Rocket Bomber - business

We tend to blog about it. From my inbox:

Matt,

Just trolling your site. I was wondering if you knew of any publicly traded manga, anime or standalone distribution companies like KDE, or Del Ray (but they are a subsidiary of Random House). Or, if you know of any companies that are venture capital, or angel funding? And if you don’t, could you point me in the right direction?

Thanks for the business analysis. Considering the vastness of the internet there doesn’t seem to be enough research done on this industry. Of course should I use your research, you would be properly sited.

Regards,
[redacted]

I’m not sure how much help I can provide, but here it goes anyway:

Right now, most manga and anime companies fall into one of two groups — a wholly owned subsidiary of a much larger conglomerate, or privately held firms most of which are so small they don’t even have to report earnings if they don’t want to.

To further cloud the issue, even the independent manga companies often have distribution (or co-publishing) agreements with one or another of the large publishers — for example Viz is co-owned by Japanese firms Shogakukan and Shueisha, but is incorporated as an stand-alone American company, and is distributed to bookstores by Simon & Schuster (which in turn is owned by CBS)

An incomplete list of Manga Co’s:

ADV Manga [defunct]
Aurora Publishing — including the LuvLuv and Deux imprints
Broccoli Books [defunct]
CMX (a division of DC’s Wildstorm imprint)
Dark Horse
Del Rey (as you know, an imprint of Random House)
Digital Manga — including the DMP, DMP Juné, 801, and DokiDoki imprints
Go! Comi
Graphic Sha
Japanime’s Manga University — which has also co-published a number of Graphic Sha titles
Media Blasters
Netcomics
Seven Seas (distributed now by Macmillan imprint Tor — it’s unclear if future releases will be co-branded with Tor or if 7seas will continue as a separate brand)
Udon
Vertical
Orbit/Yen Press (an imprint of Hachette)

[edit: oops. I forgot Central Park Media (defunct), DrMaster, and Yaoi Press — and possibly others: shout out in the comments, peeps!]

Tokyopop — which includes the Blu imprint; distributed by HarperCollins, and also co-publishing manga adaptations of Harper Teen titles under a joint HC/Tokyopop imprint

& Viz — which includes Shojo Beat, Shonen Jump & Shonen Jump Advanced, Viz Signature & Sig Ikki, the Ghibli Studio Library, and the Vizkids imprint.

I attempted to take each of these in turn but stalled after seven or so write-ups
http://www.google.com/searchhl=en&source=hp&q=site:rocketbomber.com+spotlight

And I also did some rudimentary research into publishing as an industry, in 2008 and revisiting the point more recently about 2 months ago:
http://www.rocketbomber.com/2008/05/29/2007-in-review#publ-index
http://www.rocketbomber.com/2009/09/10/business-is-booming-3-our-worlds-are-not-our-own

There are plenty of links in these articles, and of course while wikipedia has faults you can teach yourself quite a bit about the industry just by plugging in names and reading the wiki articles.

I’m not as familiar with the anime industry; I’m a bookseller.

##

To your second question: If you are trying to secure funding, the first and most important thing is to narrow your concept, and figure out what you can do best — what you will do differently. Back that up with a solid business plan: Write a plan just like you were going to walk into a small community bank and ask them for a loan to set up business in their home town — that is to say, don’t load it down with hypotheticals and market projections but plainly describe what your business is and how (in simple and concrete terms) you will make money.

And set the business plan to one side, for now.

Parallel to that, prepare a sales pitch. Here, you can go Blue Sky and Outside of the Box and New Paradigm all you want. This is how you will approach VC or other investors to get them interested in your business model.

Once you have their interest, you can then move to close the deal. After the initial burst of enthusiasm, when they begin to have second thoughts (or the lawyers and MBA’s start to talk them out of it) you can back up a stellar sales pitch with the boring, nuts-and-bolts business plan. “Angels” and VC are still businessmen — they’re still banks, after a fashion. They are willing to take greater risks (for greater returns) and can often be persuaded to back interesting ideas that might not, at first glance, make business sense — but realize that they are very much interested in the business, particularly in the post-dot-com era. The money isn’t going to be as ‘free’ as it used to be.

The only other advice I can give is to note that venture capital is still very much tied to the technology sector. You’d do yourself a favor to move to either Silicon Valley or Cambridge, Mass. even if your business has nothing to do with tech — most Angels made their money in the dot-com boom (the smart ones got out early) and it helps to go where the money is.

best of luck
—Matt.

[post script: I spent an hour responding, and thought I’d recoup the effort by also getting this post out of it.]

Rethinking the Box is a collection of ruminations on retail: a unique combination of sober (and sobering) business analysis mixed with drunken, inflammatory personal invective.

Previously:
Study your History. Recognise your Motives. Know your Customer Base, and your Staff. Find your Niche. Consider your Product Lines, take a second look at What the Customers Want, and then stare again in dismay at the Profit Margins. Try calculating the rent and the revenue from inventory (with a side of coffee) and compare your numbers to average industry per-storefront sales.

We’re still in the middle of the current topic: Physical Storefront — Consider your concept, and look at both guiding principles and actual demographics in selecting a neighborhood.

##

Last Time, Torsten commented,

When doing the geographic/demographic research, I would recommend widening your area to at least the Census metropolitan boundaries, and/or fifty miles from your target location. If your store becomes a destination, then people will journey to shop there.

I hope you’ve got more to talk about regarding location… access to mass transit, easy to find, major thoroughfares, foot traffic, BIDs [Business Improvement Districts] and the Chamber of Commerce…

so let’s go back to first principles and try this again.

Before things get too involved and boring, though, there are three simple rules that you can use as a shortcut if you can’t be bothered to do the work and research:

1. Shop where you Shop: look for space to rent in those neighborhoods and retail centers where you yourself already shop and buy.
2. Look at your Neighbors: restaurants, coffee shops, movie theaters, and grocery stores & supermarkets generate a lot more traffic (foot and the more polluting sort) than furniture stores, clothing boutiques, antique dealers, and ‘gift shops’. Don’t go hip, quirky, and fun unless there are other, boring-but-reliable businesses that also recommend a neighborhood. (and don’t pick a spot out in the sticks, no matter how cheap, if they’re aren’t any neighbors.)
3. Don’t Fall in Love — If you’re buying a house, then yes: find the cute little bungalow that plucks at your heart and speaks to your soul. Retail is business, though, so don’t sign a lease for a storefront just because it looks exactly like the bookstore you’ve been dreaming of. White concrete brick walls, flourescent lighting, cheap carpet, and exposed ductwork visible beneath the steel roof aren’t heartwarming and exciting — but the cheap building methods means a cheaper rent and if the store is in the right place, and you have the right concept, customers will flock to gawk at your merchandise. They won’t even notice. This is the lesson you should take away from the success of the Big Box and Warehouse stores: it’s all about the stock. [and there are a few reasonable investments — wood shelving, dropped acoustical-tile ceiling, comfy chairs — that will convert a big box into a bookstore overnight]

With that, you can ignore this rest of this post (and the post before this one, and at least half of the post before that) and whistle as you go on your merry way, secure in the knowledge that you know all you need to know about retail and real estate.

I’m not leading you astray: those 3 rules will serve you well. Most ‘rules of thumb’ work because they draw from and are based on thousands of trial-and-error examples — there is a method to the madness.

##

If you want to actually do the work…

OK. There are at least four different ways to approach real estate development — and while it’s very small scale, you are a real estate developer when you select an address for a restaurant, theater, or retail space.

Think on that a bit. Yes, you’re in it to make money. Yes, you’re only interested in your own storefront. But by opening a business, you are also improving a neighborhood. This is the core of development — well, that and buying low and selling high; but unlike stocks, which require only patience, you can sell at that higher price because you have improved the property in the interim.

4 Approaches to Real Estate Development:

• Demographics: Open where the people are.
• Market Analysis: Open where the other stores aren’t. That is to say, identify a need, see where that need is being filled — and where it isn’t, and situate yourself to take advantage of that lack.
• Breaking New Ground: Open where nothing is. Being first in means higher margins, but also greater risk.
• Urban Renewal: Open where nothing is, but where a vibrant neighborhood once was.

There is a lot of overlap: You don’t buy a rural parcel and look to build a shopping center unless you’ve done research into both the demographics (with projections 5 and 10 years into the future) while also checking the current market to see who else is building, who is already leasing, and what their occupancy rates are. You don’t take a chance on an urban neighborhood on the cusp of rebuilding unless the demographics in adjacent neighborhoods are also improving, or pretty good to begin with, and unless other market players are making the same move.

Dude. This is work. People do this full time, and with tens of millions of dollars at stake. I can’t give you a magic formula that will work, because even the formulas will be different for each zip code.

So much depends on what you want, what you can tolerate, and where you think society is going.

Yeah. Let me cover that third point.

##

Since 1908 our society [American society] has seen an increase in literal mobility for an ever-expanding portion of city dwellers, and the automobile combined with lots of available land, the dream of home ownership, the flight of the middle class away from the city centers (for whatever reason: some sources will cite race, or educational opportunities, or misconceptions about quality of life), and new business models developed to take advantage of the car (drive-ins, drive-thrus, enclosed shopping malls, and strip malls along every major highway) have lead to Sprawl.

