PER 2015
Econcomics: the economics of the comic industry Oscar Smith The comic industry is currently experiencing revolution. During the recession the sector really struggled, as they are seen as a normal good, which means that as people’s income increases, they buy more, and as it decreases they buy less. However, now that the recovery is underway, and with the rise of the massive movie franchises, comic shops are being re-vitalised. More people are buying from shops, more shops are opening, and this in turn increases the demand for comics and comic book shops as people have a look inside and may become attracted. However, the comics industry has a fundamental economic flaw in the way that it distributes its comics. This is due to the way that the comics are sold in the first place, and explains why very old comics are considered very rare and valuable, and are therefore very expensive. Going by the standard economic theory, when demand increases, the price rises as seen on a supply and demand diagram. This means that the suppliers increase supply so they can get more profit. In this situation, everyone profits. However, in the case of comics, there’s a catch. The comics industry is one of the very few industries where demand can increase exponentially, but supply will invariably not: the supply is inelastic, or unresponsive to a change in price. This is as the comics are printed in one long print run. Once that print run is over, they cannot print any more of that particular comic without printing less of another, as it would mean it would have to go through an entire other print run. This is because of the limitations publishers have with capital. They can benefit from economies of scale, but if they are at maximum capacity they cannot print any more of one comic, without printing less of another. This can be shown on a PPF diagram on the following page. In this case I have used two very well-known characters to emphasise my point: Batman and Superman. As you can see, you cannot print more of Batman, without printing less of Superman. To make matters worse, this market is a constricted market, meaning that for every business that is created to print comics, they immediately sign contracts with one publisher, so that they do not work for other companies, and the capital of that company grows. This creates several problems. Say a comic does amazingly well. Worldwide, the shops will discover that they are selling out of this particular comic, very fast. However, due to the fact that the publisher is on the print run for the following comic in the series, supply cannot increase. Therefore, demand shoots up, but supply does not. I can give many examples of when this has happened. A friend of mine recently became very interested in a series that is relatively new. However, due to the fact that it is constantly in the top 10 chart for comics, he could not find the first issue anywhere. He and I recently went to Comic-Con, where he found the first in the series. Instead of it being at its RRP of £2, it was priced at £20. That is a 900% increase in price. However the worst case I have heard of about increase in prices was the second in a different series, which introduced a character that now has their own series. Its original RRP was £2.50, and as of today, on Amazon, widely regarded as the cheapest place to shop online, it is being sold at the princely sum of £57.19. This increase is a total increase of 2187.6%. This is a problem that is not easily rectified. This is also why very old comics are very expensive, because they had a very limited print run, and so are very rare. One simple way of rectifying this issue, one that is used fairly rarely, is a second print run. They print the same comic again, usually with a
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