All of 2007 –That’s a large mandate; I tried to take a look at retail, publishing, and some specific trends relating to graphic novels — at least as much as I can manage, given my resources.

Bullet points

Economy
[source: Census Bureau]
* Retail Sales were up 3.2% in 2007 …but inflation was up 4.1%. Excluding energy and food prices, inflation was only 2.4% — but I’m not an economist so I don’t know what, exactly, that says about retail. Call it a wash
* Likely fan purchases (Books, DVDs, Games, Computers, Software) were up 3.34% year-to-year
* And you don’t have to be an economist to know what this means: 2007 E-commerce sales were up 24%.
[read more]

Publishing
[source: publishers.org]
* 2007 Book Sales total $25 billion, up 3.2%
* …but it’s more complex then that, depending on the format. Hardcovers are up, paperbacks not doing so well.
* Trying to boil down publishing-as-an-industry into a single set of comprehendable numbers is more than I can manage: but there are a lot of links for you to take your own look. I’ve attempted an index of publishers in addition to the sales data.
[read more]

Book Retail
[source: multiple retailers’ annual reports]
* Major Chains account for over $14B of the $17B book retail market.
* Online sales of books (or at least of ‘media’: books, CDs, and DVDs — the way Amazon defines their sales) is over $5 billion.
* Taken at face value, and without more detailed categories from Amazon, we might guess that as much of 20% of all books sales are now done online.
[read more]

and the point of the whole article: Graphic Novels
[source: icv2 and the numbers cited above]
* direct pull from icv2: GNs in at $375M, manga at $210M.
* Graphic novel sales account for 1.5% of all book sales.
* Manga was only up 5% from 2006, but is still more than half of all graphic novel sales.
* …and may be as much as two-thirds: unit sales were not reported but a rough calculation shows manga outselling other graphic novels 2 to 1.
* As sales of paperback books were only up 1% year-to-year, growth rates of 5% and 12% (for manga and graphic novels as a whole, respectively) show that the category continues to outpace inflation, other books, publishing & retail in general — which is why retailers are still looking at ways to expand their comics & manga departments or otherwise tap this market.
* …as much as they can, anyway. The number of new releases is outpacing the ability of the market to absorb new titles, and stores are also running into physical limitations: we’re running out of shelves.
[read more]

[or skip to my conclusions.]

##

I really like perspective, background, and context. It’s just awfully time consuming to research said background and context, so a lot of the time I’ll skip it, take one ‘fact’, and then pile on the high levels of umbrage and certainty that only blind fannish devotion and a certain portion of beer can provide. It’s certainly easier to write posts that way. (ref: 2007 in Review: Manga in Japan)

Every now and then, however, my predilection for getting things right will trump my desire to get articles up on time, and the result is one of very occasional opinion/research columns that used to post under the 5by8 tag.

As a 2007-year-in-review-post, obviously this is a shade over 4 months late. But when you consider that my vintage 2006 review actually posted in September then I’ve improved quite a bit over last year. And of course, since I like using corporate Annual Reports and other financials as a launching point, I guess I’ll never manage a review post like this one before the end of March at the earliest.

I really like manga. I buy a lot of it. And I can talk for years (apparently) about manga. But manga is just a portion of the comics market, which is a subset of book sales, which is just part of the overall retail sales picture. So we’ll try to put the numbers into their proper context first:

From the US Census Bureau:

2006 Total Retail Sales: $3.939 Trillion
2006 E-Commerce sales: $109.8 Billion — 2.79% of the total

2007 Total Retail Sales: $4.065 Trillion
2007 E-Commerce sales: $136.0 Billion — 3.35% of the total

Year to Year, Total Retail went up 3.20%, E-commerce was up 23.8%

3.2% wasn’t quite enough to keep up with inflation (4.1%). But rising food–and of course gas prices–are making the single-top-line-item comparisons like this dificult. Excluding food and energy, inflation is a much more reasonable 2.4%. Current economic forecasting makes my head hurt more than a little, so for the purposes of this essay we’ll call 2007 a wash and just move on.

The more valuable point to note from the numbers above is that online sales were up 24%.

