, ‘Let’s give them a test, a five-page story and see what they do with it.’ It got to the point where, if we would give a guy a five-page tryout, DC would offer them a contract. It was insane.”

Soon DC got bolder in its tactics.

“Shortly after Jenette came in, they started getting aggressive and not going after beginners but going after Frank Miller and other big shots,” Shooter says.

“There were funny stories of Jenette trying to take Frank Miller,” says former Marvel editor and writer Ann Nocenti. “The story was, Jenette would have someone she was trying to [poach] to DC over for dinner, and she’d have cookies made with the character that they were working on. She’d have Walt Simonson over, and she’d have Thor cookies made. She actively tried to poach high-selling people away from Marvel.”

Kahn, like everyone in the industry, had been particularly impressed with Miller’s Daredevil and coveted Marvel’s rising star. Kahn invited Miller to lunch at the Warner executive dining room and told the hot artist, “Tell me what it is that you would really like to do. I don’t care how offbeat it is or if it’s never been done before. Whatever it is, we’ll try to make it happen.”

Miller laid out his plan for Ronin, which he had contemplated doing for Marvel’s new graphic novel line. He poured out to Kahn not just his vision for the story but his vision for the package in which it would be presented. Miller pictured something far removed from America’s cheap, disposable monthly comics and closer to the book-like graphic novels commonplace in Europe. And most important of all, it would be creator owned.

“We were willing to do things that maybe Marvel wasn’t,” Paul Levitz says. “Print the book on real paper, find the paper stock that Frank liked from France, work with [painted] color, put it out at a higher price tag, put his name on the front. You had never seen that on a mainstream comic at that point.”

Instead of potentially producing Ronin with a Marvel imprint, Miller agreed to work with DC, signing what was rumored at the time to be the richest comic book contract ever.

“When Frank Miller went over to DC to do Ronin, it was kind of shocking, because here’s the Daredevil guy going over to do this weird book that no one has ever heard of,” says inker Joe Rubinstein, who worked with Miller on the 1982 Wolverine miniseries. “I talked to Frank and was on the side of, ‘Stay loyal to the company who brought you to the dance.’ But I guess he did what any good creator does, and he went and did it somewhere else.”

Ronin was released in a forty-eight-page, ad-free format at $2.95. It was hyped by DC’s publicity machine and presented Miller’s unfiltered vision, almost entirely free of editorial interference. But the audience response was lukewarm.

“Ronin provoked in me not only disappointment,” reviewer Kim Thompson grumbled in 1983, “but also a sense of pessimism with regards to Miller’s future career.”

“Frank had decided he could do whatever he wanted and was going to do this experimental storytelling, and he did this chaotic story,” Shooter says. “They sold it [to comic shops] really well, but it didn’t sell through [to customers] at all. No one wanted it. [Dealer] Bud Plant said to me, ‘Hey, you wanna buy some Ronins?’ I said, ‘What would I do with Ronins?’ He said, ‘Firewood. I roll ’em up and sell them by the cord.’”

Jenette Kahn considered Ronin to be among the most important series DC ever put out, regardless of the relative clarity of its storytelling. It suggested what might be possible in the medium and demonstrated that DC was willing to give creators the freedom to tell all kinds of stories, not just those involving corporate superheroes aimed at the bobby-socks brigade. It would be a philosophy that would serve the company well and would help usher in what Kahn termed “an Elizabethan age” for DC.

And not a moment too soon.

Even with Ronin and DC mega-hit New Teen Titans, the company was struggling. The brass at DC’s parent company Warner Communications was still not sold on the idea that publishing could be a profitable aspect of its business. The worry for years had been that Warner was going to shutter the underperforming DC and simply milk the characters for licensing money.

“There were rumors of that every single week I worked at DC,” says Jack C. Harris, a DC editor in the 1970s.

The whispers often reached the rank-and-file staff of Marvel, who would sit around imagining what they might do if given a crack at the competitor’s iconic superheroes.

In February 1984 they almost got the chance.

Jim Shooter was sitting in his office one day when, out of the blue, he got a call from Bill Sarnoff, head of Warner Books. Sarnoff had an unexpected offer.

“Look, I’ve been thinking about this,” Sarnoff said. “You guys make a lot of money selling comics.”

“Oh, yes, sir, we do,” Shooter replied.

“We lose our shirts every year. Million and millions of dollars,” Sarnoff said.

“I know. I can do the math,” Shooter said.

“We, however, make a bloody fortune on licensing. You guys hardly make any money in licensing,” said Sarnoff.

The Warner boss laid out a proposal in which DC would license its characters to Marvel to publish. The proposal, as incredible as it was, did not mark the first time DC had explored selling out to Marvel.

“Stan told me that some years before Sarnoff called and that a similar offer had been made by Warner Publishing to the Marvel brass,” Shooter says. “Marvel made some offer. Nothing came of it.”

Shooter brought this latest proposal to Marvel president Jim Galton, and Galton promised to call Sarnoff. The next day Shooter followed up with Galton and was told the deal was off.

“The characters must be no good,” Galton said. “They don’t sell.”

“No, no, no! Those idiots are doing them. We can make them work!” Shooter fired back.

The editor-in-chief proceeded to put together a business plan.

“What’s in it for Warner Com is, of course, guaranteed no-hassle money—the elimination of a huge overhead cost and the possibility of a new life for their dying properties,” Shooter wrote in a 1984 memo. “What’s in it for us is the money we’d make publishing those characters and the elimination of an irritation.”

After all these years Marvel would finally be able to strike a killing blow to its “irritating” rival. The plan called for Marvel to begin by publishing seven DC titles: the obvious core characters—Superman, Batman, Wonder Woman, Green Lantern, and Justice League of America—along with two series that were strong performers at the time, particularly in the direct market—New Teen Titans and the Legion of Super-Heroes.

“I was conservative as possible and had us making $3.5 million in the first two years,” Shooter says.

At a meeting with circulation head Ed Shukin and direct sales manager Carol Kalish, Galton asked Shukin what he made of the projections.

“Ridiculous,” Shukin said, as Galton shot Shooter a withering look like, You see?

“We can double this,” Shukin concluded.

Negotiations commenced, and the deal called for Warner to receive a royalty on every copy sold. Perhaps one of the sweetest perks for Marvel was that the company would receive a percentage of any increase in licensing that came as a result of Marvel making the DC characters more successful. Warner’s powerful subsidiary, Licensing Corporation of America, might also potentially agree to help Marvel in licensing some of its properties.

Word of the negotiations leaked to Marvel’s bullpen, and the excited staff was once again daydreaming about what would happen if they could have a crack at DC’s characters.

But it never happened. In the spring of 1984, as the deal was being discussed, indie publisher First Comics filed a lawsuit against Marvel alleging anticompetitive practices. The Chicago-based publisher, best known for Howard Chaykin’s award-winning American Flagg, claimed that Marvel was flooding the market with titles to try to keep smaller companies off the racks. Retailers had only a certain number of dollars to spend each month, and Marvel increasingly ate up more of the budget, leaving less money to be spent on the indie titles.

The lawsuit raised monopolistic concerns about Marvel and meant that it probably wasn’t the best time for Marvel to think about absorbing its biggest competitor. The DC deal was abandoned.

“I think we would have made those characters go,” Shooter says. “I worked at DC for a long time, and I knew those characters. I think we would have killed it, done tremendously.”

“Then I guess we really would have been a monopoly.”