10 years since the "crash"... so what caused it?

[delekkerste]

All you have to do is look at the heritage auctions and see how healthy our collectible industry is and will continue to be. Might be some small corrections but don't see anything to drive that soon.

 

I think that's very short-sighted. There are macro changes going on in the world right now that the astute collector should take note of. Income growth in the U.S. was only up paltry 1.6% in the last 12 months according to the employment report released yesterday. There is a huge structural change going on in the economy, with capital fleeing our country to seek out lower labor costs and taxes. No matter what happens in the November elections, there is going to be a persistent drag on income growth going forward as the tide of globalization cannot be halted without even more serious consequences.

 

If wages are rising by only 1.6% a year (and I believe real wages will actually fall in the coming decade), does it make sense that comic prices will be able to continue rising at a 16% clip (or whatever it is) a year, ad infinitum? That's not a bet I would make. Due to the magic of compounding returns, more and more existing collectors will be priced out of the market very quickly if price appreciation continues to outstrip income growth by a more than 10 to 1 ratio every year. That's just simple mathematics. Prices will quickly reach levels where more and more newbies won't even think about entering the HG sector of the hobby. People have to pay the rent and feed the family, you know...it's not like they can devote ever-increasing amounts of their budgets to buying ever-more inflated comics.

 

Gene

[blowout]

People have to pay the rent and feed the family, you know...it's not like they can devote ever-increasing amounts of their budgets to buying ever-more inflated comics.

 

Come on Gene, that just makes too much sense. It can't possibly be true.

[a_mysterious_penguin-migra]

Personally, it wasn't the cover-price that killed it for me. It was the saturation of the market. I stopped collecting in the early/mid-90's because of all the spin-off series, one-shots, specials, mini-series, etc. I was primarily an X-Men and Spider-Man collector, but as the number of titles I had to keep up with each month went from 4 or 5 to 14 or 15, plus about half a dozen specials and mini-series, I just couldn't keep up, either financially or in terms of sustaining interest. I imagine that's what happened with alot of people.

[delekkerste]

I was primarily an X-Men and Spider-Man collector, but as the number of titles I had to keep up with each month went from 4 or 5 to 14 or 15, plus about half a dozen specials and mini-series, I just couldn't keep up, either financially or in terms of sustaining interest.

 

Isn't it getting that way again? There are 16 issues of 12 different X-titles coming out during Marvel's X-Men: Reloaded month in May...

 

Gene

[hobbes]

Personally, it wasn't the cover-price that killed it for me. It was the saturation of the market. I stopped collecting in the early/mid-90's because of all the spin-off series, one-shots, specials, mini-series, etc. I was primarily an X-Men and Spider-Man collector, but as the number of titles I had to keep up with each month went from 4 or 5 to 14 or 15, plus about half a dozen specials and mini-series, I just couldn't keep up, either financially or in terms of sustaining interest. I imagine that's what happened with alot of people.

 

This is also what did it for me.

Gene mentioned the X-Men reload coming in May. This approach by Marvel to sell books this spring tells me they did not learn a thing after the crash in the '90s.

 

The only X-Men I buy right now is the Ultimate series. I refuse to buy any other X-book.

[fiendish]

They should call it "X-Men: Repackaged. Now with lower carbs!"

[jbud73]

Always like to get in on Gene - Valiantman threads as there are concepts being applied and logical analysis, istead of gut reaction opinion formation.

 

I left shortly before the crash of 93-94, or thereabouts - entered university and disposable income went to other sources, car tuition etc. Sorry I missed the crash as I think, had I stayed on the trend I was on, buying then obscure WWBN and TOD, and Amazing adventures, because it was A) cheaper than the new multiple cover totally crossed over [!@#%^&^] that was coming out. B) it was soo much better in story and art, my collection would have been immensly better - however.

 

All the cross overs through the Bat, Spidey and X-titles pissed me off as well. So I think we are all in agreement that the 90s crash was tied to new stuff and print runs and speculators involved in new stuff. I think from Dark Knight #1 on really the comic companies have ascribed to the summer Block Buster weekend mentality of publishing comic books. The over hyped, over produced and rarely lived up to expectations model. Get in get you cash and get out.