##

While still mucking about with Census Bureau numbers, let’s take a look at the HMBSEI* index:
(dollars, in millions)

2006
Book stores 16,733
Hobby, toy, and game stores 16,471
TVs/electronics stores 65,056
Computer and software stores 21,676
Beer, wine, and liquor stores 36,737
Bars & Pubs 21,005

HMBSEI* 2006 total: $177.7 Billion
Adjusted total: $119.9 Billion

2007
Book stores 17,021
Hobby, toy, and game stores 17,279
Electronics stores 67,293
Computer and software stores 22,353
Beer, wine, and liquor stores 39,584
Bars & Pubs 23,362

HMBSEI* 2007 total: $186.9 Billion
Adjusted total: $123.9 Billion

The HMBSEI index tracks (obviously) the *Highly-Matt-Specific-Economic-Indicators which are further adjusted (removing the beer) to reflect more normal fan consumption patterns

In keeping with general retail trends, it appears that likely fan purchases (Books, DVDs, Games, Computers, Software) were up 3.34% year-to-year, and that my own discretionary purchases (all of the above + beer and bar tabs) were up 5.18%. Which sounds about right.

Of course, total book, DVD, and games sales are a much bigger chunk then just the manga — but we’re describing trends here. Actual numbers for comics and manga will follow further down in this post

and on that topic–an aside: I’m sure the comics ‘direct market’ is part-and-parcel of the ‘Hobby, Toy, and Game’ component as tracked by the US Census Bureau, but unless someone from Diamond would care to comment, there is no way for us to know (even as a rough fraction) the total retail contribution of the local comics shops.

If we knew what that fraction was, we could look at monthly census numbers on a, dare I say, monthly basis to get a feel for how the direct market is doing. Figuring out that fraction is a worthy exercise, but one that I’ll leave to the readership.

##

Demand is only half of the equation: Let’s consider supply.

Now, last year when I looked at numbers I found a press release from the Book Industry Study Group that pegged the 2006 publishing industry total at $35.6 billion. The BISG doesn’t have a 2007 estmate, and I don’t know necessarily that they’ll post it when they do cook one up.

This year I’ve a new discovery I’d like to share with everyone: The American Association of Publishers. These guys are compiling monthly and annual statistics and posting them at their site, Publishers.org.

From this chart [PDF, w/ numbers from ‘02-’07] along with this press release, which puts the numbers in context for you, we can see that book sales for 2007 amounted to $25 Billion (24.96 billion, actually, but what’s 40 million dollars between friends?)

Before someone posts it into the comments, I’ll cover it: What happened to $10B from 2006?

Well the BISG was posting “publishers’ net revenues” while the AAP is tracking “total book sales.” Needless to say, I like the AAP’s approach much better, so we’re going with their numbers. Sales (not revenues) are what I was looking for anyway.

And the AAP is releasing a PR once a month with updates, so even if you don’t feel like subscribing to the detailed reports (if you have $800 lying around, I say go for it) you can keep a finger on the pulse of the industry.

All that aside– 2007:

Hardcovers gained, mass-market paperbacks* slipped, kids’ books (excluding Harry Potter) seem to be shifting from hardcovers to paperbacks but all-in-all are trending upwards– and taken as a whole, books in general are up.

*for those of you not up on the lingo: a mass-market paperback is the roughly 4×7″ book with a cheap glued binding, printed on cheap newsprint and initially designed to be sold off of racks in drug stores, five-and-dimes, and newsstands — remember newsstands? — these things are so cheap we don’t even bother to return them to the publisher, we just strip off and send back the cover as “proof” and discard the rest. Yes, it’s wasteful. Yes, we recycle them now, instead of trashing them. And no, you should never buy a cheap paperback from some guy on the corner if it doesn’t have a cover: that book was stolen — fished out of the trash, maybe, but still stolen. The ‘mass-market’ is a relic from a 1940s business model but they’re cheap (as mentioned 3 times previously just in this paragraph; running $7-8 these days) so they are still quite popular. Genre fiction (sci-fi, mystery, romance) might not even be categories in your bookstore if it weren’t for these. [wiki]

The flip side of the “mass market” is the “trade” (referring to the book trade): Trade Paperbacks are larger (often the same size as the hardcover edition, minus the hard cover) and are typically printed on a better grade of paper. (the feel of some of my manga, however, makes me wonder… I guess I won’t know until I see if the paper yellows over the next 15-20 years). And they cost roughly twice as much for that reason.