In places where there were previously established urban centers combined with geographical constraints (San Francisco, Manhattan) the past century has led to the development of dense, vibrant urban centers; where even former blighted industrial districts get converted to loft apartments, and poor people have to move because they can’t afford the new rents as landlords look to rennovate and re-lease to young urban professionals.

In places where there are no geographic constraints—no ocean, no big rivers, no mountains—you end up with suburbs that have suburbs, one mall after another as you drive out on the interstates, and always always another new development just a tad further out. Atlanta and Houston may be the best (or worst) examples of this development. Los Angeles is the poster child for sprawl, but L.A. has also had a 30 year head start and eventually, hit the San Gabriel and Santa Monica mountains. L.A. is bad, but isn’t quite limitless sprawl.

It’s interesting to note that while New York and San Francisco are seen as cultural centers — and, aside from cost, some of the best places to live on the planet — Atlanta is the butt of jokes

This is obviously a much bigger issue than I can cover in a blog post. I’m going to have to refer you to the literature:

The Death and Life of Great American Cities by Jane Jacobs : Random House Vintage, New York; original copyright 1961, Vintage Books edition 1992, isbn 980679741954. The publisher’s web site and the Amazon listing both have previews.

48 years old and still one of the more insightful books on urban planning. While some of the language is dated (tenements? really?) this is still a primary source and starting point for any discussion of urban planning, renewal, or even the basic question: what is a neighborhood?

Many of the issues and problems outlined in Jacob’s book have yet to be resolved; this is still a current text for urban and real estate development. This was one of the books that was assigned to me in college — despite that I still recommend it to you.

Two more, briefly:

On the one side, Green Metropolis: Why Living Smaller, Living Closer, and Driving Less Are the Keys to Sustainability by David Owen : Penguin Riverhead Books, New York; 1st edition 2009, isbn 9781594488825.

Parts of this book were previously published as articles for The New Yorker. Quite a bit of its content can be divined by reading the subtitle. The main thrust of the book is that Manhattan is one of the Greenest places on the planet to live (with scientific proofs).

And in rebuttal, Sprawl: A Compact History by Robert Bruegmann : U. of Chicago Press, Chicago, copryright 2005, paperback edition 2006, isbn 9780226076911.

Sprawl may be bad, but it has also “provided millions of people with the kinds of mobility, privacy, and choices that were once the prerogotives of the rich and powerful”. Bruegmann also points out that sprawl is not specifically American, or even recent, but rather a function of cities themselves. So long as we organize ourselves in cities, we can’t avoid it.

##

These are long-term issues — generational, even. But unless you plan to just open up long enough for the next comics boom (whenever that comes) and then cash out… wait a second: I can’t let that pass. HA! I mean, honestly? [*chuckle*] Are you looking at the same business I’ve been looking at?

Anyway, unless your horizon is just 5 years out, the Life or Death of your American City is a matter of business, and worth your consideration. This broader debate may seem beside the point, when it comes to retail. If you’re myopically focused on just the numbers — rent, payroll, cost of stock and turnover rates, inventory shrink, and marketing — then you miss the point of having a retail location. You can get the cheapest rent on a warehouse in the middle of nowhere (but within 2 hours drive of a UPS or FedEx shipping hub) and you can run an internet business where your market is, effectively, everyone.

Part of retail is serving a community. Lots of places could use a bookstore. Some neighborhoods could even use a specialty bookstore. At least one city on this godforsaken planet could use my Graphic Novel Superstore, and dammit, I’m going to figure out where that place is and rock its socks off.

Your concept might have to adapt, depending on the community you want to live and work in — wikipedia is no substitute for real research but they have one take on the situation: Your choices are Downtown/Intown, Edge City, Boomburb, Suburb, and Exurb.

I have a feeling if you take Torsten’s suggestion for looking at entire Metro areas, compile the demographic info for every zip code and cross-index that with affordable rents, you’ll find yourself locating in an Edge City/“Boomburg” (a neologism I’ll admit I’d never come across before researching this article) — in Atlanta (where I currently live) that would open up Smyrna/Vinings, Downtown Marietta, Roswell/Alpharetta, Perimeter Center, Decatur, just about anywhere in Gwinnett Co., and even stuff on the south side of town if you’re feeling adventurous.

But intown locations shouldn’t be discarded out of hand, and at least one exercise I’ve done for this series was not to find the cheapest rent, but rather to find the upper limit of what we can afford. A downtown landmark location and “main street” address offer intangibles that can’t be duplicated, and are valuable for marketing your business. Even chains that do just fine with dozens of locations out in the ‘burbs will often spring for — and invest heavily in — an intown, flagship, show-case store.

If you only have one location, why not make it a landmark? (yeah, sure, you can do this anywhere, but downtown caché is only to be found downtown)

So there are choices that have nothing to do with dollars-and-cents but which can colour your business decisions anyway. A downtown location may not be the best option, numbers-wise, but if you commit to your downtown there are ways to find the best downtown location. If you trust your gut and “shop where you shop” (Rule of Thumb #1) you might have a good idea where you want to locate anyway. —this is perfectly valid. In any city there isn’t “one best site” but rather dozens of options with at least three sliding scales, and the point isn’t to make the quote-best-choice-unquote but to make the numbers work and to find something you’re happy with. You don’t have to live and work next to an airport unless you want to, you don’t have to drive 30 miles each way to your new store with the ‘perfect’ rent unless you want to, you don’t have to open up in downtown *or* out in the sticks unless you want to.

Most of us could open an independent bookstore (or even a comic shop) where we live already — even in this economy. There is likely an available location within 10 miles of your current address. The trick is to not just take what’s available but to practice due diligence, run the math, and find the location that works: for your neighborhood, for your concept, and for your budget. The posts before this one are not rules but tools: not a single path but a signpost to point out many possible paths.

##

I’m guessing no one was looking for a philosophical post, or an admonition to find your own route to success: you’d rather have rules and a checklist and the One True Path. So Sorry. But if all you were looking for was a checklist, well, I maybe can do a checklist:

Before you even start shopping for retail space, you’ll need:

• a concept. ‘books’ doesn’t count as a concept; what type of bookstore are you?
• a business plan

• and some idea about how much space you’ll need (and your first estimate is too low, I can already tell you). The actual square footage requirements are foremost, but also consider:
• How much sales floor, to how much stock room space? Do you need a “back room” at all?
• Office space (secured office space: if you’re doing cash business, you’ll need a spot to put a safe, if nothing else)
• Food prep and food storage space requirements
• Seating: for a bookstore, that’s not just the cafe tables but all the comfy, overstuffed chairs and small hidden nooks to curl up in. You might also consider some outdoor seating for your cafe, if you can reconcile the benefits of alfresco noshing with the big gaping opportunity this opens for shoplifting.

Make back-of-the-envelope estimates for all of this, and tack on an extra 10% or so.

Now,

• do you need all your square footage on a single floor, or will some types of multi-story buildings also serve? Or maybe even a couple of adjacent buildings?
• Identify a broad range of what you consider to be affordable rents…
• …with the requisite trade-offs: neighborhood vs. cost, size vs. cost, physical plant vs. cost (that is to say: is the building brand new or falling apart?), terms and duration vs. cost, proffered discounts, nominal ‘market rates’ vs. discounted rents and how, if, when, why, and for how long the latter might revert to the former.

There are more exceptions than rules. Do you accept a 99-year land lease for the nominal rent of £1 per annum with the understanding that no matter how nice a store you build there you own nothing, or do you pay through the nose for 5th Avenue Manhattan rents (or equivalent) secure in the knowledge that while you’re being overcharged now, over the 30 year term your final costs will average well below market rates (when adjusted for inflation), or do you sign a short-term lease because hell, you might not even be in business next year?

This is enough to give me a headache, and I’m not even shopping for my own storefront yet.

Historical arrangements (like land leases, or anything long term) are more of a curiosity these days than anything else: most commercial landlords are offering something in the 2-5 year range, renegotiable at the end of term and while they’ll be happy to cut you a “break” — either a discounted first year or more favorable rates after a proven payment history — they’re still in it for the money, 98% of them have to make a mortgage payment so rents aren’t as negotiable as one might hope, and for the best locations: there is always another guy with a dream who’d love to steal your prime storefront away from you.

Most landlords will negotiate with longstanding tenants rather than terminate the relationship: They like money, and will almost always favor guaranteed money from a proven source — unless you’ve done something to really piss them off — so if you’ve been open in the same location for 5 years, you’re likely golden… unless you want to move.

Which is why you should be doubly, trebly careful about signing that lease to begin with. (And I’d insert an argument for just buying a building but this will be beyond the means of almost everyone, doesn’t make much business sense, and really locks you in to a street address. I’m not saying it’s impossible, but…)

These are all questions of money, though, not so much about real estate: How much space can you afford? If what you can rent doesn’t match up with what you think you need, then you need to rework the business plan, find more money, reconsider your space requirements, or start looking at undeveloped land out past the suburbs.

##

Forget about money for the next half hour — let’s say you’ve won the lottery. Cost is no object; we can set aside the tangles and tangibles of commercial real estate and just consider location. How do you find the ideal storefront? What should you be looking for?