 

I think we as collectors have learned out lesson. I buy between 6-10 core titles, the 6 mainstays, which leaves me $$ for short run stuff, a few xtra copies of covers i like etc. But I agree with House that Ebay has limited effect on new issue sales and new issue market entry, I tend to think that any bubble burst will not be fueled by the new issue market.

 

These things are so sublte, as to defy precognitive analysis - the factors only being observable by the few - escalating as momentum is built up. Again this ties into Houses - knowing why theory which I support. I think that the influences will come from outside the known predeterminants we now perceive. A conveinient arguement I know, but its just me admitting to not being able to perceive all to make an informed opinion here.

 

I will say that pricing out of market is a valid point, I can feel it and I have more motivation than a would be speculator - that is I feel that I make up the prtion of bedrock that is the stable collecor base. The problem is we are likely not to be involved, or factor into the elements leading to a market correction and therefore have a hard time perceiving it.

 

The only analogy I can fathom is the movie industry parallel, as the comic market gets swayed more and more into the Blockbuster weekend mentality - or the 4 month prior to release buy and flip period. This scares me - as even though I know the astute collector set, BronzeBruce, Darth,etc etc will profit from this - I feel that the hobby as a whole has tied itself to a erratic tumultuous horse.

 

I will say that I agree with Gene and JC to extents that if in fact articifial forces are propping the market up, and the key market is the back issue market this time and the bubble does burst then the ramifications for the hobby are dire. I know we'll all be there and I think that certain books are insulated, but I still wouldn't want my hobby to go through what the post graded colectable sports card hobby went/is going through

[musicmeta]

speculators, Speculators and more SPECULATORS. That's it in a nutshell.

[FlyingDonut]

I'm interested in Gene's opinion on what will happen to the market for books that I sell all day long - mid-grade Silver, mid-grade Gold, higher-grade Bronze, stuff like that, all unslabbed. I'm happy to see a significant reduction in the cost of slabbed books, since that's what I'm buying to keep - I'm tired of paying 20X guide for 9.8 FFs (given however, that the Guide is way low on Bronze FFs), but I think there won't be a crash on mid-grade unslabbed books, mainly because those books already sell for a significant discount from Guide.

 

If you want great buys right now, look on eBay (and elsewhere) for fine to VF raw Silver. Cheap cheap cheap - in many cases less than what they were selling for 5 years ago. They still sell quickly and without resistance, just the price is lower.

[jbud73]

Thats an Excellent point FD

[Zonker]

I'm interested in Gene's opinion on what will happen to the market for books that I sell all day long - mid-grade Silver, mid-grade Gold, higher-grade Bronze, stuff like that, all unslabbed.

 

See, that's the problem with this thread and most of the market crash discussions. Inevitably, we wind up confusing things by falling into the trap of thinking of comics as one market. Instead there are at least 4:

 

1. New comics on sale every Wednesday

2. Slabbed 9.x versions of 1.

3. Vintage raw comics, the books that built the VFDE (Vast Flying Donut Empire)

4. Slabbed versions of 3.

 

This thread started out talking about Market 1, which certainly did crash 10 years ago. I can definitely see the link between 1. and 2. If the Ultimate line and Hush were not generating the buzz they are, it's unlikely you'd see the heat on slabbed new books, RRP editions and what-not.

 

The macro demographic trends Gene likes to cite may in fact link market 1. to 3. and 4. (good arguments there, but not definitive proof, IMHO). But the best arguments rely upon new comics readers becoming vintage comics collectors after they amass sufficient disposable income. So the linkages between 1 and 3/4 are delayed by 10 years or more!

 

Now some have said the new comics crash brought down the Silver Age raw market with it. Maybe. I tend to think the Silver Age price reductions were just the cooling off of the big run-up those books enjoyed in the late 1980s. I believe for every reader who left comics altogether in disgust ten years ago, there was another (like myself) who simply shifted the spend from new books to filling holes in my back issue collection. Likewise, I only started buying Golden Age books in 1998 or so (eBay, right), which had nothing to do with my interest in new comics at the time.