Graphic novels and manga are “trade paperbacks,” I don’t know if the research firm compiling numbers for the AAP considers them to be adult or juvenile books — the kids’ paperbacks are up quite a bit more than the adults’ (which barely broke even) but both are up year-to-year — combining the two and doing a rough calculation I come up with just a 1% gain for 2007.

Publisher Index:

Bertelsmann
Privately held, unlisted. Incorporated in Germany.
owns: Random House, 50% of Sony BMG
of Note: Del Rey Manga

NewsCorp
Owns: Fox, Myspace, Death ray mounted on the Moon, HarperCollins
of Note: HarperCollins is our distributor for Tokyopop

CBS
owns: buncha TV & Radio stations, Simon & Schuster
of Note: Simon & Schuster distributes Viz

Pearson
Owns: DK, Penguin
of Note: GN adapations from Philomel (an imprint of Penguin), Comics encyclopedias and other guides from DK.

Hachette Livre
a wholly owned subsidiary of Lagardere SCA, incorporated in France
owns: Hachette Book Group USA, aerospace company EADS
of Note: Yen Press

Macmillan
The Macmillan moniker was recently resurrected for their English-language units: owned by Holtzbrink, a German privately-held investment group
owns: St. Martins, Henry Holt & Co, Farrar Straus & Giroux
of Note: First Second, Tor (Sci-fi and genre fiction; also recently allied with Seven Seas for manga and more)

Time Warner Inc.
owns: Cartoon Network, DC Comics, Vertigo, Mad Magazine, and duh: Time magazine & Warner Bros.
of Note: Batman, Superman, CMX

Big, but not comics:

Walt Disney
owns: ABC, ESPN, rights to Kermit and most of the other Muppets, 17% of Florida, Enough congressmen to keep Mickey under perpetual copyright, the frozen corpse of Walt, Hyperion Books
of Note: Pixar. Muppets. Sportscenter. The rest is dross.

Sony
owns: 50% of Sony BMG, Animax Japan
Of note: PS2, PS3, PSP, Blu-ray; Geeky, but Not Comics

Comics, but not big:

Marvel
Oh, wait: Marvel isn’t a publisher, they’re a character-based entertainment company that makes movies and toys. I could have sworn they used to print books, too; sorry, my bad.

Diamond
owns: Gemstone Publishing, a number of other pop-culture related ventures
Of note: they are the direct market. Wholly owned subsidiary Diamond Book Distributors is also running a separate but parallel drive to get their clients’ product into bookstores.

Smaller Fry:

McCraw-Hill
owns: Business Week, Standard & Poor’s
No Comics

Vivendi Universal SA
owns: Universal Music Group, World of Warcraft and some other game companies.
Geeky, but no comics

Wiley John & Sons
owns: Dummies’ books
Sorry, half-assed Shakespeare [*cough*] “manga” doesn’t count

Scholastic

And Scholastic is the exception that proves rules are useless and even brings our set categories into question. Scholastic sells a lot of books. As might be inferred from the name, they focus on selling books to kids who are, in fact, in school, and it might be safe to say that they own this market. Not that they have a majority market share; every publisher has a juvenile or el-hi (elementary-to-high-school) division — but Scholastic is the kids’ division that is the whole damn company.

They publish Harry Potter. ‘nuf said.

Of note is their Graphix imprint, home to the colour reprints of Jeff Smith’s Bone, Amulet, & Queen Bee (which is about as ‘manga’ a graphic novel–in terms of plot and character design–as I’ve seen come out the states).

I didn’t bother to research the annual reports and other financials of every publisher, not least of all because that would be a headache the size of the SDF-1, but also because between foreign ownership, corporate labyrinths, and private holdings, hell, half the time I don’t even know where to look. Some publishers I haven’t even heard of.

