I’m not just a comic book guy. I have other interests.
To be honest, though, every other interest comes back to, “What could the comics industry learn from this industry?”
They all also apply to the Substack deals that are all over the comics news cycle these days.
Mostly, I’m a tech guy. I program computers for a living. And I follow the tech industry, both from the programming languages point of view as well as the various crazy things that happen in Silicon Valley, from the big players to the start-ups raising money to get started.
I also follow a lot of business podcasts, entrepreneurial stuff, web site/content-building stuff, etc. It’s what I’m doing here. First and foremost, I’m writing about the comics I love to talk about. But there’s also a bit of the business game going on here with running a website in a way that brings more people in.
This Substack story from the past couple of weeks is hitting me from ALL of those angles. There’s a lot going on here, and if you don’t follow all of those other worlds, it might not make any sense to you.
So, in this article, I’m going to lay sout where this all came from, why it’s happening, how it’s happening, and what it means in the long run.
The short version of the story: There’s a lot of money flowing through Silicon Valley today. Start-ups love to fund creators to use their platform to bring more people in. Newsletters are the way people are skirting around the ever-more-oppressive rules of the social media networks that, for a brief time, people relied on.
Substack is offering a dream scenario to creators who struggle with getting their own ideas off the ground, while getting back some numbers they need to impress their investors.
Why Newsletters Are Popular and Why It’s Social Media’s Fault
Social media is unreliable. In its earliest days, sites like Facebook and Twitter were gold mines for independent businesses and individual creators. It was a great way to keep in touch with their audiences — once subscribed, they’d see all your posts and you’d always be in their mindspace. Your People could always know what was going on with Your Business, and it didn’t cost you a cent.
All good things must come to an end, of course. The social media people decided to monetize it to cover the costs of providing their huge and free networks. Now, it’s all pay to play, particularly with Facebook. Facebook just hides everything you do unless you boost it. Maybe a tenth of your subscribers might see what you’re posting there unless you grease some palms.
Twitter went more passive/aggressive, claiming that they have an algorithm that knows better than you what you want to read. The default layout on the Twitter website is Whatever the Algorithm Thinks You Should See. You can, however, set that to straight reverse chronological timeline, but you need to remember to reset that every time you go back to the site. People forget. It’s annoying.
So what chance does an individual creator have to keep in touch with their audience without building a membership site or a message board or something else? The social networks are less useful than ever, and could boot a creator off the network at any time. (For the moment, let’s put aside any issues those networks have with being hostile environments that you have no control over and that you might be better off not living on to begin with.)
The Holy Grail of contact is the mailing list. It’s what every internet-based business preaches. It’s why every website wants to give you a free ebook or a free checklist or a free “printable” in exchange for signing up to their newsletter. They want your email address to be able to contact you outside of any social network. They know that you’re their most active and interested reader and that if you sign up to the mailing list, you’re more likely to buy their stuff.
It’s all about the sales funnel. Or, one might argue, the “attention funnel.”
Get those names. Build your own list. It’s the only thing you own and the only thing you can take with you. If you change newsletter services, you can just move your list over to the new one.
You can get a free newsletter up to so many people at most newsletter services. MailChimp might be the best known. It’s free for the first 1000 subscribers. If you’re super well known and grow a list with tens of thousands of people, you’ll be paying some service a monthly fee for that. You better have a business plan to justify that expense.
In any case, that’s why newsletters are having a resurgence. It’s a free (or relatively cheap) publishing effort with a friendly audience that avoids the pitfalls of the social media services and could be directly responsible for your future career.
The State of the Start-Up
There’s a ton of money flowing through start-up land these days, thanks to a number of factors. It’s easier than ever to become an investor at lower price points. It’s not completely democratized yet, but it’s only a matter of time. You still need to be accredited to score a big deal.
There are more investor funds than ever with bigger budgets. It’s a seller’s market. You can get huge valuations on your company right now with little proof. They’ll let you lose money for years if you can promise them a huge upside potential and a great exit plan.
Companies that vowed never to take investor money are taking it now because they get such good value for it. It’s tough to turn down the money Substack is offering them when it’s coming so cheaply. It would almost be fiscally negligent to say no.
Of course, with great money comes great responsibility to grow and sell out. Investors, by and large, want one of two outcomes with all of their investments: a big sale or a big IPO. Either way, they can make a multiple of the money they put in.
We see that these days with 1Password, which is undergoing some controversial changes as it moves away from users and into a more focused business experience. They took money. They need to grow. The money is in the B2B world for them. And it threatens to come at the cost of the user experience for all of those who brought 1Password as far as it has come.
Don’t even get me started on Uber. While I don’t buy into the “late stage capitalism” blame on Twitter, Uber would be the best example to use for that case. There’s nothing right about that company. It would be legally questionable for me to call it a money laundering organization, but companies keep “investing” billions into it when it loses billions every year. And now it’s public and is theoretically worth $90 billion in stock? Insanity. (The theory is that once electric, self-driving cars take over the world, Uber will be perfectly positioned to become an enormous company that everyone relies on. How many more billions will they lose before they realize their Utopia isn’t coming true as quickly as their investors dream?)
