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November 10, 2013

CR Newsmaker Interview: Gary Groth

imageGary Groth is a co-founder, a co-owner and the longtime guiding force of Fantagraphics Books, the iconic publisher of alt-comics, art comics and prose based in Seattle, Washington. The company made news last week when it put together a crowd-funding campaign to get through a forthcoming publishing season. I sent Gary a few questions last Wednesday morning, and a pair of follow-ups on Sunday evening a few hours after his answers came back. I am grateful for his attention to those answers in this very busy time.

I will not have tweaked a lot of this -- maybe three or four things for flow. I think I'm going to combine two questions into one for which Gary responded one answer, but otherwise I'm going to leave it alone. So remember 1) that this was hoped for sometime last week and 2) Gary admirably started answering the questions the day he got them. So you have some misapprehensions on my part from last Wednesday at 5 AM that had to be worked through that might not have been present if Gary and I did this all at once after a period of time for me to ramp up, say if we had done this on the phone last night. You also have some depictions of the state of the crowd-funder that are no longer true, such as how far along it is. -- Tom Spurgeon


TOM SPURGEON: By the time this sees print, you will likely be somewhere between two-thirds and all the way past your goal. Is that response satisfying? What were your specific worries about putting this campaign out there as it came up on you? Who in the office wrote the text, and who was involved with how this campaign came together and how it is presented?

GARY GROTH: How did you know that we'd be between two-third's of our goal and our goal? What do you know that I don't know, Tom?

Seriously, I am typing this at 10:10 Tuesday night (November 5); we are almost exactly 36 hours into the campaign and the needle is at $99,602. I'm a little overwhelmed and cautiously elated. (I'm still paranoid that we'll get within $5 of the goal -- and stop.) I realize that a lot of people's motivation is, obviously, to buy the work we've offered, but I also can't help but think there's something more to it than that -- what you referred to, a bit too contemptuously, I thought, as "an ethos of community support" (God knows, we wouldn't want conscience to guide consumer choices!), which I personally find edifying.

I wrote all the text and initiated the project. Which makes sense since I'm the one here who's responsibility it is to watch the money most closely. I then brought the idea to and brainstormed with my marketing staff (most of whom are in the video). They then proceeded to do the heavy lifting while I did the light lifting.

SPURGEON: Can you talk a little bit more about how you came to $150,000 figure? Is that representative of the amount you think the canceled Kim Thompson books cost the company in the short term, or was that a figure, perhaps, derived as a sum that would simply get you through these tough times no matter how the projected shortfall actually turns out?

GROTH: The former. It is based on a rough calculation on how much those books would have contributed to fixed costs. This conforms roughly to how much ground we had lost (which was between $150-200K.)


SPURGEON: Because it's a projected shortcoming, will the money raised here be saved and spent during that time period? How will you spend the specific monies raised here?

GROTH: The shortfall has already occurred, so we can't just put the money in a piggy bank and apply discrete sums to individual books. Besides, there's been a tremendous amount of money already spent on those books (in the form of advances, catalogue costs, etc.) Money is fungible, Tom. The money will be spent in such a way as to make our season possible.

SPURGEON: Can you talk a bit about how this group of Kim books has left your company short? I think I would have an easier time understanding what you're saying if Kim's passing cost you or temporarily delayed the Peanuts or the Disney books or perhaps the EC books, but aren't these books where you also gain back in terms of what it takes to get that many marginally-selling books out there?

GROTH: To the extent I understand that last gnarled phrase, I think the answer is no. Most of these books, with the exception of the Tardi books, are low-selling books, but they still generated revenue above and beyond their manufacturing cost that went toward paying fixed costs. I've explained this in some detail over at Comic Book Resources.

SPURGEON Gary, I've read the interview at CBR, and the detail you cite seems to be: "What I hadn't realized is that even a lower-selling book contributes to overhead even if it's not technically profitable, which is, I came to understand, why we kept losing ground."

And I've been reading up on this stuff, and I'm not sure I understand what that means. Can you unpack that a bit? How do 13 low-selling books contribute to overhead in a way that theyir delay leads to a $150,000 deficit? How did you come to understand what that means?

GROTH:. Very simply: An individual book's profit is measured by how much it makes above and beyond its entire cost, which can be broken down into a) costs that can be directly attributable to the book (printing, shipping, Customs; and b) fixed costs (rent, utilities, payroll, health insurance, etc.). Some fixed costs are somewhat fungible, but, for example, you can't let four employees go for a week and a half because you didn't publish a book; you are still paying the same payroll irrespective of whether you cancel a book (this is one of the reasons publishers prefer not to cancel books). Most if not all of the books we cancelled/postponed were not profitable, meaning they did not sustain their share of fixed costs, but this doesn't mean they contributed nothing to fixed costs. They did.