I invite the lackeys and partisans of additional small comics publishers to chime in on the comments, if only with a link to a main page.

Looking at the bottom-line number, overall publishing was up 3.15%; we’ll take a closer look at comics and manga publishing a bit further down. Before that: there’s the $17 billion retail chunk that is the Book Stores, something we can track:

##

Comicsnob.com: “We read boring corporate reports so you don’t have to! ™”

Corporate Financials:
(in millions)

Amazon
annual report [pdf]

for North American sales of “media”
2006 $3582
2007 $4630

Media, per Amazon, are CDs, DVDs, digital downloads, and the occasional book. Amazon does about that much (dollar-wise) internationally as well. Tack on electronics and $325M of ‘other’ (if I were selling hundreds of millions of dollars of merch I think I’d be more specific) and overall, Amazon grossed $14,835M (14.8 Billion) in 2007

year-to-year gains: $1048M (29.3%)

aside: It’s a shame that, as a bookstore, Amazon sucks so very, very much, since it does so well as a general, all-purpose retailer.

and note: when comparing AMZN to other booksellers, all of Amazon’s sales are .com sales.

Barnes & Noble
annual report [pdf]

2006
total sales $4534M
.com sales $433M

2007
total sales $4648M
.com sales $476M

year-to-year gains
total sales $114M (2.51%)
.com sales $43M (9.93%)

Borders
annual report [pdf]

2006 $3683.8M
2007 $3774.8M

year-to-year gain: $91M (2.47%)

Borders didn’t have a .com component in ‘07, but apparently they’ve been working on that.

Books-a-Million
annual report [pdf]

2006
total sales $496.6M
.com sales $27.6M

2007
total sales $512.9M
.com sales $26.0M

year-to-year gains
total sales $16.3M (3.28%)
.com sales -$1.6M (-5.80%)

Online sales are not a panacea; if you do it wrong, then you’ll quickly discover that, yes, some guy in a garage with right proper web skillz is not only going to take your lunch, she’ll eat it too. (yeah, yeah, the pronoun doesn’t match the antecedent and all that… but she’s still eating your lunch)

Chapters/Indigo
annual report [pdf]
note: Indigo uses a fiscal year that runs from May-to-March, so I had to pull data from two different reports: the numbers below match up to calendar years ‘06 & ‘07.

2006
total sales 851.8M CAD (853.6M USD)
.com sales 79.5M CAD (79.7M USD)

2007
total sales 875.0M CAD (876.9M USD)
.com sales 86.7M CAD (86.9M USD)

[conversions from Canadian Dollars (CAD) to US Dollars (USD) done via Google at the 1 May 08 exchange rate]

year-to-year gains (in US$)
total sales $23.3M (2.73%)
.com sales $7.2M (9.03%)

Hastings
annual report [pdf]

2006 $454M
2007 $458M

*Hastings doesn’t bother to independently track their online revenue — which only makes sense, as their web site sucks.

year-to-year gains: $4M (only .88%)

editorial: ouch.

##

Setting aside whether the inclusion of Chapters is a good idea (as a Canadian company they likely aren’t covered by the US Census Bureau): the the top 5 US (+1 Canadian) Booksellers account for $14.6 Billion of a roughly $17 billion market. So all you local, independent booksellers accounted for at least $3 Billion in sales in 2007. Go Indies!

The .com chunk, or at least the Amazon-plus-websites-of-brick-and-mortar-booksellers portion, is $5.22 Billion.

There are a lot of subcomponents to consider, not to mention the diversified nature of Amazon that makes tracking only their book sales more than a tad difficult, but it looks like (roughly) a fifth of all books are being sold online.

Now let’s change gears.

I’m about to lean heavily on icv2 and their reporting of 2007 sales:

Graphic novels had a fine year: Up 12% to $375 Million in sales.
Manga was also up, 5% to $210 Million. Manga still accounts for more than half of all graphic novels (56% last year) but that means as a percentage they actually slipped a bit; in 2006 manga sales of $200M was 60% of the total.