When looking at the map, find your

• Competition: In my case that’s other bookstores, comic shops, game & hobby shops, and even things like computer game stores — whatever your target demographic buys, you’ll want to know where their favorite stores are located.
• That isn’t to say you need to avoid the competition and find a completely empty strip mall 15 miles minimum from your nearest competition: Have you ever noticed that all the hot, trendy bars tend to open up next to each other? Or that for 50% of the shopping malls, there is a Borders a quarter-mile to one side and a Barnes & Noble the same distance on the other? Or: Charing Cross Road in London, Saint-Germain-des-Près in Paris, New York’s ‘Book Row’ (Fourth Ave.), Kurfürstendamm in Berlin, Jinbōchō in Tokyo, İstiklâl Avenue in Instanbul — now, admittedly, some of these are more of historical note than latest-tourist-guide-fodder (The Strand is the last bookstore standing on old Book Row) but it points out that being next door to the competition isn’t always a bad thing.
• Interstate exits: My current place of employ isn’t off of an interstate. This makes giving directions, particularly in Atlanta, a royal pain in the ass. This despite the fact that, dude, we’re on Peachtree. [for non-Atlantans: Peachtree is like Main Street crossed with Main Street squared by Main Street, with a side of Broadway, a gloss of Tolkien’s Great East Road, and a knowing wink to Farmer’s Riverworld: there are many Peachtrees in Atlanta, but only one Peachtree — and why do I have to explain this over the phone at least once a day? If you can’t find us you’re either brand new to town or willfully ignorant] Anyway, if you can say, “Oh Yah we’re just past the Howard Johnson on Exit 52” you’ll save yourself hours of payroll and at least one coronary bypass surgery.
• Universities & Colleges: the closer, the better; whether your business is comics or books in general.
• High Schools: if your business is comics, being close to teens is all for the good. (as noted previously, the US Dept. of Education has you covered on this one)
• Malls. I don’t consider proximity to a shopping mall to be necessary, or desirable, but it’s probably a good idea to know where your local malls are
• Golf Courses. I’ve nothing against golf, other than the fact that I hate playing it. But there is a type of neighborhood, and a type of customer, and a disposable income associated with country clubs, and since they show up as big green blobs on most maps it’s just as well to make note of them, whether you choose to locate near one or avoid them altogether.
  
  

When driving out to see a property, note:

• Directions: could you find it the first time?
• Neighbors: What’s in the same shopping center? What’s across the street, and down the road? Heck, what kind of shop is immediately next door — will they help your business, or turn off your base?
• How far did you drive? How long did it take? Is it because you live no where near the location you want to open up in (…might want to fix that) or just because traffic around here is awful? — Nothing wrong with heavy traffic, actually (there is a potential customer in each and every one of those vehicles) but it will have an imapct on you: can you move, will you move, to be closer to your store?
• Is this an established, built-up part of town, or are there still empty lots (or worse, empty shopping centers) just waiting for the next economic expansion? Depending on the rent offered, this could be good or bad, but is yet another consideration
• Before making that last turn into what-might-be-your-parking lot: keep going. Get lost a little bit, even. What’s just past this location? What’s around the bend? Do you see subdivisions, more strip malls, schools, churches… or farmland? This can take ten minutes, or an hour. Maps and zip codes and census data are fine, but not a subsitute for looking at conditions on the ground.
  
  

Imagine you didn’t have a car. No, really.

• Sidewalks: if there are no sidewalks, there will be no foot-traffic. If there is no landscaping or if the sidewalks are in disrepair… there will likely be no foot traffic. Of course, sidewalks are a rare thing these days, after 80 years of development (in America) centered on cars.
• Bus Stops: A subway/rail station would be even better, but not every city will have heavy rail or massive mass-transit. Bus lines are better than nothing. When someone calls for directions, can you tell them which bus route you’re on?
• Is there anyone who lives within walking distance? Granted, this is such a laughable concern out in the suburbs (*psfsh* everyone has a car, are you kidding?) but when considering intown locations, especially for bookstores and other general retailers, this is pretty damn important. Are there residential neighborhoods nearby, or is it all retail/commercial/industrial for miles around?
• Neighbors, again: people without cars tend to really combine trips. Are your neighbors the sort of weekly-neh-daily must-stop-locations for shoppers, or just the once-a-year-type destinations? You want regular traffic, on the roads or on the sidewalks. (This is Rule of Thumb #2, cited above)
• Even if you’re considering a ‘specialty’ retail district: Who Are Your Neighbors? Music/CD/Vinyl Shops, a Newsstand, Coffee, Restaurants, Video Sales/Rental — heck, where’s the closest library, or college? There are a lot of adjacencies that might make the address more valuable than even the landlord realizes.
  
  

You’re standing in front of your potential store:

• Is it inviting?
• Does it have a presence, from the street?
• If no — can you fix it so that, yes, it has a presence and is inviting?
• OK, so where’s the parking? Do you have your own lot, do you rely on street parking, or is there no parking? (no visible parking is a problem)
• Look to your left, look to your right: One of you will not be here next year. This is a hoary old saw that they fed to the incoming freshman [at Georgia Tech] back in my day. If the café that seems to do booming business now suddenly closes, will you survive the loss? Can you subsist on your own merits — at least as long as it takes for someone else to open a trendy café in the same space?
• Do you have window display space? Granted, this is minor; if the store is good, you can get by with a single 32” door that opens up onto a staircase that leads up to your fantastic 20,000 sq.ft. store (and if this is in fact the case, you could likely make that into a marketing push) but for most [intown] retailers, a little street-side window shopping is a major marketing component. Does this location have a storefront display on the street?
  
  

Step Inside.

• Do you feel it? No, really: Is this your store?

That’s most important, actually. Still:

• Is it big enough? You can always make compromises, but whenever possible get a space you can grow into.
• Do the floorboards creak? (if there are floorboards… concrete slab is more likely.) Does the roof leak? Stains on ceiling tiles are the most obvious sign of leaks, but it is possible the tiles have been replaced (or that there isn’t a acoustic tile dropped ceiling in place to begin with). Consider drainage around the shop and in your parking lot — sure, maybe there is a drought on now but what happens when it rains? You might even go so far as to find a home inspector in the yellow pages and have them come out to take a look.
• Where’s the thermostat? Can you figure it out? (some of these new digital models are tricky…) Past that, what is the age of the HVAC [heating, ventilation, and air-conditioning] system? Who is responsible for repairs, you or the landlord?
• Where are the fire exits?
• What’s the layout? Single, massive big-box style sales floor? Multi-story? Rennovated residential with a maze of rooms and floors? Shotgun-style single use retail spaces that can be combined but only by knocking through walls? I could make just about any space work — and the more idiosyncratic, the better, to a certain extent — but you might have other preconceptions and ideas about retail. Can you fit your concept to this layout?
• Find the middle of the sales space: this might be on the second floor, or just past the main entrance, …or really easy to find in a big box. Close your eyes. [no, really. and taking a big breath and letting it out is optional but recommended] Ask yourself: Where are your specialty departments? The Café, the kids department, foreign language comics, adult comics, new release displays, whatever specific categories you’ve decided on: without opening your eyes, can you picture a home for each in this space? Yes, this is new-age-y crap. Don’t skip this step.

also:

• Are the ceilings tall enough? Bookcases (particularly those installed on a wall) can be 7-8’ tall, and the taller they are the more impressive the store will be to customers.
• Where will you put your restrooms? (If you think you can run a bookstore without a public restroom, all I can say is you are mistaken).
• What will the sales floor look like? Is there a logical flow or will it be a literal maze? There are recommendations for both layouts, acutally, but it depends on what your concept is.

• Is this the first property you’ve looked at? Sure, maybe it is the best, but shop around anyway.
• Don’t fall in love. (Rule of Thumb #3) Sure, it’s perfect. But step back, run the numbers, call in a friend for a second opinion.

##

That’s it. I’m tapped out. If you still have more questions, I’m pretty sure that you need to go back and re-read all three posts, or that you shouldn’t be looking for professional business advice from an admittedly drunken blogger anyway.

Rethinking the Box is a collection of ruminations on retail: a unique combination of sober (and sobering) business analysis mixed with drunken, inflammatory personal invective.

Previously:
Study your History. Recognise your Motives. Know your Customer Base, and your Staff. Find your Niche. Consider your Product Lines, take a second look at What the Customers Want, and then stare again in dismay at the Profit Margins. Try calculating the rent and the revenue from inventory (with a side of coffee) and compare your numbers to average industry per-storefront sales.

##

Last week month I went over some retail theory. Let’s translate that into retail and real estate application & practice.

I could do this for my hometown, obviously, but I’m not quite ready to open up shop yet (a small matter of 2 million dollars… I’m a tad short at the moment) and I’d hate to give away the perfect spot to someone else for their stinkin’ bookstore. So we’ll pick a town at random, do some basic research, narrow in on a neighborhood, and then maybe see if Google Maps has some street level views for us.

