Will Comixology go the way of Audible or Zappos?

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The great digital hope has been acquired by one of the giant fire breathing kaiju of the digital era. Will they trample tiny cottages beneath their feet or become a lovable behemoth? Ask me in a year. In the meantime…

First off, will you be able to read your comics? A story at the Guardian indicates yes…but…

The firm also sought to reassure users that their comic collections, some of which are in the thousands of dollars, were safe after the acquisition. “Of course [they are safe]! Our goal is to build on each other’s strengths and create the best service for all comic and graphic novel customers.” But it declined comment on whether it would “guarantee” that customers would always be able to read the comics they had purchased.


No guarantees. That is pretty much standard with any digital media. Folks have pointed to Jmanga’s collapse for a model of how you can lose your collection from something that seemed solid. Of course, in the short term, Amazon and Comixology will keep you reading all your comics. Even the most gloomy analysis—Amazon acquired a competitor to wipe them out—suggest that where there’s smoke there’s money. Digital comics are obviously a growth product of the future and Amazon will want to keep and grow that business, even if it is just to move Comixology to their Kindle storefront.While we can only speculate at this point, it’s worth noting that among the dozens of companies Amazon has acquired there are many different models for how that development evolves. For instance, in 2005 Amazon bought POD company Booksurge, eventually turning it into Createspace, now an Amazon-like portal for uploading and selling your books via Amazon, Kindle and other Amazon services.

Audible is company selling audio books that may offer a very direct comparison to Comixology. The Audible store is still a standalone, but with a Amazon branding. And to buy books you need to sign in with your Amazon account, something that we imagine could happen very quickly with Comixology. Books sold on Audible are subject to Amazon’s customer ratings and everything else you get on the main Amazon site. So really, Audible is a dedicated webstore for audiobooks just in case you are easily confused by going to Amazon and being bothered by those print things.

On the other hand, there’s Zappos, the world’s biggest shoe store. As a woman, I love shoes, and I have to confess I had no idea that Zappos was owned by Amazon and I have purchased shoes through both! They offer different brands, different pricing and a different user experience.

Zappos also retains its own fairly unique corporate culture, as this story indicates.

During the 4-hour meeting, Hsieh talked about how Zappos’ traditional organizational structure is being replaced with Holacracy, a radical “self-governing” operating system where there are no job titles and no managers. The term Holacracy is derived from the Greek word holon, which means a whole that’s part of a greater whole. Instead of a top-down hierarchy, there’s a flatter “holarchy” that distributes power more evenly. The company will be made up of different circles—there will be around 400 circles at Zappos once the rollout is complete in December 2014—and employees can have any number of roles within those circles. This way, there’s no hiding under titles; radical transparency is the goal.


While it’s clear that Amazon offers different levels of autonomy for its company, it’s also true that comics are more like books than shoes, and the ebook business is one that Amazon is already very active in with its game changing Kindle business.

A frequently brought up question in my emails and DMs was how Amazon and Apple will play together. These two get along in a more Godzilla vs Mecha Godzilla way, so don’t expect loving cooperation. For instance, you can’t actually buy anything through the iOS Kindle app, unlike Comixology’s where you can spend away. As the Register put it, “Amazon therefore just acquired itself an app that lets it do things Apple doesn’t like it to do.”

UPDATE: as mentioned in the comments, I had this exactly backwards. It’s Amazon who refuses to pay Apple’s share of the costs, so will you see them ditch in-app purchases to spite Apple? Comixology was the top grossing non-game app on the iPad in 2013 and #11 overall,which must have meant significant profit. Would Apple Amazon cut off its nose to spite its face?

Yes. Oh yes.

At the Big Five (Apple, Amazon, Google, Microsoft, Facebook) level it’s all a pissing contest. And Amazon does NOT play nicey nicey.

Of course, there is the brick and mortar aspect to the story. While ComicsPRO just released a fairly defensive statement, at least one retailer was glad he never signed up with CX’s retailer service:


As you may recall, when Comixology first got on the scene they smartly made peace with retailers by offering a bunch of services for stores, such as digitized pull lists. They also offered a digital storefront that some stores used, a model that found much more success than Diamond’s attempt at the same. Some retailers were always wary of the system however, and now it looks like they may have been the wise ones after all.

Winners in all of this may be digital alternatives. iVerse is still around, with some unique services, including its potentially large library lending system. Sequential is an indie-focused stand alone app that just signed up Top Shelf, NBM and Fantagraphics. Image and 2000AD have held on to their own drm-free download sales. And of course Dark Horse has its own digital store.

That said, there’s no questions but that Comixology was the leader in this space, with its sales dwarfing other digital vendors’. And of course, everybody was already selling through Amazon, whether it was actual books, or Kindle editions. Tieing in Amazon’s formidable user reviews and related material makes discoverability much easier for comics, one area where Comixology had a ways to go.

And what about Submit? While it’s been specifically mentioned that this service will continue—users upload their own content and sell them via Comixology splitting the revenue. This is a lot like what many of Amazon’s services are already like, including the Kindle Direct Publishing portal. HOWEVER, Kindle charges a “digital delivery” fee by the MB of upload, as Todd Allen explored in this 2011 piece. This adds up to significant costs. Moving to a KDP model from the Submit one would be pretty onerous for indie comics creators. On the other hands, maybe it wasn’t a big cash cow to begin with, as this post from Ryan Estrada shows.