 

The big wild card is market 4, vintage slabbed comics at "nosebleed prices." We've never seen this exact thing before in the comics world, so it is difficult to judge. The analogies to slabbed sports cards are worth thinking about. On the other hand, the vintage comics hobby has supported a similar idea-- the idea of Guide multiples for pedigree books-- for decades now. The premium for vintage slabbed books may just be the new, vastly expanded "Pedigree premium," and may still have legs.

 

 

Summary: Be careful to explain which comics market you're talking about.

[Zanarkand]

How about: "the whole industry (publishers/artists/distributors/retailers) failing to realize that, ultimately, content wins out, and preying on the consumer's loyalty with gimmick and alternate covers wrapped around $2.95 worth of fluff is only going to go so far."

 

Other then that, I think you hit the high points.

 

That pretty much sums it up. Writing went downhill, art was inconsistent, every halfway popular character was marketed up the wazoo, to the point where readers just didn't care anymore (Superman, Batman, Wolverine, X-Men, Spider-Man each with 4+ of their own titles, plus minis, plus cameos, plus 1-shots).

[joe_collector]

I believe for every reader who left comics altogether in disgust ten years ago, there was another (like myself) who simply shifted the spend from new books to filling holes in my back issue collection.

 

I don't know about that. I quit buying new comics well before most everyone else, and shifted to 100% Bronze buying around the time Valiant started heating up, and Image books started appearing on the shelves.

 

I used to hit all the comic stores when they had their "half off back issues" and it was a ghost town. There would be me and few others looking through the bins, while the rest of the store would be packed with slavering speculators, dragging their box-loads of new drek out the door.

 

I continued to buy Bronze back issues right up until three out of the four stores closed down, and never saw any real change.... other than fewer and fewer buying case lots of new comics.

[valiantman]

Inevitably, we wind up confusing things by falling into the trap of thinking of comics as one market. Instead there are at least 4:

 

1. New comics on sale every Wednesday

2. Slabbed 9.x versions of 1.

3. Vintage raw comics, the books that built the VFDE (Vast Flying Donut Empire)

4. Slabbed versions of 3.

 

...But the best arguments rely upon new comics readers becoming vintage comics collectors after they amass sufficient disposable income. So the linkages between 1 and 3/4 are delayed by 10 years or more!

This is an interesting point as it relates to Valiant...

About 10 years ago, Valiant purchases were extremely short-sighted as they

fell easily into market 1 (along with Image, Spider-clones, SupermEn... etc.).

As Joe often points out, the books were sold by the case to speculators focused

on the idea that market 1 books were a "sure thing" to become market 3 "gold".

 

Today, I suppose my website demonstrates Zonker's point that a linkage between

market 1 and market 3 actually takes about 10 years (or more) to solidify...

Meaning that the emerging market for Valiant back-issues,

and only particular Valiant back-issues, not EVERY Valiant back-issue,

is the result of both the time element, the ability to look back with hindsight,

and the new "disposable income" available to those who did not have it 10 years ago.

 

In other words, the link between market 1 and market 3 exists, given enough time,

but it is not a 1-to-1 linkage. Just because books were once market 1 "hot"

does not guarantee that they will become market 3 "solid".

 

What can we learn? That's easy...

Today people are dropping even bigger dollars on market 2 books with the

idea that they are a "sure thing" to become market 4 "gold"...

Though a few might... it's clear that ALL of them won't...

 

In the 1990s, some made multiple $2.50 and $3.95 market 1 "new book" mistakes...

In the 2000s, some are boldly walking into multiple $39.95+ market 2 "new book" mistakes...

and it's easy to see why that may be 10 times worse.

[lighthouse]

How about: "the whole industry (publishers/artists/distributors/retailers) failing to realize that, ultimately, content wins out, and preying on the consumer's loyalty with gimmick and alternate covers wrapped around $2.95 worth of fluff is only going to go so far."

 

Other then that, I think you hit the high points.

 

That pretty much sums it up. Writing went downhill, art was inconsistent, every halfway popular character was marketed up the wazoo, to the point where readers just didn't care anymore (Superman, Batman, Wolverine, X-Men, Spider-Man each with 4+ of their own titles, plus minis, plus cameos, plus 1-shots).

 

I haven't had much time the last couple weeks to work on this thread, but it's now four weeks until my next show so I will see if I can spend more time fleshing out my theory this week.