Oh, yeah: we’ll be able to do this from the comfort of the internet (I would say from the ‘comfort of home’ but I know some of you are at work, some are at a coffee shop and about 12% of you are clogging up my bookstore because we now offer free wifi) — and did I say random? As long as our target could be anywhere, why not answer the age-old question, “Will It Play in Peoria?“

Peoria (named after the Peoria tribe) is the largest city on the Illinois River and the county seat of Peoria County, Illinois, in the United States. As of the 2000 census, the city was the fifth-largest in Illinois, with a population of 112,936; by 2007 it was the sixth-largest city and had population of 113,546. The Peoria Metropolitan Statistical Area had a population of 372,487 in 2008, making it the third largest metropolitan area in the state after Chicagoland and the Metro-East portion of the St. Louis metropolitan area. (from wikipedia)

So this is our target. Not exactly the back woods, or the far end of nowhere. Peoria is in fact a small city like at least 200 others (it ranks 217th) and it is home to Caterpillar Inc., a Dow component and Fortune 500 company. There is a community college and local private university; Illinois State University is also nearby, just 35 miles away.

Peoria has both a Barnes & Noble and a Borders, and not one but two comic shops. There’s a symphony, an opera, a zoo, interstates, an airport, blah blah blah — you can read wikipedia as easily as I can for the rest of it. It’s a normal, boring small city. —no offense intended, Peoria: you’re a damn sight more interesting than the place I grew up in.

So you could start at the Town Hall, or the Bradley University Campus, or the Madison Theater — or the Illinois River, for that matter — and walk around and get a feel for the neighborhoods and maybe luck across a storefront for rent in a nice looking part of downtown, in a quaint brick building from the 20s or 30s — so cute, and look there are still some shelves and fixtures from the last guy who went out of business here. (note: not the best sign for retail)

Or we can drop some science on it.

##

I was half-joking about the storefront above. I have no idea what downtown Peoria looks like. There may in fact be a thriving shopping district there for all I know.

In fact, I know nothing about the neighborhoods of Peoria and it’s surrounds. That is to say, I know nothing yet.

What’s our criteria for a retail location?
Well, I want to be where the people are, and since I’m opening a bookstore I want to be where smart people are (or at least pretentious people who spend money on books because they want to look smart, those are good too), and I’d like to be where the people with money live. Of course I’m speaking in broad generalities, but this information would be good to have, right?

If you want to know about people, ask the Census Bureau. (This is one of the best uses of taxpayer money ever.) Before we tap the CB, though, let’s start with the map:

Head on over to maps.huge.info/zip.htm, and let’s plug in our target zip code (61605, Downtown Peoria) — if you don’t happen to know the zip code yet, well, just start clicking the map and scan around until you find your target, which is what I did last night. Zoom out a bit and look at the surrounding zip codes — you might want to start writing these down, actually.

Now, point your browser to www.census.gov and look up each zip code. Easy, right?
…OK, so it’s a mess, and you have no idea where to start. That’s fine, because someone at the Census Bureau has written directions on how to find exactly the information we need, by zip code. Gosh, they’re smart. (and I’ve a feeling someone—a lot of someones—have asked exactly this question before.) This will be a lot of clicking and writing and typing — and if you have the time it’d be 2-3 hours worth of work. And worth it, but still a pain in the ass.

If you’re willing to spend a little money, I can make it even easier for you:

Uclue is a research service I’ve used in the past, and have been quite pleased with. The folks they have working there are top notch, professional (but with a sense of humour), and more than willing to tackle tricky (or time consuming) research tasks of all types: From “this is driving me nuts, what’s the name of the song with this lyric” to [*cough*] “Median income and education levels by zip code for Peoria, IL”. Most of the previous questions asked are publicly viewable so you can go take a look for yourself.

Late last night I asked the question and I had an answer before breakfast. Not only that, I asked for (and received) the appropriate census information for all 616xx and 615xx zip codes, and the Uclue researcher even set it up as a spreadsheet for me. Of course I offered a premium (for prompt service) and also tipped well — if you really like the answer they have a mechanism for tips — but I also value Uclue and will often price my questions a bit higher than the information might strictly be worth because the service is excellent.

Maybe I paid too much. If a lot of us ask this type of question I’m sure supply&demand will figure out just what a fair price is — but for less than a c-note I’ve income and education numbers for a place I don’t live in and and have never been to, and in a format which can be quickly and easily sorted. If I actually were looking to open up shop in Peoria, this information would be priceless.

Zip codes are handy because they’re used by a number of independent sources (like the Census Bureau), the post office originally set them up (and continues to maintain them, occasionally adding new ones) so that while not uniform in size or population they fall within manageable ranges for both, and most importantly, every address — and by extension, every real estate listing — has one.

So what’s the best address in Peoria?

The five zips with the most households are

• 61554: 17,770
• 61614: 16,542
• 61604: 14,477
• 61611: 10,354
• 61571: 8,283

The five with the highest median income are 61525, 61535, 61526, 61547 and 61528. These are less than ideal, though, as each of these zip codes has less than 2000 households apiece. (more expensive homes on much larger lots out in the suburbs and exurbs — wait, does Peoria rate ‘exurbs’? — if you were working with a map you’d put gold stars on these: you’d want to be near them, certainly, but perhaps not in them)

Considering both income and population (even doing something as simple as multiplying one against the other) yields this top 5

zip: households/median income

• 61614: 16,542/47,030
• 61554: 17,770/40,220
• 61604: 14,477/35,878
• 61611: 10,354/43,051
• 61615: 8,157/51,548

and considering the number of college graduates (bachelor’s degree or higher)

• 61614: 9,175
• 61615: 4,835
• 61604: 4,315
• 61550: 3,916
• 61554: 3,647

And it looks a lot like we’ve narrowed our search from 55 zips to just 4: 61554, 61604, 61614, and 61615. Going back to our map:

61604 wraps around zip code 61606 (which has Bradley University in it) and lies just to the NW of downtown Peoria. 61614 is immediately north of that, has 4 golf courses in it (as a Peachtree City, GA native son I know exactly what that means) and in the 2000 Census, also included the area now designated zip code 61616.

61615 is just north and west of both and moreover, seems to be defined by I-474: the north half of the bypass runs smack through the middle of the zip code and it includes the I-74/I-474 interchange. (in fact, it looks like the boundary lines for 61615 were drawn after the interstate was built, as it rather suspiciously follows the curve of the bypass loop.)

aside: Both the B&N and the Borders in Peoria have addresses in (wait for it) 61615.

Not that we have to (or should) slavishly follow the major chains, but it’s a nice little confirmation of my data on the part of their respective real estate departments.

…and actually, given that both majors are on the west side of the river (and also sparing a glance at the locations of the local comic shops) I might first recommend something in 61604, closer to downtown and the university, if possible — in part because I actually like downtowns, and I’ve a feeling a small city like Peoria might have some nice, walkable shopping available — particularly near a college campus.

Alternately, an address in East Peoria just off of the interstate (61611 prefered, or 61550 if a bigger location was available at a cheaper rent) would put us closer to both the community college kids and the ISU campus north of Bloomington (just a half hour away down I-74), while still being in ‘Peoria’.

##

We can repeat this exercise for hundreds of other cities and towns. (or you can, and I might be persuaded to if there’s money in it.)

The point I’d like to make is that you don’t have to go in blind: resources are available that will paint a pretty clear picture of where the potential readers are. These numbers will also be awfully nice to have when you walk into the bank, and start asking for money. Market research is a basic necessity for any business, and when you are talking retail, demographics (and real estate) are your market.

If Peoria had an art school — offering a sequential art degree, which would be pure icing if true — we might even consider this city with less than a half-million people in it as a candidate for a Graphic Novel Bookstore. I’m not sure I could make my idea work here, but I could certainly find a home for a strong independent bookstore in Peoria (looks like there are two, in 61616 and 61554).

(and so there might be room for one or two more, in the other two areas I identified: 61604 and 60611. Peoria entrepreneurs, take note!)

If you live in a much larger metropolitan area, you could use these same methods — either on a larger scale, or concentrating on just one county or area (north of I-285 and between I-75 and I-85 in Atlanta, for example) either based on where you currently live or where you see potential for growth. And obviously, there are hundreds of Peorias all across the United States, and similar townships elsewhere (though you’ll have to figure out your own analogues to zip codes and the Census Bureau.)

It’s work. Duh. We’re talking about business here. Even if you are following a dream, don’t forget to ground it in a little business.

Resources:

The U.S. Naviguide Co. set up the Zip Code Map I liberally used above; it’s built on top of Google Maps so the interface should be familiar, and while they have a number of products for sale, the zips map is free to use (but not to copy, which is why there are no screen shots above).

The U.S. Census Bureau rocks. (but then, I’m a numbers geek…) Here’s the link to their detailed instructions on finding census info by zip code

I also made use of the American Booksellers Association store locator, the Comic Shop Locator, B&N and Borders store locators (y’all know those web sites, right?) and the National Center for Education Statistics School Locator — which is handy for finding out how many (and which) colleges, universities, and libraries are in your community.

Uclue did the heavy lifting for me on this one; hell, if you throw enough money at them (with a link to this article, so they know what you’re asking) they’ll likely research the zip codes and identify the best bookstore locations for you. It’ll be expensive, but what’s a few hundreds for convenience?

please note: Uclue provided no money or other compensation for my testimonial. In fact, my queries—as linked above—cost me $80 in this instance. I just like the service.