With Submit submissions already backed up for six months, this never really caught fire, I think, and most creators have been moving to Gumroad, Sellify or their own Paypal storefronts. DIY and the maker ethic are going strong in indie comics.

Then there’s the whole Guided View trademark matter…something I’ll need a whole other post to get into.

Finally, how much did Amazon pay for Comixology? We may never know but history offers guides. The terms of the Booksurge acquisition were never disclosed. Amazon purchased Woot!, a daily deal’s type tech store for $110 million in cash. Audible sold for $300 million and Zappos for $940 million. I guess people like shoes more than books.

Comments

  1. Why would Apple ban the in-app purchases? The only reason Amazon doesn’t sell Kindle books on iOS is that they don’t want to pay Apple their 30% cut. As long as Comixology is paying Apple’s tax on in-app purchases, why would Apple want to stop it.

  2. I may be wrong, but I’m pretty sure the reason you can’t buy books through the iOS Kindle app is because Amazon refused to cut Apple in on a share of books sold through that app. Comixology follows Apple’s rules and cuts them in, so that shouldn’t be an issue unless Amazon imposes a policy change.

    However: For now at least, when you’re buying comics on Comixology—especially indy comics—it’s better to do it on the website, not through the app. If you buy through the website, you’re bypassing Apple’s cut (or Google’s, on the Android platform) , so a lot more money flows back to the publisher & creators. You can even do it on your mobile device; just switch to Safari for a minute, then go back to the app afterward. It’s a couple of extra clicks, but it means real money to indy creators.

  3. The Register article is just plain wrong about in-app vs. web-site purchases for Comixology vs. Kindle, both the facts and the reasons. Apple loves Comixology’s option to buy comics thru the iOS app, because Apple gets a 30% cut on those sales. By contrast, the Kindle iOS app doesn’t give you the ability to buy books in-app because Amazon refuses to give Apple that cut.

    So far, Comixology has put up with Apple’s demand for a piece of the action, because they’ve figured it’s worth it for the increased sales they get from iPad owners poking at the “buy” button on their screens. (It’s the same reason comics shops will accept your credit card despite the fees they have to pay on your $8.97 purchase.) The question is whether the new owners will take that view, or not.

  4. Whoops, sorry for the misinterpretation gang. I’ve fixed this so we blame the real culprit.

  5. Nicholas Winter says:

    Stuart, how do you know that more money goes to the folk who helped crate a given comic when you buy on the Comixology website instead in-app via iBooks? Is there a statement on their website that states where the money goes?

  6. I’ve been told this by indy creators.

  7. Johnny Memeonic says:

    Stuart, how do you know that more money goes to the folk who helped crate a given comic when you buy on the Comixology website instead in-app via iBooks? Is there a statement on their website that states where the money goes?

    When a book sells on Comixology then everyone involved gets a certain cut of the money (creators, publishers, Comixology itself, etc) based on whatever their contracts specify. When a book sells through Apple then Apple takes 30%, which leaves less revenue behind to go to those various parties mentioned before.

  8. Apple takes 30% of any in-app purchases sold through ANY app acquired through its Appstore — whether it’s comics through Comixology or additional Star Wars characters in Angry Birds Star Wars, etc or Candy Crush extras, etc. If you want to avoid having Apple take that cut, make the purchase through the app’s desktop website. Comixology for a several weeks ran website only discount codes I assume to help drive traffic to the desktop site. I never buy comics through Comixology’s app anymore because of this, just through the Comixology site.

  9. Nicholas Winter says:

    So if Comixology sells a comic at full price through their website, what percentage on the average do they keep? It would seem that they must be taking a very high percentage off each issue if they can absorb a thirty percent cut for Apole when selling in-app. Or are the contracts based on the net Comixology makes off a sale?

    Amazon just paid good money for this company, so one assumes that they’re planning on making money off it which means they’ll get their Danegeld one way or another.

    DC also sells in-app through Apple. I’m far more likely to buy a single issue there than I would in a paper edition. The only physical things I buy now are the trade paper editions of Fables and the like. Oh and things like the Hellboy library editions and the Pogo hardcover collections.

  10. Darren J Hudak says:

    For the record I’ve been a member/customer of Audible since the company started, and I have always had a separate password for Audible then I did for Amazon. It may be possible that Audible requires new customers to use their Amazon password but this is not true for folks who have been customers all along. I can’t see why Comixology would be any different.

  11. >> Or are the contracts based on the net Comixology makes off a sale?>>

    Yes.

    The Apple money doesn’t come only out of Comixology’s share, it comes off the top, off of everyone’s share.

    Thus, the sales made through Apple don’t just make Comixology less money, they make everyone else less money, because they’re divvying up a smaller pie.

    kdb

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  1. […] service. It doesn’t sound like the pull list service is going anywhere. But Heidi at The Beat points out that retailers who use those services may not be happy with the fact that Amazon now has access to […]

  2. […] “Will Comixology go the way of Audible or Zappos?” by Heidi MacDonald, The Beat […]

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