 

This won't be my long reply in the thread, and I will skip some steps in between for now. But several of you here are sharp enough and have enough business acumen to fill in the gaps before I do my long reply...

 

The more replies I read in this thread, the more convinced I become that the true fault lies with the lack of industry barriers to entry. The publishers and distributors are far from autonomous. The orders from retailers dictate not only the size of the print runs but how many titles are produced as well. If a publisher offers a new series and the retailers order the hell out of it, that publisher is a lot more likely to continue offering new series until the orders slow down.

 

Open a copy of Captain America from 1979 and count the number of titles Marvel is offering for subscription in the back of the book. Now do the same for 1987... and again for 2000, or for 2004 if you like... You will find that Marvel is offering almost the exact same number of titles for subscription at any of these points in time. These are the titles Marvel feels it has a stake in, enough of a stake to commit to their production for the next 12 months.

 

Now open any Marvel book from 1992 and count the titles.

 

For those of you who don't collect anything made after 1970, I'll pull back the curtain for you. Any time from 1977-1988 or any time since 1998, Marvel has offered between 22-31 titles for subscription. Check a book from 1992 and you will see they were offering over 80, I believe the high point I counted was 91 at one point in 1992

 

The reason there were so many titles is that retailers continued to order them. It doesn't matter whether customers order the books or not, titles live and die by retailer orders. In an efficient marketplace the distinction shouldn't matter. The orders of customers should directly correlate with the retailer orders and would determine which titles survive. When the marketplace is working correctly that's exactly what happens. There are lags of a couple months between changes in demand and changes in print runs, but the orders of the customers are still directly correlated with the sizes of print runs.

 

The number of comic book retailers today is almost exactly the same as it was in 1988. It has been stable since 1998, and was fairly stable from 1982 to 1988. In early 1993, there were four times as many comic book shops as there had been five years previously, and four times as many as there would be five years later.

 

No one really believes that those "extra" 50 titles Marvel was offering in 1992 were worth publishing. Does anyone really believe that those "extra" 8,000 comic book retailers knew what the hell they were doing?

 

Comics were very popular in 1992. A monkey with a cash box could have made money selling them. (And I say "cash box" because our industry did not see 50% market penetration of the "cash register" until after that time ). Normally what happens when an industry sees extra popularity is that the established firms become more profitable. And eventually, the number of firms will increase.

 

If Mexican food suddenly got more popular, the Mexican restaurants in your town would be more profitable. And you might see a few more of them open if the popularity stayed high. But do you think they would quadruple in number? It's not that easy to open a Mexican restaurant. Beyond the capital investment, you also have health code issues, licensing, inspection, ADA requirements that prevent you from opening just anywhere you want to...

 

You know what it took to open a comic shop in 1992? A pen... You needed a pen... to sign a lease on a space, to fill out a sales tax certificate, and to sign your supplier applications... Okay, you also needed enough money for your first month's rent in your new location, and enough to cover your first week's invoice from your distributor. But don't worry about the second week because all the books from the first week will be long gone by then and you can afford start ordering even bigger for next month...

 

There were 7,500 people running comic shops in 1993 that had absolutely no business doing so. I use the number 7500, because there probably were around 500 of the "new" owners who actually did have a clue and were astute enough to open when times were good. But by a 15-1 margin, the "new" store owners didn't know what they were doing. And they didn't have to. Things were so good it didn't matter if they ordered twice as much product as they needed.

 

In a normal industry, the popularity seen in 1993 might have generated 1000 new firms, 500 of them that belonged in business and 500 that did not. Every industry sees a certain number of people who jump in when times are good that fail soon afterwards. If the number of comic shops had grown from 3,000 to 4,000 during the 1991-1993 runup, we would likely still have over 4,000 stores today and I don't believe a "crash" of the magnitude we saw would have ever occurred.

 

When Mexican food isn't quite as popular as it used to be, the restaurants stay open. They have fewer employees working at any given time. Their menu selections may be adjusted. But the only firms likely to close are those "bubble" firms that didn't really belong in the industry in the first place. The efficient firms will adjust their expenses to match their changes in revenue and move on.