Coda: The Street Level View from Google Maps for 61606 shows a pretty nice residential neighborhood. It’s not exactly the view of the street I’d be able to open a storefront on, but I wouldn’t mind being just down the road from here. (or living here, for that matter)

As fans, our world is owned. Our participation in the process is necessary, and we can vote with our wallets, but no matter how many books, collectibles, variant covers, movie tickets, or DVDs we buy, we don’t own anything. The actual owners aren’t fans, and sometimes the actual owners aren’t the best custodians of the property, but most media conglomerates are in the business to make money — at least in the long run, and it’s our money they’re counting on — so more often than not we come to some kind of mutual understanding.

It doesn’t always work out, in the short term. Ironically, the most money is made when creative types are allowed to be creative, when stories are told about characters and not “properties” and when Business is in fact the last consideration of the business. It’s hard to teach this to lawyers and executives, though, no matter how many examples and great works we throw in their faces — there’s always some weaselly excuse (“Our Marketing was Great!” “We leveraged the property to meet the market demand for this kind of comics project according to our projections and estimates!”) that has nothing to do with the actual movie, when both Occam’s Razor and any ticket buyer will give you the simplest explanation: we like good stories. Projects made with care (particularly movies) are best when the point, main focus, and the directed efforts of many professionals is to tell a compelling story, first. Down this path lies greatness; not only do the fans gush but the critics weigh in with their snobby, backhanded complements (but still complements) and the general public (you know, the ones not invested emotionally in the characters) respond as well — because we all like good stories. (I’ll cite the most recent Batman and Star Trek movies to support this)

Just going through the motions, or larding in decades of continuity for the sake of continuity, or trying to go ‘dark’ just because it works with Batman (hint: his parents were killed and he hunts criminals by night; the suprising thing is that the comics could ever be ‘light’), or on the other side: completely ignoring all past continuity because we need a kid sidekick, or some vehicles that can be sold as toys, or a love interest who’ll die in act 3, or because the character is a psychopath but the studio demands a PG13 rating…

The point of those two comma-spliced sentence fragments is that Changes made because of Business always fail; Changes made in service of Story more often succeed. Because what we’re buying are the stories; we buy soundtracks and figures because they remind us of the stories, we buy books (graphic & otherwise) obviously, we line up on a Friday night no matter how many times we’ve been burned before because few things pack an emotional punch like 135 minutes of carefully written, filmed and edited Story. The use of a comics character in this context is the warm embrace of the familiar added on to a Really Nice Night Out. It’s a date. When it goes bad, when expectations are rudely and roundly thwarted by a studio that doesn’t know better, it’s like a blind date from hell — or that one awkward date where you both (or worse, just one of you) are just going through the motions, and that ends with the breakup.

Three paragraphs on comics movie adaptations are off-topic — though given the recent moves on the part of both major studios (Disney/Marvel and DC Entertainment) perhaps movies are the new topic — and 750 words of intro (tonight, at least) aren’t the article.

As much as I like pounding corporations for neglecting the Art in favour of chasing the ever elusive Dollar (and everything that statement encompasses) in fact the point of this drunken diatribe isn’t this distasteful part of the business, and as much as I like to promote Story (your corporate ambitions and maybe even a lawyer or two should be sacrificed on the altar of Story) what I intended to write about this evening is this matter of ownership.

Recent business news has reminded us: no matter how much we love these characters, and the backstory, and the origins (retconned and otherwise), and the multiverses and the space empires and realms of dream, magic, antimatter, funhouse-mirror-reflections, and Captain Carrot — The places we know like home, the words we know by heart, the icons and archetypes we recognise on sight — after all we have invested, both with our money and of ourselves, these Worlds of Wonder are still owned, entire, by the Company.

##

The question is *which* company, and increasingly, there are fewer and fewer of them.

Let’s go back 15 months, to my last yearly review post (hint: it was for 2007) where I posted a publisher’s index, basically a who-owns-what and why it matters.

After listing the top six publishers (then, as now: Random House, HarperCollins, Simon & Schuster, Penguin, Hachette, Macmillan — and Time Warner, but Time Warner was an add-on, and only gets a nod because of DC: their other [book] publishing is not only miniscule but was, in largest part, sold to Hachette in 2006) I then listed another dozen or so companies also of note.

And actually, I listed each not by the names you know, but by corporate ownership, which introduces some American fans to names like Lagardere, Bertelsmann, and Holtzbrink — and others that you know but prehaps never knew the connections of, like News Corp’s ownership of HarperCollins.

In that listing, Disney went under the “Big, but not comics” heading; Marvel was under “Comics, but not big”.

* past that statement, I make no claims as to having seen the Disney/Marvel deal coming.

Let me back up a half-step and consider that exception I made for Time Warner. Even considering DC Comics and the not-insubstantitial magazine business, they are hardly a publisher of note when it comes to books — but they still merit a listing in any sort of top ten because they’re Time Warner and “media” have overtaken and subsumed books both as a business, and in the mind and eye of the consumer.

The last really good look at this was Douglas Rushkoff’s “The Merchants of Cool” on Frontline (PBS) — and even then, the best information is not in the program itself, but was posted as a footnote to the Frontline website — though the information presented is now 8 years old, their summary is still the best out there. (btw: the whole “Merchants of Cool” program is posted for free viewing on Google Video — and I include the link with a smirk as this is “new media” and didn’t even exist when the Frontline documentary first aired) (if you have 50 minutes you should watch or re-watch this)

(The Nation had a similar article at about the same time, but how many of you read The Nation? Their site also has an interactive outline of ownership)

##

There are 10 Big Media firms, but we’re not stopping there (and I’ve always been a bit leary of Top 10 lists; it smacks of laziness, or something some drunk blogger could post on his days off) because even a smidge of research into the top 10 immediately suggests the 11th (& a 12th), and past the big media conglomerates there are 3 additional book publishers worthy of citation also.

So here’s a Media top 11 and a Publisher top 12. I leave the exact rankings (and figuring out which is which) as an exercise for the reader; they’re presented below initially in alphabetical order, with my additions on the end.

##

Bertelsmann
website & wiki
Privately held, unlisted. Incorporated in Germany.
owns: Random House, a lot of stuff in Europe you’ve never heard of
of Note: Random House is the world’s largest trade book publisher; among other things they publish Del Rey Manga and several Comics of note (Maus, Persepolis, Asterios Polyp) under the Pantheon imprint; as recently announced they are Kodansha’s US distribution partner.
Reported Revenue: more than €16 Billion — of which ~10% is Random House.

CBS
website & wiki
publicly traded on the NYSE as CBS.
owns: CBS, duh; Showtime, a 50% chunk of mini-network The CW, a buncha TV & Radio stations, and Simon & Schuster
of Note: Simon & Schuster distributes Viz
Reported Revenue: $14 Billion — of which $850 Million were attributed to ‘publishing’

Disney
website & wiki
publicly traded (NYSE: DIS)
owns: ABC, ESPN, rights to Kermit and most of the other Muppets, 17% of Florida, a third of Hulu, enough congressmen to keep Mickey under perpetual copyright, the frozen corpse of Walt, Hyperion Books… & pending regulator approval and by the end of the year, Disney will also own Marvel.
of Note: Past Marvel? Hyperion. Pixar. Muppets. Sportscenter. The rest is dross.
Reported Revenue: $37.8 Billion (the addition of Marvel, if the purchase had been completed prior to 2008, would have bumped that up to $38.5 Billion)

Hachette
website & wiki
a wholly owned subsidiary of Lagardere SCA, incorporated in France
owns: Little, Brown & Co., the oldest (founded 1937) part of Hachette Book Group USA, a bunch of stuff in Europe, and multiple Jet Fighter factories (also in Europe, but these are jets: you’re in range, fanboy)
of Note: Yen Press,
Reported Revenue: Lagardere reports sales of €8.2 Billion, of which a shade under €2.2 Billion are from ongoing publishing operations

Macmillan
website & wiki
The Macmillan moniker was recently resurrected for their English-language units: owned by Holtzbrink, a privately-held German investment group
owns: St. Martins, Henry Holt & Co, Farrar Straus & Giroux
of Note: First Second, Tor (Sci-fi and genre fiction, and which has emerged as a most excellent blog, go see; also recently allied with Seven Seas for manga and more)
Reported Revenue: (from 2007) €2.5 Billion, of which €630 Million came from publishing and €521 Million was attributed to the North American market

NBC Universal
website & wiki
NBCU is relatively new; this is the media merger you didn’t hear about. The new company is 80% owned by General Electric (the long-time owner of NBC et al.) and 20% owned by Vivendi SA (which was Vivendi Universal before the deal, and which still owns the Universal Music Group, Canal+, and Activision Blizzard; all of which were not included in the ’04 deal — I might go so far as to say Vivendi kept all the cool stuff, and hell, we should give Vivendi SA the 11th spot on this list)
owns: NBC & Universal Studios, duh; Olympic broadcasts in the US through 2012, MSNBC, Telemundo and mun2 [that’s ‘mundos’ for us gringos], Bravo, USA Networks, SyFy [that’s Sci-Fi for us who haven’t been brain-stapled], the Universal Studios Parks, and a third of Hulu.
Of note: um. Queer Eye For Straight Guy? and as noted above.
Reported Revenue: Per the GE 2008 AR, NBCU accounts for scant %10 or so of GE’s total earnings, or $17 Billion of the $183 Billion total

News Corp
website & wiki
Still 40% owned by Rupert Murdoch, publicly traded as NWS on NASDAQ; other classes of stock available there, on the ASX (Australia) and LSE (London)
Owns: Fox (all iterations: network, cable, movie studio, a third of Hulu), Myspace, Death ray mounted on the Moon, HarperCollins
of Note: HarperCollins is our distributor for Tokyopop, the HarperCollins Teen imprint co-publishes some of Tokyopop’s most popular original titles (Warriors cat-sorta-manga and the Vampire Kisses adaptations)
Reported Revenue: $30 Billion — of which $1.1 Billion is due to publishing.

