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 Entertainment | Books | February 2006 
Publishers Find Growth in Comics
 Edward Wyatt - NYTimes
| | David Steinberger, chief executive of Perseus Books, says distributors like the one his company owns fight over prized clients like Tokyopop, which publishes manga books. (Ruby Washington/NYTimes) |
After years of lagging growth, book publishers are in a mood to try just about anything. That is why top executives from several of the biggest New York publishing companies headed west late last year.
Their destination was the Los Angeles office of Tokyopop, this country's largest publisher of English-language manga, the Japanese book-length comics larded with doe-eyed characters with chiseled good looks and hard bodies.
Like many small- to medium-size publishers, Tokyopop farms out its distribution: the process of moving its books from printing plants to warehouses, gathering orders from big chain stores and smaller independent booksellers, packing the books into boxes for shipment, and delivering them and collecting payment.
For the big publishing companies that provide distribution services — companies like Random House, HarperCollins, Simon & Schuster, the Time Warner Book Group and Holtzbrinck — Tokyopop was not just another potential customer, however. Graphic novels generally, and manga specifically, are among the few rapidly growing areas of the publishing business, so securing the right to distribute Tokyopop's books was a hotly contested prize.
The prize went to none of those giants, however, but rather to the Perseus Books Group, a medium-size publisher whose imprints include Basic Books, PublicAffairs and Da Capo Press. That is notable because Perseus entered the distribution field just last year through the purchase of one of the largest independents, Client Distribution Services.
David Steinberger, the chief executive of Perseus, called distribution "a big battleground" in the industry. "Publishers are fighting over distribution clients the way they used to fight over authors," he said.
One reason is that it is one of the few areas of the publishing business that enjoys economies of scale. "If you put two publishing imprints together, you might have twice the number of editors but you can still only get them to produce two times the number of books," Mr. Steinberger said. Adding distribution clients, however, raises revenues but barely affects costs. "It is a low-risk, low-investment way to help the bottom line," he said.
While Client Distribution Services (or C.D.S., as the distributor is known), had provided much of the same work for Tokyopop since 2002, Tokyopop officials said it was unlikely that the company would have stayed with C.D.S. if not for its new owner.
"We are 8 to 10 times the size we were then," Mike Kiley, the publisher of Tokyopop, said in an interview. "So we had to become free agents. We looked at a lot of other options that were very much bigger than Perseus, but we needed someone who both had the technology and systems we needed to continue to grow, and who fit our business. We're radical, crazy, teen-pop-culture guys who do a lot of wild stuff and who have to turn on a dime."
After being sold mainly in comic-book shops, manga now has shelf space dedicated to it in most large bookstores, including all the national chains. The genre has become so popular that last month, a syndicated manga strip began running in the Sunday funny pages of about 30 American newspapers.
But Tokyopop is in stiff competition with an increasingly crowded field of manga producers, including VIZ Media, a San Francisco company that is owned by three of Japan's largest manga creators, and Del Rey, an imprint of Random House, which licenses and imports Japanese manga to the United States.
Tokyopop is looking to push manga even further into the mainstream, hoping to gain inroads into mass merchandisers, grocery stores, gift and specialty stores and other places where popular fiction and nonfiction books are sold. As such, Tokyopop says it believes the battle for manga superiority is likely to be as much a fight among distributors as it is a struggle for the best cartoonists, characters and storylines.
"With their new infrastructure," said Stuart J. Levy, Tokyopop's chief executive, Perseus "will be instrumental in helping manga tip beyond the niche market into the mainstream."
The difference that a distributor can make for a small publisher these days goes far beyond saving a few pennies per box of books on shipping charges. "Sales and distribution in the 21st century is all about systems," Mr. Kiley said.
Not so long ago, the world of publishing was one where the people who made the books did not know where or how many copies they were selling until months after a book showed up in stores. It was only when stores reordered a certain book or, more likely, when it shipped back unsold copies 6 to 12 months after they went on sale, that a publisher got a true count on how many of a given volume had been taken home by consumers.
Books are still sold on a consignment, or fully returnable basis, meaning that most retailers are free to return as many copies as they want for a full refund to the publisher. (One exception is specialty stores, to which publishers often sell small quantities of selected titles without the return option.)
What is different now is that most big publishers get direct point-of-sale information fed to them each day by the large chain stores, and they rely on third-party providers, like Nielsen BookScan, to track sales at independent stores.
It is only the largest publishers that have been able to afford to make the investments in the systems that allow that close tracking, said Jack Romanos, the president and chief executive of Simon & Schuster. "If you're smart, you have extra capacity" in warehouses, sales forces and accounting systems, he said, "and it's just good sense to lay off some of the cost of that on third-party distribution services."
Nearly every large publisher has been ramping up its distribution business. Simon & Schuster, which is owned by Viacom, recently reorganized its distribution services unit. One of its first big deals under the expanded system was announced last month, when VIZ Media, the manga company whose books have been shipped by Simon & Schuster since June 2004, said it was adding Simon & Schuster's sales capabilities to the agreement as well, also with the intent of pushing manga into new types of retail outlets.
Random House got out of the distribution business altogether shortly after Bertelsmann, the German media company, bought the publisher in 1998. It even sold one of its three book warehouses, the one located in Jackson, Tenn., to a group of managers who started C.D.S., now owned by Perseus.
Andrew Weber, a senior vice president for operations and technology at Random House, said that the company got back into distribution in 2003 after investing close to $100 million in new infrastructure and systems. Only three years later, Random House is expecting to collect $150 million in revenues from the business this year, Mr. Weber said. Random House's distribution arm now serves 15 outside publishers, double the number from just over a year ago.
"We are in a business that is largely acknowledged to be growing very slowly," Mr. Weber said. "That is why a lot of new companies are paying attention to distribution. In this business, they are hungry for growth." |
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