 

In 1992-1993, the print runs of comic books were determined by 7500 stores that didn't have the first clue what they were doing. Publishers print what the retailers tell them to print. And there were 7500 speaking just as loudly, if not louder, than the 3500 rational businesses. I don't actually fault those store owners, they didn't know any better. They had no idea of the impact their poor business decisions would have. But they didn't belong in the industry in the first place.

 

Because I was really, really, really bored this morning, I pulled all my Quickbooks records for the year 2000. I wrote checks to 565 people that year to purchase comics they brought into the shop. An additional 350 or so were paid in cash. That's around 900 purchases of comic "collections" ranging from 5 or 10 comics to 55,000. I am unlike most shops in that I buy everything. It doesn't matter how bad the books may be I will make on offer on everything, even Malibu...

 

According to my records, I purchased 220 copies of Uncanny X-Men 300 that year. Forty-eight of them came as one copy included in a collection. Two collections had two copies each. The other 168 copies I purchased came in two buys of "store overstock" from stores that closed.

 

I just don't buy the theory that the crash was the fault of speculating customers. I buy literally hundreds of collections every year, and the number of them that include books from 1990-1993 is staggering. But the number of them that includes heavy duplication in that time period is very small. It's far easier to arrive at 200,000 "too many" copies of an issue if 7,000 stores all order 30 more copies than they need because they just don't know how to order.

 

Clearly there was speculation involved with the multi-million selling books like Spawn and X-Men and X-Force. But one or two books selling a ton of copies won't screw up an entire industry. The fact that Marvel had 80 books all selling 200,000+ copies, books that everyone knew were [!@#%^&^], books that every smart retailer tried to avoid, books that customers really weren't collecting... That's what killed the industry...

 

Without those 7,500 extra retailers in the marketplace pulling sales from the efficient firms, and ordering in quantities that made no sense, the publishers would not have been printing so many copies. They wouldn't have launched so many titles that were unnecessary. They wouldn't have had to scrape for third-rate talent to produce those extra titles. They wouldn't have had to dilute the good talent they had, spreading them over too many titles.

 

The retailers determine the print runs. If I decide next month that I want to order 200,000 copies of Superman 205, they will print an additional 200,000 copies just for me. If I did that month after month, I could guarantee that those books would never be "worth" anything. Because that's more copies that what we will see demand for. The results are the same whether it's one insufficiently_thoughtful_person ordering 200,000 copies or 7,000 insufficiently_thoughtful_persons ordering 30...

 

That pretty much sums it up. Writing went downhill, art was inconsistent, every halfway popular character was marketed up the wazoo, to the point where readers just didn't care anymore (Superman, Batman, Wolverine, X-Men, Spider-Man each with 4+ of their own titles, plus minis, plus cameos, plus 1-shots).

 

This statement is absolutely true. And the reason why these things happened is that the retailers demanded them. And 2/3 of those retailers had no freaking clue what the heck they were doing. So the opinions of the more sensible retailers were drowned out by the noise...

 

And no... this really wasn't my "long" reply... although my long reply may wind up as paid work for a publication the more I think about it...

 

'House

[joe_collector]

Without those 7,500 extra retailers in the marketplace pulling sales from the efficient firms, and ordering in quantities that made no sense, the publishers would not have been printing so many copies. They wouldn't have launched so many titles that were unnecessary. They wouldn't have had to scrape for third-rate talent to produce those extra titles. They wouldn't have had to dilute the good talent they had, spreading them over too many titles.

 

But 'House, these guys didn't just open up stores for their health, and ordered comics to be sent to a warehouse. There was a serious spike in demand, sales rose considerably, as otherwise the new stores would have lasted about a week. The retail market responded to a growth in sales by opening more stores, and reacted to the speculator frenzy by being sucked into buying way too many books.

 

Sure, these newbies may have over-ordered and accelerated their own demise, but the rampant, mass-media-fueled speculator frenzy is what really started and ended it.

 

All the new stores and their mass orders did was make it a really, really big event.

[valiantman]

Outstanding logic, I'm definitely buyin' it. Thanks 'House...

If you take the time to write up the long version,

here's one guy who'll take the time to read it.

[lighthouse]

Outstanding logic, I'm definitely buyin' it. Thanks 'House...