Another aspect to that is don't you postpone books as a matter of course? Do all of those book delays contribute to similar shortcomings in related to overhead?

We don't postpone 13 books from one season as a matter of course, no.

imageSPURGEON: Wait. So is your forthcoming season, the season in question, 13 books smaller than the previous equivalent seasons in 2011 and 2012?

GROTH: No, not appreciably. We had 41 books scheduled in the same season in 2012; 39 in 2013.

SPURGEON: If not, don't those books that you are publishing make up for the books you aren't?

GROTH: Sorry, Tom, I'm not sure I understand your question. In order to make up for it, we'd literally need to add 13 books to the 2013 season, which would be physically impossible to do unless the staff were willing to undergo multiple nervous breakdowns producing and marketing them.

SPURGEON: So just to work this through my brain, these are books that were already on the schedule and that have been delayed so therefore there is a deficit now? Because I thought that a lot of these books were 2014 and were being delayed against that future time frame. Again, I'm just a little confused and I wonder if there's any way that can be unpacked, because I know from the questions people ask me there is some confusion about this. How does a book that wasn't in production incur costs that can't be corrected? Because you said your seasons were going to be about the same.

GROTH:I honestly can't fathom how anyone could misunderstand this. None of these books were from our 2014 season, which wouldn't make any sense at all; cash flow that has been disrupted is in the past, not the future! All the books referred to were clearly from our Spring-Summer 2013 season. I made this very clear in the first paragraph of the Kickstarter text:
2013 has been a particularly hard year for all of us at Fantagraphics Books. ... Kim [Thompson] edited our European graphic novel line and as a result of his illness, 13 of his books scheduled for the Spring-Summer season had to be cancelled or postponed, representing the loss of nearly a third of that season. Our fixed costs stayed the same -- because they're fixed -- but the income 13 books would've generated was lost, disrupting our cash flow, and leaving us in a tight spot. Many, if not most of them, will be re-scheduled (Jacques Tardi's Run Like Crazy, Run Like Hell is scheduled for July 2014, for example)
The "13 cancelled/postponed books" clearly refers to our Spring-Summer 2013 season, which is in the past; I even point out that one of those books was re-scheduled to our Spring Summer 2014 season (the future), and by God, it's in the list of the 39 books we're publishing.


SPURGEON: Crystal. Thanks. Now, you talk in forthright terms about the costs of being the kind of publisher that you are -- things like the kind of material you routinely publish, the skill with which it is presented, the fact that you have always offered health insurance despite not being a mega-successful company. Are there any costs specific to right now that were not mentioned, say that might come in the next year? For example, is there a buyout forthcoming for Kim's widow in terms of company ownership, or are there previous legal costs that are coming due now or anything of that sort?

GROTH: No, there aren't. We are a frugal company and we keep a tight reign on our expenses. (To answer your specific question about Kim's widow, Lynn Emert: Lynn is, basically, my new partner, and she understands and appreciates the company's mission. Lynn would not be bought out until the company could afford it, and she understands the financial position of the company and is content to be an owner of the company. She knew how invested Kim was in Fantagraphics and wants to see us flourish.)

SPURGEON: One indictment of crowd-funding campaigns is that it pulls the campaigner away from a strategy of executing their core business in order to raise money in favor of doing things that that stand apart from that business -- thus the company and the businesses it serves aren't as strengthened as they might be. When deciding not to do, say, a massive EC/Peanuts/Disney sale to retailers or directly, even, did you take into a account losing the advantage that comes for a strategy where you help the general strategy of keeping your company alive by fulfilling your equally important mission of selling specific books? How do you respond to the argument that Fantagraphics' time may be better spent selling 20 more EC books than it is making 20 Fantagraphics fund-raising t-shirts?

GROTH: I understand what you're saying, but it's a little like asking a politician (at least my kind of politician) if he'd rather spend time phoning rich people and raising funds for his re-election or proposing anti-poverty legislation. You're really asking me if I prefer to be sitting here answering your questions related to crowdfunding than editing one of our books? Of course I would, but, like most people, I need to do work I don't particularly relish or enjoy so that I can accomplish the work that's fulfilling and rewarding. I mean, have you ever asked an artist if he had felt as if he were being pulled away from his core vocation of producing art by filling out an application for a Xeric grant, submitting to the process, dealing with a printer, and lugging boxes of books? Well, he probably does, but that's part of the game. Don't you do work that is done purely so that Comics Reporter can function? If not, you are a luckier man than I am.