Enter Substack, a three year old company in the newsletter space. It’s taken on $82.4 million in investments. It’s a growing company offering paid newsletter subscriptions. It’s an attractive proposition for journalists with followers to get paid. Because we all know there’s no money in journalism on line or in print. If you have a following, though, you might be able to monetize it. It’s part journalism, part cult of personality. Individual journalists have shown that they are capable of making a brand out of themselves and monetizing that.
It’s a model that could work for comic book creators, as well.
So, Substack is taking a flier and trying out a new audience for its growth. “Hey, the graphic novel category is where all the growth is in book publishing. Let’s bring in some comic book writers!”
Substack is big, but not big enough that attracting a decent number of top tier creators from comics couldn’t help move their bottom line. And with the amount of money they’ve raised, they can afford to splash some money around to attract those creators that will bring them additional users.
Keep in mind that tech companies love stats like “Monthly Active Users” and “Daily Active Users.” They want to goose those numbers anyway they can. Here, they can pay to bring in a whole new audience of users with a new group of newsletter creators.
Since Substack is technically a SAAS (Software as a Service) company, they also will be paying attention to their monthly subscription fee totals. And they’ll want to minimize churn (the rate users unsubscribe). I can’t imagine a more sticky paying audience than devoted comic book fans, who return to their local comics shop every week to keep up on all their monthly titles (that are $4 or $5 each).
I’m sure when Nick Spencer pitched this idea to Substack, he raised all these points.
Even I’m beginning to think this is a good deal for Substack now…
It’s a Fan Club
What Substack is offering for these creators is more than just a newsletter, however. It’s really a fan club for creators. It’s more than just a weekly letter in your inbox from a creator ticking off their accomplishments for the week, promoting their next comic, and teasing a new announcement from Hollywood soon.
Oh, there will be plenty of that, but it’s almost the afterthought.
Looking at the various offers now, you see that digital comics will be going on. Sketches will fly. Process Junkies will be kept fed.
More than that, being a subscriber opens up opportunities to get on commission lists, buy original art and limited edition variant covers, participate in Zoom calls directly with the creators, etc.
Substack, in many ways, feels more like Patreon than Mailchimp this way.
I’ll be interested in seeing if the comics business becomes important enough for Substack to create some kind of new app or web page to make reading comics from these newsletters more enjoyable. You don’t need Guided View or anything, but reading large JPGs in your email inbox is not always pleasant, particularly for a generation that lives in their phones.
And we see how hostile the core Direct Market audience for comic books can be when it comes to digital comics. I run a website here that’s centered on translated comics that are 95% digital only. I hear the same thing over and over again: “Is there a print edition?”
Power of Creator Ownership
Here’s where things get interesting.
First, the disclaimer: I haven’t seen the contracts. There could be a trick in there somewhere that will make this deal less palatable. But I have a funny feeling that the top tier Marvel/DC creators with previous experience doing independent comics had lawyers look very carefully at these contracts, so I’ll take all the press release information as being correct.
Substack isn’t taking any interest in the IP (intellectual property) being developed for their platform. Substack is merely a distribution tool. The creators keeps the rights to their creations. They can shop them around all they like. Some already have print deals ready for their Substack comics once they’ve run their course.
Save Image Comics, there’s not another deal in comics like this. Every other comics deal has some element of it being a portion of rights to the properties. That’s where the money. is. Not in comics, but in Hollywood, video games, etc. That’s what was the death of CrossGen, when the licensing money didn’t show up as expected. (They were a couple years too early for the comic book movie boom.). Oni has a whole wing of the company dedicated to shopping around its comics in Hollywood. Dark Horse is half a Hollywood company. Boom! has a deal with FOX. Marvel is a content factory for Disney.
That’s where the money is. Not in comics.
Substack is giving money to creators to make their comics and is expecting nothing in return, short the subscriber dollars and some improved statistics to show their investors.
To a certain degree, this makes sense. That’s Substack’s business model. This whole deal is happening to bring in more subscribers and more monthly subscription dollars. They aren’t a licensing farm or a streaming company that’s looking for the next big franchise. They want Monthly Active Users and a low Churn Rate.
That’ll make them super valuable to whichever larger company they eventually sell themselves to. (Place your bets: Facebook or Google?)
It’s the greatest deal in modern memory being given to a comic book creator. Anyone would be half crazy to not take it. It’s free money to fund your comics and still own 100% of the property.
It’s what every creator who isn’t blind to the realities of “content creation” are seeing these days. Working for Marvel and DC doesn’t set you up for a pleasant retirement situation. (I wrote more about this in “Seriously, Don’t Be a Comic Book Artist. Just Don’t,” which only becomes more correct as the years pass by.)
Owning your own property is where the money of the future is. Comic book publishing doesn’t pay big money anymore, particularly if you’re a cog in the Marvel/DC machine. The so-called Big Two only promise royalties on future reprints, but the creators have no control of what gets reprinted, and the percent the creators get is notoriously low by comparison to what they could get on their own works.
