I think that Mark Alessi underestimated the amount of resistance that a new company would face in the comic book market. It was definitely an uphill climb. One of the factors working against the company was the reluctance of comic book fans to try new products in the current marketplace. That reluctance is not unique to CrossGen. New companies and new lines are not given much of a chance. In the last four years, Image has faced the same difficulty when trying to launch a new superhero line; Dark Horse ran into it when trying to launch the sci-fi line Rocket Comics; not even DC’s Focus line and Marvel’s MAX, Tsunami and Epic imprints have been able to reverse this industry reality. It’s a conservative marketplace. The fans have seen too many titles cancelled, too many companies eliminated, too many stores closed. They aren’t looking to take chances.
CrossGen as a company ran headfirst into this reluctance. Many potential readers refused to even try the products. I recall dozens of fans writing that they’d “already been through that with Valiant” or Milestone or Eclipse. They weren’t willing to give another company a chance. That means that CrossGen, as a new company, had a reduced pool of potential readers. They had to prove themselves before many fans would embrace them.
The resistance to CrossGen however involved more than simple reluctance. From a number of corners, CrossGen faced outright hostility. The issue of reluctance was out of their control, but in many ways the hostility was of their own doing. Just as many fans didn’t want to take a chance, others were put off by what they perceived as Marvel-bashing by publisher Mark Alessi. Indeed, before his company had published a single book, Alessi had insulted Marvel and DC as being old and tired. The statements backfired. Just as Alessi underestimated the resistance, I think he underestimated the brand loyalty that exists in comics.
One of Alessi’s frequent proclamations was that one day CrossGen would be the number one publisher in the US. I found the bravado amusing. To me, it was like Peter Laviolette taking over as coach of the New York Islanders or Dusty Baker taking over as manager of the Chicago Cubs. Of course, they promise that the team isn’t playing “just to make the playoffs” or “just to finish .500.” Of course they promise that their goal is a championship. To me it was therefore natural that Alessi would proclaim that his company was setting out to be number one, and not just number five. But many fans didn’t consider these to be innocuous statements. They took them seriously. And comics fans can be as loyal to their particular company as sports fans to their teams. Because of his declarations, Alessi alienated many Marvel zombies. Again, CrossGen’s pool of potential readers was reduced, but this time in reaction to the publisher’s own comments.
That problem is compounded by the size of the industry. Comics aren’t a very big industry. Therefore, there isn’t a lot of room for professional industry pundits and journalists. The comics press is mostly fan press. And many fans who felt that their favorite companies were threatened used their press positions to actively agitate against the company. Let me be clear about this: I am not including all fan journalists or internet sites. I am also not including rumors columns which specialize in controversy and can’t be expected to leave any particular company alone. But there are clear examples in which internet news sites wrote misleading articles.
I’ll share two. The first example is the reporting of sales figures for Solus #1. Solus #1 debuted at 77 on the Diamond top 300, selling an estimated 27,008 copies (these figures are available at icv2.com). The reporting centered on the negative speculation that this may have been the lowest-selling George Perez debut ever. That is possible, but I’d want to know the sales figures on some of Perez’s 1990s independent ventures like “The Dark” before including that in a “news” article. What didn’t go reported was that Solus #1 was CrossGen’s highest selling book ever. Lady Death had the honor of a higher ranking but it did so while selling 3,000 less copies, and even El Cazador fell 1,500 short of Solus’ mark. Solus may not have been a critical or creative success (and I’ll cover that) but it was a commercial success despite reports to the contrary.
The other example is a comprehensive article written by someone at Newsarama. The article was written after CrossGen’s financial failures were made public, and the article appropriately detailed the company’s failures. However, the article went beyond the straightforward reporting of facts. The article made a point of highlighting Mark Alessi’s predictions that CrossGen would be number one in five years. Rather than noting that this prophecy would not come true, the article repeatedly attacked the boast and spent more time illustrating the impossibility of that claim than reporting the more serious issue of non-payment of employees. Apparently, it was more important to establish that Marvel was and would remain number one. To me, it was a clear example that CrossGen’s alienation of fans loyal to other companies had resulted in a similar negative backlash within the fan press.
As if CrossGen wasn’t already facing an uphill battle trying to win over reluctant and sometimes hostile fans, CrossGen also had to deal with serious opposition from other publishers. A couple of side-points need to be established before we proceed. One, we live in a capitalist society so it is not up to either Marvel or DC to insure that CrossGen succeeds. In fact, the opposite is true. Marvel and DC should do what they can to protect and increase their own profits. If it’s fair for CrossGen to hire former DC staffers like Butch Guice, it’s just as fair for Marvel to woo Steve McNiven with “an offer he couldn’t refuse.” Two, the opposition that “The Big Two” brought to bear against CrossGen can be exaggerated. For example, the idea that these two companies vetoed CrossGen’s entry as a premier retailer cannot be confirmed. Again, the opposite seems more likely. Both DC and Diamond flatly deny that such a veto exists. And although Marvel doesn’t deny it, possibly because they enjoy the illusion of power, they also haven’t confirmed it. “The Big Two” may have done everything they could to prevent CrossGen from reaching the 5% goal, but they did so legitimately.