Pearson PLC
website & wiki
publicly traded on the London (LSE: PSON) and New York (NYSE: PSO) exchanges
Owns: Penguin (the Penguin Group is the second largest publisher on the planet), The Financial Times (and it’s associated brands and websites), and Pearson Education (which you’ve never heard of but if you went to school have most certainly read
of Note: GN adapations from Philomel (an imprint of Penguin), Comics encyclopedias and other guides from DK.
Reported Revenue: Pearson reports sales of £4.8 billion, of which 20% is Penguin — and 60% are textbooks, study guides, and other educational material

Sony
website & wiki
ownership: Sony is one of those fun byzantine conglomerates I referenced in the recent Kodansha post; most applicable in this context is the Sony Pictures unit (website & wiki); Sony trades on the Nikkei and on the NYSE under SNE
owns: 100% of what used to be Sony BMG (they bought out Bertelsmann and folded the company into their other music businesses) also, Animax Japan, the SET and AXN families of cable channels (almost entirely outside the US), Columbia Pictures and Columbia Tristar.
Of note: PS2, PS3, PSP, Blu-ray — Geeky, but Not Comics
Reported Revenue: The Sony Mothership reports revenue of ¥7,730 Billion — which sounds like a whole lot (and is in fact a whole lot) but converts to the smaller-seeming $83.8 Billion. Sony Pictures amounts to a tenth of that at ¥717.5 Billion ($7.8 Billion at current conversion rates)

Time Warner
website & wiki
publicly traded (NYSE: TWX)
owns: 50% of The CW, Cartoon Network, (and other Turner cable channels) DC Comics, Vertigo, Mad Magazine, and duh: Time Magazine publishing operations & the various Warner movie, movie studio, cable, and network TV operations.
of Note: Batman, Superman, et. al. (not that they have any idea how to ‘leverage’ these) (which may be a good thing); also: CMX, which I’d previously described as “such an outlier (the furthest colonial outpost, as it were) and running so far beneath the corporate radar that they can actually release good stuff.”
Reported Revenue: Total revenues of $46.9 Billion, of which $25.8 Billion was ‘subscription’ revenue (which includes cable fees and AOL subscribers) — and an aside & editorial: it’s interesting that Time Warner separates this stream from the content that produces it, and conflates it with the $15-25 bucks a month they’re scamming from AOL users. HBO subscribers are different from AOL, the fees TW charges to cable providers for ‘free’ channels like CNN and Cartoon Network are different from the ‘premium’ content of HBO, and the acquisition of a channel by a consumer (no matter how it is done) can’t always be considered separate from the content served through that channel — but this is a much larger debate. [TW is right in a business sense in this case but otherwise wrong in how they approach the business.] Less than a quarter is attributed to “content” (again, the wrong way to look at the business, as the content drives the rest) which encompasses the entirety of cable TV programming, movies, magazines, web articles, publishing, and comics — not that TW wants to talk about comics; I mean, they’ll talk for three pages about the Siegel lawsuit and mention DC in a dozen different contexts as property owned and available to other TW units, but the seed and root of all these other revenue streams gets the same two sentences this year as last, and the year before: “DC Comics, wholly owned by the Company, publishes a wide array of graphic novels and an average of over 90 comic book titles per month, featuring such popular characters as Superman, Batman, Wonder Woman and The Sandman. DC Comics also derives revenues from motion pictures, television, videogames and merchandise.” (We’ll have to wait for the 2009-2010 AR to see if the “DC Entertainment” move and re-org actually changes anything in either the Warner Bros. unit or Time Warner as a whole.) No matter how fine they parse it, TW still admits that “content” generates $11 Billion — 23% of their total.

Viacom
website & wiki
trades on the NYSE as VIA
owns: MTV, Nickelodeon, Spike, TV Land, BET — and the Paramount movie studio
Of note: MTV was really good, like, 18 years ago. I don’t know where they first went wrong but I could make a guess. Viacom used to be much larger: they voluntarily split the business in 2005 into the companies now known as Viacom and CBS [cited above]
Reported Revenue: $14.6 Billion.

Vivendi SA
website & wiki
Trades on Euronext Paris under VIV
owns: (as noted) Universal Music Group, Activision Blizzard, some European stuff
Of note: Blizzard has a sum total of three properties — Warcraft, Starcraft, and Diablo — any one of which is a license to print money; and World of Warcraft has 11.5 million subscribers, more than the populations of Greece, Cuba, or Belgium — more than the populations of Denmark, Norway, and Iceland combined — or more than 150 other sovereign nations and I’m not sure what this says about world politics.
Reported Revenue: €25 Billion. (60% which is just the French operations.) To put a punctuation mark on the discussion of Blizzard’s success, they scored a scant $2 Billion of the overall company revenue; less than 10% — but also, that’s two Big Bills for a PC (not console) software company.

Publishing’s Smaller Fry:

McGraw-Hill
owns: Business Week, Standard & Poor’s, a huge text book division (see $6+ billions below). (But No Comics)
Reported Revenue: $6.4 Billion

Wiley John & Sons
owns: Dummies’ books, scads of business titles (No Comics; Sorry, half-assed Shakespeare [*cough*] “manga” doesn’t count)
Reported Revenue: $1.6 Billion

and, of course

Scholastic
website & wiki
Scholastic is the exception that proves rules are useless; they publish Harry Potter— ‘nuf said. Compared to other publishers Scholastic is the kids’ division that is the whole damn company.
Of note is their Graphix imprint, home to the colour reprints of Jeff Smith’s Bone — which is perhaps most important, but they also have Amulet, the Baby-Sitters Club adaptations, & 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).
Reported Revenue: $1.85 Billion

##

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

But I can only do so much: for more information on publishing I’d like to point you to the Monthly reports from publishers.org and for more information on media conglomerates, you should check out all the ‘website’ and ‘wiki’ links above, and also the PBS Frontline and The Nation articles first referenced.

The “news” that recently broke is that Kodansha pulled all licenses from Tokyopop. Tokyopop itself will tell you: this was no big surprise.

Trying to get word out of Kodansha on the matter, though, is a lot more difficult. They’re not talking. They don’t even have a website: some cybersquatter has staked out Kodansha-USA and KodanshaComics and a different cybersquatter picked up the old and seldom (perhaps never?) used KodanClub site

Not that all is silence:

Kodansha Intl. (last updated 31 Aug) now reflects that affiliate Kodansha America, LLC will be responsible for sales and marketing, though distribution of Kodansha-Intl. titles is still being carried out by Oxford University Press.

It’s worthwhile to note that Kodansha International Ltd. is based in Japan; Kodansha America, LLC is one of three new companies set up in the United States. (The new Kodansha U.S. Manga initiative has always been separate from this chunk of Kodansha’s overall business.)

with a tip of the hat to DocWatson, who posted this helpful link to the NY State Gov’t. Business Database on the Mania.com anime/manga boards, we can infer a timeline:

Filing Date Name Type Entity Name
SEP 16, 1988 Actual KODANSHA INTERNATIONAL (USA – NEW YORK) LTD.
DEC 12, 1988 Actual KODANSHA INTERNATIONAL (USA) LTD.
JUL 19, 1990 Actual KODANSHA AMERICA, INC.

JUL 01, 2008 Actual KODANSHA USA, INC.
JUL 01, 2008 Actual KODANSHA USA PUBLISHING, LLC
JUL 01, 2008 Actual KODANSHA AMERICA, LLC

21 years ago Kodansha thought the potential was there for some of their (non-manga) titles, translated, to make inroads into the North American market (and likely was doing so previous to the formal establishment of a NY company & office) and then last year they thought enough of the potential for the comics to sink a couple million bucks and to get the ball rolling on a full scale(?) American Manga division of their own.

Also last year, Kodansha set up a slate of new companies and starting working (behind the scenes, but also presumably full-time, and in earnest) on a new American strategy…

And now, 14 months later, news comes that Kodansha has pulled it’s licenses from Tokyopop — hot on the heels of an announcement that they’ll be using long-time partner Random House for US distribution. And just six weeks from now, the first books will hit retailers.

Six Weeks? Yes.

Oh, hey… following the announcement of the Kodansha/RH distro deal, did anyone else think to search Random House’s site? Apparently, the imprint will be known (at least internally at RH) as “Kodansha Comics”.