I think the fundamental fallacy here is that you you're assuming a crowdfunding campaign is somehow different in kind from organizing an artist's book signing tour or coping with the logistics of an NPR interview, or filling out a grant application. Each of these activities constitute work that takes one away from producing the actual book, but they are all part of the process of selling the book (we're selling books on our Kickstarter campaign, by the way and it, at least incidentally, promotes our authors) and maintaining the infrastructure that makes it all possible. I'd love to live in a world where we produce beautiful books that market themselves (but I'd hate not seeing the dedicated and passionate men and women who comprise our marketing team every day), but that's not the world I live in. A "massive EC/Peanuts/Disney sale to retailers or directly" requires not insignificant amounts of time, labor, and resources (and clearly would not generate as much money as we need; c'mon, don't you think we thought of things like this?); a crowdfunding campaign may be able to yield more revenue that can be plowed back into selling more books. In other words, selling T-shirts and selling EC books are not mutually exclusive; they can be mutually reinforcing.

The "indictment" of crowdfunding as you put it -- an accurate description of the criticism I've read -- and the general skepticism vented here and there, seems to be based on the premise that there is some Harvard Business School-approved platonic model of the free market that we are violating. I reject this premise entirely. As if telling people straightforwardly what you're raising money for -- in the crassest terms, manufacturing a "product" -- is somehow less legitimate than concocting a slick, manipulative advertising campaign to sell people garbage they don't need and never wanted. The latter is not only accepted but widely admired and embraced whereas the former is seen as suspect, as if we're just not playing by the rules -- rules presumably established by corporations, media conglomerates, and banks to enhance their own revenue and keep out those who can't afford to play the game. (And, yes, I am aware that Amazon is involved in Kickstarter.) So, no, I see it as a legitimate tool to raise needed revenue.

SPURGEON: Are the artists that are participating doing so by volunteering that time, or you will reward them for their contributions to the incentives? If you make 2X, 3X the amount asked for, will you, say, cut Simon or Joe or Ed a check for their contributions to the campaign?

GROTH: The artists are volunteering their time and effort. I can't even adequately express my gratitude to people as varied as Jean Schulz, Robert Crumb, and Don Rosa, who think enough of what we do to help us continue doing what we do. Good question, though. I hadn't thought about how we'd handle it if we made two or three times our goal. But, now that you brought it up, I think I'd simply discuss with them openly and honestly what our financial needs are relative to what we raised and work out a retroactive arrangement they would consider fair. You know, be civilized about it.

SPURGEON: Is this something you would do every year? Do you have worries about doing business this way beyond the blow-back aspect of it in more theoretical fashion -- maybe not with this one, but just doing crowd-funding generally? What are they? Is this something you think you may have to do every year? You won't lose Kim again, but the other challenges seem ongoing, and there could be other things that crop up that could cause another disruption.

GROTH: You're quite right that the challenges will continue. I would never say we wouldn't use crowdfunding again, but I don't want to unduly burden our supporters, either. I think the crowdfunding model could evolve over time to involve greater and more egalitarian participation in the revenues and it could be more routinely used by arts organizations and their like.


SPURGEON: Are you considering or will you consider structural changes of any kind in order to better meet these financial realities?

GROTH: I study the bottom line every single day. I balance the needs of art and commerce every single day. Literally. I'm not sure if I know what you mean by "structural changes," but I take very seriously my responsibility to maintain profitability, and I am constantly reassessing our own model -- I've been doing that for 37 years now. But there is no denying that it's a difficult balancing act -- between commercial realities and artistic goals. It's especially difficult in the U.S., which is a pretty ruthless economic environment (unless you're an oil companies or an agri-business, in which case you'll get government subsidies, or a powerful corporation, in which case you'll get gigantic tax breaks) where art and artistic enterprise is viewed with suspicion and not seen as useful as producing oil or building jet liners. I continue to explore ways to keep us alive and flourishing.

SPURGEON: Did you think about winding down, closing shop? You've had a magnificently lengthy run, what do you see as the end result -- does Fantagraphics end when all possible ways to earn money or exhausted? Will it end with your retirement? Will it end with you?

GROTH: Tom, this is an existential as well as a practical question and I'm not sure I'm quite prepared to discuss this at length with Comics Reporter at the moment. When I wind down, close shop, hit the road, put myself out to pasture, mosey off into the sunset, procure a terminal disease, run out of money, or otherwise near my expiration date -- I'll give you first dibs on the story, OK?


* Gary Groth
* Fantagraphics
* The Fantagraphics Kickstarter


art from various postponed publications



posted 10:20 pm PST | Permalink

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