If you like to make comics and want that to be a profitable living, your best bet is to think long term and build up a library of creations that you can license out to any number of other industries. You get the money, they do the work.
It’s kinda/sorta what people like to “passive income” if you squint your eyes just right. It’s a lot of work to create and to market and to sell, but you’re not responsible for making a $50 million movie. Someone else does that while you cash their checks, and the checks of all the ancillary properties you license out on the back of that movie that you don’t have to directly work on, either.
Unless you make some kind of total rights deal, you can repeat that process again a few years later. Everyone loves a good reboot!
With this Substack deal, even if they fold up shop entirely in a year, you still have the money and all the comics you created. You’re free to go anywhere with that material immediately. (Again, I didn’t see the contracts, but it doesn’t sound like they added a No Compete clause or anything to them.)
The only way this goes south is if the contract isn’t bulletproof, the company goes bankrupt, and there’s some sort of liens placed on the properties that Substack funded. I doubt that’s in there, but it IS possible, I suppose
Who wouldn’t take that deal? Why wouldn’t you take that deal?
This is one of those beautiful and rare moments where interests are very well aligned. One side can take full advantage of the other side, and vice versa, without anyone getting hurt. Substack gets the numbers they want. Comic book creators raise the money they need to make more comics and IP that they can profit from for a lifetime.
Even if the whole thing falls apart, there’s no harm to the comics creator, who effectively got the money to make their comics and walks away owning everything.
Taxes and Technicalities and Outsourcing
I’m curious why everyone keeps referring to this money as a “grant.” I wonder if there’s a tax reason for that, or just a Silicon Valley company trying to be precious.
Ultimately, what it does is take the onus off Substack. They don’t need to create the infrastructure to create a pipeline (not pun intended) to make comics. They offload that all on the creators, who can handle it however they’d like. They can share ownership, hire on a freelance basis, or go all out and create a company with a complete bullpen, for all Substack cares.
It makes sense — these creators have years of industry experience. Most, if not all of them, have put together their own independent books in the past. They have the knowledge, so why would Substack want to spend more money to hire people to handle that stuff?
Just pay the creators enough to set up their own organizations. The creator has to handle the hiring and the freelancers and will deal with all the tax complications from that, not Substack.
Substack just outsourced comics creation to wherever the creators are.
One Possible Poor Ending
The other possibility for the Substack Endgame is this:
The VC money is running out. Substack is having a hard time finding new investors, particularly in a world where the money isn’t flowing as freely as it did in the heady days of 2020/2021.
They need to find a new way to make money, fast.
Their contracts with the comic book folks are coming up for a renewal, and there’s a lot of money in Hollywood they can siphon off. So why don’t the new contract terms stipulate a 10% fee to Substack for any licensing deals launched off the IP created under the terms of the new contract?
It’s almost as if Substack is acting as a Venture Capital firm for the creators now, taking a small chunk of ownership in exchange for up front money, or just the use of their oh-so-valuable platform.
That’s likely when the existing creators leave, en masse.
Let’s just hope the young, hungry, and desperate creators of that era don’t think, “10% of something is better than the 100% of nothing I’m getting right now” and take that deal.
The Punchline: But Who Wants This?
Who wants to read comics via a newsletter?
Nobody, that’s who. This is completely a solution in search of a problem.
But that’s the big open secret of this whole thing: Nobody cares.
The newsletter isn’t the point of this. The creators are funding the creation of their comics with Substack’s money. It’s a mere technicality that they have to ship JPGs over email.
If it takes off as a digital comics distribution platform, great, but nobody in their right mind really thinks that’s going to happen.
The Real Business Opportunity of Substack for Comics Creators
The end goal is the intellectual property.
The middle term goal is the print comics that will come after some exclusivity with Substack during their creation.
The immediate money and the true business case for this deal is the opportunity to buy new exclusive comics, sketches, original art, etc. The most motivated buyers for those sorts of things would happily pay a monthly (or annual) fee to get more exclusive access to buy that kind of stuff.
That’s called catering to your audience and taking that profit.
It may be the smartest business move by comic book creators I’ve ever seen. They won’t even need a huge audience through Substack to make lots money outside of just the comics work.
Think about that for a second: Substack is paying Skottie Young to create opportunities for his fans to pay Substack so that they can pay Skottie Young for comics and art.
Substack wants the numbers, the creators want the money for their long term success. They also have an easy way to make money on top of everything else, using the platform that is available to them. It’s new enough that its owners are fairly open with it.
The creators get to have their cake and eat it, too.
I’ve read nothing about Substack taking a cut of those off-subscription sales offered exclusively through the newsletter. It wouldn’t be smart of Substack to do that anyway. They don’t want to do anything to disincentivize their creators from creating the kinds of opportunities that their fans will pay Substack for access to.
The Bottom Line
For as long as this lasts — I give it two years, three at the most — it’s a wonderful opportunity for comic book creators. Let’s wish them luck with it.
We’ll probably get a great oral history of this time shortly after it concludes. Let’s just hope the contracts between creatives are well-vetted and we don’t get any drama between them in the meantime.