Akira vol 1
Format: Trade Paperback, 352 pages
On Sale: October 13, 2009
Price: $24.99
ISBN: 978-1-935429-00-5 (1-935429-00-0)

Akira vol 2
Format: Trade Paperback, 304 pages
On Sale: January 12, 2010
Price: $24.99
ISBN: 978-1-935429-02-9 (1-935429-02-7)

Akira vol 3
Format: Trade Paperback, 288 pages
On Sale: April 13, 2010
Price: $24.99
ISBN: 978-1-935429-04-3 (1-935429-04-3)

Ghost in the Shell vol 1
Format: Trade Paperback, 368 pages
On Sale: October 13, 2009
Price: $26.99
ISBN: 978-1-935429-01-2 (1-935429-01-9)

Ghost in the Shell vol 2
Format: Trade Paperback, 320 pages
On Sale: April 13, 2010
Price: $26.99
ISBN: 978-1-935429-03-6 (1-935429-03-5)

##

Kodansha is playing it safe: not only are Akira and Ghost in the Shell older titles with a proven track record and North American sales history, each also has versions available on DVD (many versions in the case of GitS) which are also proven fan favorites with their own sales numbers to back them up. They had to screw over their oldest American partner (it’s unfair of me to ask, but: is this a contributing factor, as to why Dark Horse suddenly finds themselves the custodians of so much of CLAMP’s catalogue?) and actually, Kodansha may be doing themselves a disservice if they’re using these two legacy titles to guage American consumer demand for manga, but imagine yourself in Kodansha’s place — with a lot of newer titles tied up in more recent licensing agreements and the Del Rey deals in place actually making money for both sides — which titles would you launch with?

##

The Kodansha has Landed.

why are we so excited?

Kodansha moved into manga publishing with the launch of Shukan Shonen Magazine in 1959. This weekly anthology for boys went on to become one of the top-selling titles in Japan, with a circulation of almost 2 million copies (2007). Addressing every gender and age group, many of Kodansha’s manga magazines now belong to the so-called “megacomic” category, selling hundreds of thousands of copies on a regular basis. Whether it’s Rival, aimed at junior high school kids, Bessatsu Friend, for high school girls, or Young Magazine, designed for the youth market, Kodansha’s comic magazines cover every major demographic.

Kodansha currently publishes 18 manga magazines and around 1,270 manga trade paperback titles annually. [link]

[please note, by their own reporting Kodansha publishes 2000 titles a year — so manga is roughly 2/3 of their total output.]

1200 manga tankobon annually is roughly the entire output of all US licensees back in 2006 — it’s been up and down (and down) a bit since then. So when we talk about Kodansha-US-Direct, we’re talking about the potential to double the amount of manga available to American otaku — not overnight, obviously, as K-USA has been in the works for a couple of years already — but that’s the potential.

Kodansha USA is like a big black box.

A closed box; but not quite a featureless mononlith: it seems to incorporate a recycled PC speaker, has a single red LED on the outside, and a mysterious barely visible seam towards the top that hints at a lid but which can’t be proven to be a means of access because to date all the damn box has done is sit there.

We know it has a sound chip because every now and then, it beeps. And then nothing. And the light comes on and turns back off, or at least some blogger reported that the LED blinked but I didn’t see that myself, I’m just repeating what the first guy said.

And we all suspect that something wonderful is in the box because The Kodansha in Japan has some great stuff that they’ve been selling the heck out of (in Japan) and us fat, razy Americans would certainly like some of that too. We’ve seen some Kodansha releases in English, obviously, but in our heart of hearts we know it’s all been like the supermarket sushi — yes, it is ‘sushi’ but the expectation is that if a Japanese sushi master opened a restaurant next door to the supermarket we could finally get a taste of the real thing.

Mmmm. Sushi. I can almost taste it…

That is the promise and potential of Kodansha USA. But so far we’re not geting a sushi lunch, or Kodansha-direct manga, unless they’re sitting inside the un-openable black box. Kodansha USA is a riddle wrapped inside an enigma surrounded by sushi rice, nori, and served with wasabi and gari.

##

Mixed (and confusing) metaphors aside…

It could be that Kodansha USA is only going to do premium reprints of older, established titles — this assumption is certainly in line with the only titles released so far. It could be that K-USA is going to skip licensees entirely and release their own stuff to North America direct — which is what their (Japanese) press release last year seemed to say, and of course there is the recent Tokyopop development, but which has been at least partly disproven by every Del Rey and Dark Horse Kodansha title announced in the year since. It could be that this seemed like a really good idea in 2007 but the couple years in between has since convinced Kodansha to scale back or delay their plans for the indefinite future.

Could be a lot of things. That’s why I describe Big K as a big black box. We can assume all kinds of things, based on the market or our experience, or what we overhear at a book expo [*cough*] but in the end until we get official word from Kodansha—or we have the books in our hands—past the most general of statements [Kodansha is coming] there is nothing that we can actually say about this move.

There is only one thing we can say, the same thing we knew more than a year ago: Kodansha is coming.

Previously on this site:
Checking in with Kodansha and Chthulhu
Kodansha USA III

##

Update, 3 September 18:00
The discussion begins:

[since I’m reposting the comment, entire, in the main post, I’ve deleted it from the comments section below]

Comment by Torsten Adair — 3 September 2009, 14:37

According to Books in Print, the Kodansha America website is:
http://www.kodanshaamerica.com/

which has NO information about Akira or Ghost In The Shell.

I think your assumptions about their strategy are misguided. Kodansha cannot start established series from scratch until Tokyopop sells out of their remaining stock. Starting with established titles allows stores to order with some confidence, which helps KA start this new line. It is possible that there are few Kodansha properties which are unlicensed, and with the Tokyopopped letter, they can start planning to print their own volumes, but it will take at least six months (more with translation) before we see new titles.

Kodansha’s oldest American partner would be either Oxford (their U.S. distributor of Japanese titles (ISBNs starting with 4-) or Random House, which has licensed titles from Kodansha.

It seems that RH is distributing, so Kodansha manga will not be an imprint. (In much the same way that DC Comics and Titan Books are not imprints of RH.)

Yeah, it’s an interesting box. Not as interesting as that other box with the Mickey Mouse and Spider-Man stickers on it…

(and first: I may get to Mickey/Marvel before the end of the week, but everyone else is doing a fine job in the interim — my thoughts are not necessary, to date)

Did I forget to link to what-passes-for-the Kodansha Org Chart?

Like many Asian conglomerates, Kodansha is not set up as single, huge corporation (i.e. Disney) but rather a network of affiliated companies; of interest to us are the publishing-related firms, but per the site linked above: “Kodansha has further affiliates in industries like publishing, printing, paper broking, logistics and real estate.” The whole is so much bigger than the manga-intellectual-properties parts.

Books in Print™ — a hallowed and much respected source for titles (and companies) in English, fails us when it comes to piercing the veil of any Japanese publisher.

The site you link to is Kodansha, Intl. Ltd. And that’s fine. But K-Intl. is different from K-USA as currently set up and different from Big-K, Japan (who owns all the others).

And in reference to my citation in the post above of previous long standing RH-Kodansha ties, I wasn’t talking about Del Rey but as linked, to Random House Kodansha Co. Ltd, the independent firm (co-owned by both) established in 2003 to bring Random House titles translated into Japanese to the Japanese market.

Dark Horse didn’t start licensing Kodansha titles until 1994 (ref.) — a scant 15 years ago or so — so maybe I should have qualified my statement by saying Kodansha was screwing over their longest-standing manga partner, and I thank you for the opportunity to post the correction.

[Oxford deserves notice, and credit, and in fact appears to still be the partner for the academic & noteworthy books of Kodansha Intl. — but today we’re talking about comics] [And Dark Horse is still publishing Oh My Goddess! so it seems the new Kodansha USA isn’t messing with all previous business relationships, just T’pop]

In America, a Publishing firm is more likely to set up an imprint (a semantic unit) to try out a new idea. —it’s less about business arrangements, and all about marketing the ‘new thing’ to the public.

In Asia (a point I made last year) the model is to instead set it up as a new company — owned in whole or in part by the mothership but set up to fail or to succeed on their own.

I can buy a Yahama receiver for my home entertainment system. I can buy a Yamaha saxophone. I can buy a Yamaha motorcycle — these are all Yamaha but in fact there are 3 separate companies selling me these disparate goods. I picked Yamaha because I know these product lines off the top of my head (and own both the receiver and the sax) but many Japanese firms (and at least one Korean co.: Samsung) are set up on very similar lines.

SO Kodansha as-a-name-and-brand is monolithic, but the individual companies doing business in their name are not so coherent as the single brand (and our experience with American, UK, and European publishers) would lead us to expect.

Which is why this is called a Kodansha Puzzle. What I find interesting is that Kodansha USA Inc. or Kondansha Publishing USA LLC (whichever is actually responsible) in the arrangement with Random House would like the books to be branded “Kodansha Comics”

—I mean, they could just have easily asked for “Kodansha USA” or “Kodansha Del Rey” or even “Kodansha”-no-modifier. Which is why I made a note of it above. I call it an “imprint” out of habit, maybe — after all, I’ve spent a few weeks trying to untangle Villard from Pantheon from Del Rey from Ballantine Doubleday Dell.