However, I can’t say that DC and Marvel did so indiscriminately. Both companies were quite discriminate in their opposition to CrossGen. If a freelancer left for Image or Dark Horse, it was shrugged off as the way of the industry. If a freelancer left for CrossGen, it was treated as a betrayal. There are unconfirmed stories of DC cutting artists out of a contract after they’d learned that the artist had signed with CrossGen. Reportedy, completed issues were discarded and artists were not paid for the finished work. While the controversy concerning Mark Waid’s non-compete clause was boiling over, Mark Alessi told reporters that he had paid more money to people who were still on staff at DC than the other way around. On that point at least, he wasn’t lying. Marvel was more direct. Joe Quesada and Bill Jemas inflamed the hostility towards CrossGen. They treated the company as an interloper and encouraged their fans to do the same.
Why would other publishers display such hostility towards a new company? How could their 30% market shares be threatened by someone struggling to reach 5? The answer lies in CrossGen’s treatment of their creative staff. If CrossGen succeeded, the other companies faced the possibility of offering similar terms. They may have had to pony up for paid vacations and health care and other benefits. CrossGen may not have been a threat to their sales but CrossGen was definitely a threat to their way of doing business. These companies responded to CrossGen as they would to any threat: by making it harder for them to do business and by actively trying to undermine the company. And it some ways, CrossGen did affect their way of doing business. DC and Marvel are both more likely to offer exclusive contracts which include such benefits as health care. And DC and Marvel have both increased the royalties they pay over the last five years. CrossGen may not be directly responsible, and they certainly aren’t the only factor, but indirectly they cost both DC and Marvel money.
At this point, I know that some readers are wondering if CrossGen did anything wrong at all. I’ve pointed the finger at the fans, the press and the other publishers. Don’t worry; I’ll get around to CrossGen’s failures and they are plenty. I just wanted to establish the odds against them as a new company. Admittedly, some of CrossGen’s actions and Mark Alessi’s statements increased those odds, but it is difficult for any comics company to survive. It is an uphill battle.
There are, of course, some industry realities that CrossGen didn’t reckon with, underestimated or chose to ignore. One of those was the cost of those extras that they used to woo so many creators to their company. Health benefits aren’t cheap. As a result, CrossGen was paying more for their creators than other companies. On top of that, CrossGen’s vacation plan meant that they were paying artists for 10 books instead of 12. This again increased their cost per issue. On top of that, Mark Alessi’s generosity with people who had signed with the company but who hadn’t yet begun working for the company cost money. And on top of that, the thousands of dollars in relocation payments cost money.
Let’s look at some numbers. For the sake of argument, let’s say that CrossGen paid everyone on its creative staff a salary of $50,000 per year (that’s a safe number; pencillers were most likely paid more and colorists less). Since each title requires a penciller, an inker and a colorist, CrossGen had to relocate three people and their families for each title (a writer works on multiple titles so their cost is spread out). CrossGen also had to pay at least three months salary to each person before their first issue was printed. Three months of $50,000 is just over $12,000. Relocation costs are in the 3 to 5 thousand dollar range. Health benefits can be as much as 10,000 per year, or 3,000 for the 3 month period we’re describing. Mark Alessi was paying at least $20,000 for each penciller, inker and colorist before a single book was sold. If you factor in another $7000 for a writer who is working on three titles, CrossGen had spent almost $70,000 per title on creative staff alone. That’s a huge upfront cost and one that was much higher than that of other publishers.
Those salary costs meant that CrossGen’s comics needed to be profitable. And each month was costing each CrossGen title up to $20,000 more in creative staff alone. Even a successful book would take months to recoup that kind of investment with that kind of overhead (and we haven’t even discussed the printing or administrative figures).
Mark Alessi claimed that CrossGen had enough financing to survive five years without making a profit. Considering that the company is almost out of business before its fourth year is finished and that the real financial crunch happened during the third year, I would say that Alessi’s claim was overly optimistic. He either overestimated his potential income, or underestimated his net profits. Most likely, he did both.
There’s one last industry reality that we should look at before we move on to the books themselves. Comic books are a collectible industry. As such, it is always difficult to attract new readers once a book has been launched. Plus, fans drop out as they tire of a particular title or of the hobby itself. Those two factors combine to result in the “slow bleed” that almost every title experiences. Every title loses readers more quickly than it gains them. Successful books only lose readers at a rate of 100 per month. The more poorly received titles can lose readers by the thousands every month. This is true of the entire industry and there are very few ways to reverse that trend.
One of the most successful ways of reversing that trend is to cancel a title and relaunch with a new number one. Although this method receives a negative backlash, the results are self-evident: sales go up. One of the ways of avoiding the backlash is by releasing a title as a series of mini-series. Crusade, Event, Image and Dark Horse have all had success with this method. CrossGen originally spurned this method of gaining sales for its core titles although the company would later relaunch second series of Code 6 titles DemonWars and Lady Death.