Dollar sales are not units, though. Here’s some really rough math:

Capes:
$165M / $15 a book = 11 million units.

So assuming an average cover price of $14.99 (a few are cheaper; my take is that most are 15 bucks or more) then bookstores and comic shops managed to move 11 million non-manga GNs.

Manga:
$210M / $10 a book = 21 million units.

Some mangas cost more. Naruto, Death Note, & Bleach are only $8, though, and those are our top three series. ($10 is going to be close to an actual average price — and it makes the math easy.)

It’s all about the money. Add in periodical comic pamplets (another $330 million) and the strong growth in sales (12%) and it looks like spandex is on the rebound. At least, 2007 seems to have been a very good year. And I like comics, too, so go Team Capes. rah. But the unit sales make me proud to be a manga snob: that’s a 2-to-1 victory — at least that’s the view from this cheap seat.

Not that it’s really a competition. And this is still only 1.5% of the book business.

The troubling sign is that growth in the number of new titles released is outpacing the growth of sales.

I say troubling. New titles are great, choices are good, and it should be a sign of a healthy market… but unless you are making online sales a new priority then you have to face one cold, hard fact: there is limited shelf space. New comic shops, or old shops opening new branches & moving to larger locations, or continued category expansion in the major chain book stores might increase the overall linear footage of shelving space — but I don’t see that happening in ‘08.

Growth is going to hit a wall. Or websites are going to become even more important. Or both, or neither. I don’t know.

One thing that I can predict: The manga boom hasn’t busted but the gold-rush-years are over. Big Box bookstores physically can’t expand their manga sections any more. Space for manga (and other graphic novels got to ride along) was carved out of other genre fiction space: stores had to shrink sci-fi, role-playing & the RPG associated novels — and to a lesser extent things like mystery, romance, classics, and other fiction sub-categories depending on individual store layouts — in order to shoe-horn a brand spanking new category into existing footprints. Sales have been great, and growing by double digits for several years, so some tough choices were made and each year more shelves have been given over to manga.

But this process has reached its limit, I think, at least in existing stores. New stores (like the new Borders concept stores) can make unlimited shifts on paper before they open, and a company can even open a GN boutique-store-within-a-store if they think customers will respond to that. But the expansion in older (and usually smaller) locations is done.

New titles (33 of them a week by some counts) no longer have an unlimited lift ticket and automatic orders-and-placement in stores. Manga is still a great market to be in, but you’ll have to have quality product and maybe even a bit of luck to make the scrooge-mcduckian-scale profits that seemed to be every manga publisher’s right just a few years ago.

Though honestly, looking back on the past 5 years: I think Viz was the only really big winner.

##

One likely result of the shelving crunch combined with the title flood: The manga-only book shop is coming –or at least a graphic-novel-only shop, which would of course sell manga. This is still a mythical beast, with a sighting occasionally reported (a friend of your father’s brother’s nephew’s cousin’s former roommate knows he saw an ad for one in Peoria, or Commerce, or Springfield, or Riverdale — you know, that town just one state and two counties over) but the actual critter has yet to be documented in the wild. And no, at least in my book, Kinokuniya doesn’t count.

Manga shops aren’t a ’solution’ to the ‘problem’ by any stretch, just proof of popularity and what I see as a logical outgrowth of both the comic shop tradition and the success of manga in mainstream, big box bookstores. (making a profit with one… hm. that’s a much tougher proposition)

Some fan is going to open the newtype of comic shop soon. At least they should. Floppy comics still have a place in this pipedream of mine, just like magazines are still sold by most large bookstores, but I can definitely envision a shift in format from pamphlet to trade paperback.

You know, if digital delivery of comics doesn’t kill off print entirely first.

2008 will be a good year but not a great year for comics. Movie adaptations don’t hurt but they are not a panacea, a bad economy is bad for retail generally but comics are “cheap entertainment” and often substituted for more expensive purchases, at least historically. But my feeling is the boom years are over, and unfortunately that means that merely good is no longer good enough — unless there are home runs, some analysts, bloggers, and fans are going to feel let down.