Honestly, unwrapping US publishers is enough to drive me to drink, and I’m already at drink (I own a condo here) so compounding US publishers foibles with intentional Kodansha obfuscations is enough to drive me to… I don’t know… hard liquor? bad poetry? non-profit activism?

I’m still waiting for Kodansha Manga USA (whatever co. releases it) and I’d love an easy answer, almost as much as I’d love to be able to just buy the manga (I’m a simple guy: readily available beer and manga are enough to shut me up.) But in the absence of the easy buy or easy explanation — or even a complex explanation if it’s something I can figure out — all we are left with is a lot of guesses and the Damn Black Box.

I had hoped to get some work done on the much-delayed Graphic Novel & Manga Rankings over the next two days; but, like many a blogger, my plans go out the window as I can’t help being derailed by the business and financial transactions/distractions that have been announced this week. Even though I can be pretty sure I’ve nothing to add to the vast pool of conjecture spreading like a growing slime mold over the interblogs, I can’t help but add my 2 Yen.

[So long as I’m downshifting into full-on business-analysis mode, it may be time to revisit some other points of interest (Borders, last year’s publishing industry and sales stats, digital comics, scanlations and fansubs) — so anyway, my plate is pretty full.]

First up is the most recent, and in it’s own way, smallest news. Those of you camped out on the Comics side of Popular Visual Culture may not even have heard of it yet, and/or may not know enough about the company involved to have an opinion one way or the other.

##

There is the lovely title from the official press release (as reprinted by just about every anime blog, and currently the only thing you’ll see at the advfilms.com website)

A.D.VISION, INC. CONCLUDES SERIES OF ASSET TRANSACTIONS

Oooo. Exciting. The all-caps gives me chills. Reprinted here in it’s entirety:

HOUSTON, September 1, 2009 — A.D. VISION, INC. (“ADV” or the “Company”) announced today that June 1, 2009, the Company concluded a series of transactions that are expected to result in seamless delivery of home video products and television programming to customers.

Through an asset purchase agreement, AEsir Holdings, LLC (“Aesir”) acquired a subordinated interest in selected programming from ADV’s film library together with other intellectual property subject to all liens and security interests of the Company’s senior secured lender. The transaction requires Aesir to assume specific obligations and scheduled liabilities of the Company under legacy license agreements associated with the acquired programming.

Concurrently, the Company concluded an asset purchase agreement with SXION 23, LLC, doing business as “Section23 Films,” a home video distribution company, under which it assumes account servicing and distribution operations in connection with the library acquired by Aesir, subject to all liens and security interest of the Company’s senior secured lender.

John Ledford, ADV’s President and CEO, states “We believe the actions we initiated and completed provided the same or more value to the Company’s secured lender and its programming licensors while giving other key stakeholders such as employees and customers some potential value or the reasonable probability of realizing value.”

In a separate transaction, Valkyrie Media Partners, LLC (“Valkyrie”) acquired a 100% equity position in Anime Network, Inc. (“ANI”), formerly ADV’s television unit, pursuant to a stock purchase agreement between ADV and Valkyrie. That transaction includes an assumption by Valkyrie of specific liens and security interests of the Company’s senior secured lender.

In another separate transaction, Seraphim Studios, LLC acquired Amusement Park Media, the production unit of A.D. Vision, Inc.

Further announcements are expected from the respective acquiring entities over the coming days.

RIP ADV:

• The Wikipedia Entry has already been edited (I checked at 9PM) to reflect the press release of this morning
• The Wayback Machine has archives of the ADV site, but nothing more recent than 2007. Here’s the front page, the website site map, and the ‘about us’ page from ADV circa Oct. 2007.
• As linked above, there’s naught but this on the ADV website now.

Anime News Network:
(I hope they don’t get mad at me for linking so extensively and deeply to their site)

• Here’s ANN’s news story on the move.

Also culled from ANN: A partial timeline of what went wrong

• ADV/Sojitz
• ADV loses Newtype, starts PiQ
• ADV closes PiQ
• ADV holds yard sale for ready cash
• FUNimation picks up former ADV/Sojitz titles
• ADV announces the first distro deal for a ‘new’ company, Sentai Filmworks
• Sojitz dissolves the company (one of two companies, actually) that it set up just for the ADV deal
• which doesn’t affect the new deals FUNimation made earlier regarding these titles

After that, things were quiet for about a year. This morning, ANN had the news story, followed in the afternoon by an Editorial

Other news and views:

Anime Vice had two posts with the facts (as we knew them) along with Gia’s attempts to contact someone at ADV for a clarification or comment — and one of the commentors on the first Vice post (scottfrye) gave a helpful pointer to a blog post by Robert of Robert’s Anime Corner Store with the first confirmation and some other inside baseball on the deal.

EDIT 23:20pm: Simon Jones at Icarus Publishing [NSFW, usually; recommended anyway] also has his first thoughts on ADV (plus some additional commentary on the other business news of the week).

And I’m sure every other anime blog will have analysis and commentary (just like this post) by tomorrow morning, or midnight tonight — right now most are just re-printing the official press release (just like I did above).

##

I like the phrase from the official announcement, “liens and security interests of the Company’s senior secured lender.” It’s the most telling bit. It was repeated 3 times, verbatim, in the press release. (Yeah, the names of the new companies are nice and all, but this is part of the back-room business — and the only part that is showing)

If ADV were *really* gone, and the bits and pieces put up for auction for whatever the open market would pay for them, that “Senior Secured Lender” is the one who would be paid first and in full. Since ADV isn’t a publicly traded company—with the associated required SEC filings and reports—we have no idea who this mystery creditor is. Maybe ADV had a multi-million dollar line of credit at some bank (or made similar arrangements with a venture capitalist) and the terms of the loan finally came due. Could be.

If I had to make a bet — I think this is still fallout from the Sojitz deal of ’06: Even after that went sour, Sojitz (and their partners Klockworx and the Bank of Japan) still had 20% ownership of ADV, a point Christopher Macdonald brought up in that ANN editorial I linked to above.

Maybe they convinced Sojitz/JCI to convert the 20% into a ‘loan’ — and then made the move to either kick out John Ledford (basically buying the company out from underneath him) or to shrug off other liabilities. Maybe the un-named “Senior” already bought the Sojitz/JCI share (no need to consult with ADV if Sojitz was motivated to sell) and used the ownership stake as leverage to force a deal that they felt would be best — for the future, or for the bottom line.

Here’s my take on it, and something I doubt any of the new units will report in their upcoming ‘introductions’ to the market:

The “transfer of assets” was in fact a buyout, officially sanctioned by (if not initiated by) the Senior Secured Lender.

The split of assets in these four new parts —

• film library & licenses,
• DVD production, sales, and order fulfillment,
• recording studio (+ localization, scripting, and casting),
• and cable TV Anime Network
  
  — is likely designed to isolate each against future losses (or even failure) of one of the other components.

Abandoning the ADV label is necessary as:
a) a way to present a new face to potential Japanese partners & licensors who have been literally burned or otherwise turned off by “ADV”;
b) a legal dodge;
c) the A.D. Vision and ADV names are owned by a party who would not concede to the sale, so it was done as a ‘transfer of assets’ rather than the sale of the company entire;
d) a way to break clean with the past and present something new to the fans (possible; but hard to gauge: I thought most fans liked ADV—or had fond memories from a few years back);

and of course, some or all of the above

In the new schema: Aesir is responsible for lining up new licenses, Seraphim Studios will be responsible for localization and dubs, Section 23 manufactures the discs and ships them out to retailers (possible also with direct sales to fans via the internet — we’ll see) and Valkyrie deals with Aesir to get the licensed properties onto cable TV. Presumably, Section 23 will also be still be working with Sentai Filmworks and Switchblade Films for their DVD releases.

(I’m intentionally ignoring their stupid misspellings and d/b/a’s from the press release — “SXION 23” and “AEsir” are as sure a sign as anything else that someone with an “A.D. Vision d/b/a/ ADV” sensibility is still working behind the scenes here.)

The other up-shot is that Aesir could get Bang Zoom! or Coastal Studios to do a dub, Section 23 could ink a deal with Right Stuf for DVD production, Seraphim could take on translation & dubbing assignments from any licensee (a direct deal with Cartoon Network for new anime, or JDrama releases in English on DVD, anyone?) and most obviously: The Anime Network under new, independent, non-ADV ownership is ideally positioned to actually become an anime network — neh, the anime cable network, with a couple of deals with additional cable providers to extend their reach (perhaps even into basic extended cable packages… Oooo…) and some smart moves with regard to content.

Let me just point out that if AN-as-owned-by-Valkyrie made a deal with Right Stuf/Nozomi to show Aria, Tylor, & Emma (and there are others; a lot of series I love have been picked up by Nozomi, but start with those) and retained the ADV titles (along with the CPM license pickups) then they’d be a damn fine competitor for the FUNimation Channel. It’d be a horse race. Actually, I’d like to see both win.

And while these are separate companies now…

In 2011 or 2012 I wouldn’t be surprised if, say, Asgard Digital Ventures bought up Aesir, Valkyrie, and Section 23 (renamed Bifrost in early 2010) to bring everything back under a single corporate umbrella. but then, I’m a cynical bastard who thinks this whole maneuver is just for show to begin with.