Another way of increasing sales on an existing title is to change creative teams. A well-publicized transition can increase sales by tens of thousands (recent successes include Birds of Prey, Superman and the X-Men Reload). Although CrossGen didn’t publicly scorn this method as they did the relaunch, they did choose not to rely on it. Although there are a few exceptions, CrossGen generally handed titles over to less-experienced and lesser-known creative teams. Whether it was Fabrizio Fiorentino on Mystic or Scott Beatty on Ruse, CrossGen rarely received a sales boost from new creative teams. Their inability to reverse the slow bleed on their core titles, even with new creators, was one of the biggest factors in CrossGen’s fall, yet it remains one of the least publicized.
The previous two methods are proven to be the most successful in today’s industry, but they’re not the only methods that exist.
When a new creative team isn’t possible, a new story arc can sometimes be advertised as an opportunity for new readers to come aboard. CrossGen was obviously aware of the constant decline in readership and although they shunned other methods, they did try this one. Late in 2002, CrossGen introduced the Key Issue program. Each key issue was designed to be friendly to new readers. The campaign was moderately successful. Although the Key Issues didn’t completely offset the slow bleed, they did delay it. Each title experienced sales increases of 500 to 1,000 for a Key Issue. This extended the profitability/life of each title by 2-3 months. For example, if Title X had a Key Issue in February, its February sales would increase over its January sales. The slow bleed would mean that the March or April sales would be back to January levels. However, the overall result was that Title X retained its numbers over a three month period rather than experience the normal decline.
You can see that the Key Issue program was a success. But it was a bandaid measure not a repair. Eventually, the books were still going to lose money. And eventually the title had to be cancelled rather than drag the company into the red. CrossGen did not deal with this reality. There was no contingency plan in place in case the Key Issue program didn’t work. The first key issue was published in November 2002 for “The First.” Obviously, “The First” was one of the titles most in need of a boost and quickly reaching, if not passing, unprofitability. And yet, despite the fact that the Key Issue should’ve granted “The First” only a two-month reprieve, that particular title wasn’t cancelled for another nine months and was published for twelve more issues. Despite its promises to its fans, CrossGen needed to pull the plug on titles that were losing money.
There is one last way to reverse the trend of the slow bleed: positive word of mouth. There are always a few titles that buck the trend without gimmicks, based solely on the quality of the product and the enthusiasm of fans and journalists. DC has seen word of mouth bring significant boosts to Vertigo titles like Fables and Y: The Last Man. Marvel has experienced recent success with Fantastic Four. So what about CrossGen?
My study of the numbers has shown me that CrossGen experienced the benefit of word-of-mouth increases more than any other company over the past few years. Their fans had spread the word, overcoming the understandable hesitancy of fandom and even, on occasion, the hostility of brand loyalists. Sojourn was one of CrossGen’s greatest successes. In its heyday, Sojourn was selling 2000 copies per month more than its debut issue. Even at its end, Sojourn’s last issue sold only 500 issues less than its first. Sojourn was by no means CrossGen’s only success. Ruse was so successful that its twelfth issue sold within 1000 copies of its debut. The third and fourth issues of The Path outsold the second. The fourth and fifth issues of Way of the Rat could make the same claim. And Scion had perhaps the most impressive growth of all. Scion increased sales in 6 of 12 months from May 2001 (issue 12) to May 2002 (issue 24) with the result that this particular title lost less than 1000 readers in 13 months.
In 2001 and 2002, CrossGen experienced positive word of mouth growth of 5 of its 12 core titles. The four other major publishers would be lucky to claim 5 of 100 during that time span. Yet CrossGen was unable to capitalize on its success. Rather than promote the titles that were being embraced by fans, CrossGen stubbornly remained loyal to all of its titles. That loyalty wasn’t entirely unreasonable as other core titles like Mystic, Sigil and Meridian experienced smaller gains, particularly in November 2001 and March/April 2002. It was reasonable to believe that each title was capable of receiving similar word-of-mouth attention. But it was unreasonable to believe that every title would receive such benefits. The slow bleed would catch the majority of CrossGen titles if not all of them. And CrossGen had no real plan to counteract that industry reality or to cancel unprofitable titles.
At this point, I should address the most common reason given for CrossGen’s failure: too many titles too soon. For months, I admit that I dismissed this claim. Each title represented a different genre and should have appealed to a different set of fans. I thought they weren’t directly competing with each other. In this case, the prevailing wisdom was right and I was wrong. The numbers do not lie. CrossGen launched their eleventh and twelfth titles in May and June of 2002 (Way of the Rat and Route 666). It is significant to note that several word-of-mouth titles stopped making gains at that time (The Path and Scion). It is also significant to note that the monthly bleed increased, doubled and sometimes tripled for the majority of the CrossGen titles in late spring and summer of 2002. Way of the Rat may have been experiencing success but it was coming on the backs of the earlier titles. Only two series continued to make gains at this time- Sojourn and Ruse- and even they began to lose sales during the winter of ‘02/’03 when CrossGen launched seven new titles (the three Code 6 titles, two mini-series, Brath and Solus). Obviously, CrossGen had saturated its market and at that point, it was beginning to cannibalize its own sales.
The smart move would’ve been to cancel the weaker titles during that winter and concentrate on their current and potential future successes.