If you take the time to write up the long version,

here's one guy who'll take the time to read it.

 

Thanks man... It's getting tougher and tougher to stay ahead of you in the voting for "Most Informative Poster"

[Zonker]

Warning: I'm about to quote Chuck Rozanski as an knowledgable source.

 

2nd Warning: I'm about to add fuel to the Chuck = House conspiracy theory!

 

'House, that mirrors one of the few accurate insights I've gained from Chuck's Tales from the Database -- like you, he believes the new comics bust was the result of thousands of bad business decisions by newbie comics shop proprietors.

 

Sure, they were trying to satisfy a spec market they thought was there. But I think it evident that they thought wrong!

 

 

For those of you who weren't around during the early 1990's, that was a period when the comics world underwent a tremendous spike in growth. Part of that growth was ostensibly spurred by the purchasing of multiple copies of new comics for future sale, by fans eager to replicate the enormous "profits" generated by older fans who had purchased comics during the 1970's. While the speculation phenomena did, indeed, occur to some extent, I find it troubling that this superficial analysis fails to address the real cause of comics' woes during that period.

 

To be specific, after years of purchasing bulk comics on the secondary market, I've come to the conclusion that the 1990's comic book speculator is a myth. While I'm sure that most comics fans know of someone who was purchasing large quantities of new comics during that period of time, I really haven't seen many private collections offered to me that include a large number of duplicates. I do see a lot of small collections that include all the overprinted books from 1989-1995, but there are generally only single copies.

 

...

 

In 1979, when I helped persuade Marvel to open up their distribution system, I was an advocate of having a low entry cost to become a comics retailer.

 

...

 

 

The only problem with these numbers is that the comics "retailers" who had been lured into the business by Diamond and Capital were very inexperienced, and grossly undercapitalized. They were often long on comics knowledge and enthusiasm, but knew very little about operating controls, and nothing about how to manage a business. Making matters even worse, Diamond and Capital were so self-involved and greedy that they had no compunctions whatsoever about helping these neophytes set up in direct competition with their existing accounts. This quickly led to a situation where the new retailers cannibalized volume from their better managed competitors, thus setting the stage for both to fail.

 

...

 

Returning to the subject of the myth of the private speculator, I now am seeing the bitter harvest of Diamond and Capital's duping of these gullible would-be retailers. Over, and over again, I am offered deals containing tens of thousands of comics from the early 1990's. Invariably the story goes "My ---- had a comics shop for X years, and finally closed in 199X. These are the comics they had left over when they closed. We're sick of storing them, what will you give us for them?" Sadly, I can almost never offer more than a few pennies per book. Most books from that period are in such oversupply that it will be decades before they ever sell for cover price.

 

In the end, the real losers of the early 1990's were the poor people who got suckered into owning comics shops, only to fail because they were unable to sell a high enough percentage of the new comics they were ordering. The distributors made out like bandits (at least until these new retailers failed...), but the publishers were completely taken in by the robust numbers coming in from the distributors. They actually thought all the comics they were printing were selling to eager fans, when in fact, I estimate that at least 30% of all the comics being published from 1990-1994 ended up as overstock in comics dealers inventories. When the weight of these unsold books finally collapsed the retail end of the business, the publishers saw their numbers decline drastically. This led to a cutback in the number of titles being published, which led to less product for retailers to sell, which led to even more retailers going out of business. Thus began vicious the downward spiral of the 1990's.

[lighthouse]

Warning: I'm about to quote Chuck Rozanski as an knowledgable source.

 

2nd Warning: I'm about to add fuel to the Chuck = House conspiracy theory!

 

It's times like these I am really glad I hired that actor to play me in Vancouver... and at the Seattle show... and the Portland show... and at the Forum Dinner in San Diego... and at the shop that forumite cd4ever visited thinking it was mine (leaving his two girlfriends sleeping in the car for two hours I might add)...

 

If not for my careful planning... people might actually know the truth...

 

Damnit! Why did I just reveal the extent of my elaborate plans in this post? Why couldn't I keep the secret to myself? Why couldn't I just not push the "continue" button?

 

Curse you Zonker! Once I finish off my current nemesis, the Rocket Surgeon, you move to the top of the list!