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November 12, 2013

Robert Boyd On Fantagraphics And Kickstarter

My Friend The One-Time, Longtime, Alt-Comics Industry Veteran Robert Boyd Writes In:


When I think of publishers using Kickstarter to finance books, I think of my college accounting courses. One of the things they always teach you is how to "recognize" revenue from magazine subscriptions. I won't get into the accounting issue (it's actually kind of complex), but the thing about magazine subscriptions is that you pay a year in advance. Fantagraphics used to offer subscriptions for many of its periodical titles. Now Fantagraphics has almost no periodical titles. But what this Kickstarter permits them to do is treat their books like magazines -- it allows them to have people pay for them many months in advance. You write, "Crowd-funding might allow publishers to avoid the traditional responsibility of being the person that provides capital." But if people are simply paying in advance for books that they would have bought anyway, how is that different from offering a subscription? Do magazine subscriptions allow companies to avoid their "responsibility" of being the ones who bring the capital? No, what they do is increase the size of a company's working capital.

And here's the second accounting thing. You talk about companies supplying capital, which can obviously come from a bunch of different sources. Fantagraphics is a small business, and one of the most common traps that a small business faces is having a working capital deficit--where your current assets are less than your current liabilities. It doesn't matter how much money you are going to make next year if right now you can't pay the printer. This Kickstarter seems to me to be about shifting cash flow from next year to this year. When I paid for my Eightball boxed set just now, I paid in advance for a book that I was definitely going to buy next year anyway. But you can't pay anyone's salary with money you are going to get next year. This Kickstarter campaign increases Fantagraphics' working capital.

Frankly, I don't see how it is any different than a loan. A bank risks its money when it loans it out to a company, which might default. I, a Kickstarter "donator", risk my money as well. I might not get my "premium" (the Eightball boxed set) after all. (But it's a smaller risk for me, and unlike a bank, I feel confident that Fantagraphics will come through since I've seen them come through similar crises regularly over the past 30 years.)

The thing is, until Kickstarter and their ilk came along, it was very difficult for Fantagraphics to "pre-sell" a bunch of books to a bunch of individual buyers all at once. To me, all that Kickstarter is for a publisher is a pre-selling platform. It lowers the cost of reaching all those consumers--in economic terms, it reduces friction. If it's a new publisher, fewer people will be willing to take the risk (of not receiving their premium), and the amount they can reasonably ask for will be small. An established publisher like Fantagraphics can shoot much higher because the risk premium for individual "donators" is much lower (and Fantagraphics is better known, of course).

But what Fantagraphics and the smallest presses who use Kickstarter have in common is that they have a thin layer of working capital at any given time. Any financing mechanism short of mugging that mitigates this is A-OK with me. Obviously Kickstarter can be abused, but so can just about any other form of capital. (What was it the distributor said to Harvey Kurtzman and crew when they were publishing Humbug? "Gentlemen, I own you.") But if I give Fantagraphics money through Kickstarter and a few months later get a boxed set of Eightball, that seems like a perfectly fine way for Fantagraphics to raise working capital.

Tom Spurgeon Responds:

Hi, Robert.

I think you're conflating a lot of what I say are dangers of certain behaviors becoming normalized with direct criticisms of Fantagraphics. This is frustrating only in that I thought I was pretty clear on that kind of thing in the piece you reference. I want Fantagraphics to succeed. I contributed to their crowd-funder as best as I was able. I think they have virtues that allows them to avoid many of what I see as potential pitfalls, and the talent on staff to lick the other ones. I question the implications.

In other words, to use your historical example, clearly I don't think Fantagraphics offering subscriptions was a problem. But was an industry-wide ethos that for a period normalized paying people ahead of their work a problem at times? I bet the people that purchased lifetime subscriptions to Hepcats might think so.

Also in that recent Fanta piece I hoped out loud for a way that companies like Fantagraphics might better realize working capital through advance support without their having to be a crisis, right down to suggesting maybe we should all start thinking in those terms more frequently. So I'm right there with you on that.

Let me say this, though. Using a crowd-funder in this matter isn't solely a business transaction from any vantage point, and I'm pretty sure it wasn't for you just as it wasn't for me. I'm going to assume that the imminent danger expressed, your admiration for Fantagraphics, your personal affection for many of its employees and your general sympathy for the struggles of small-press publishing and non-mainstream arts-making -- all things I share -- are some of a number of things above and beyond the desire to have the book you ordered, or that at the very least those things likely moved your purchase timing-wise and may have moved it out of another retail channel to this more direct one.

Where I get concerned for the impact of this kind of thing is that I suspect other people will use it that aren't virtuous companies, and that this is specifically likely to allow for a change in an already at-times exploited balance of who benefits from these commercial acts. The fact that I feel I have to be super-clear that I love Fantagraphics a bunch of times to negotiate in these waters at all underlines -- to my mind -- that an assumption exists that these things maybe shouldn't be talked about, even in the case when you see some poor creator out there doing all the work on the behalf of themselves and some publisher instead of that awesome thing Jen, Jacq and the rest of Team Fanta put together.

I also think that when personal affection enters into it, that not everyone is liked because they spent 35 years making awesome comics and creating an entire literary category. You know this about comics, Robert. You know that, say, childhood nostalgia is at least as powerful a tool for manipulating affection and mobilizing people as a history of supporting Paul Ollswang and Los Bros, probably much more so. So is personal appeal. I'm wary of a future where those forces can be applied in those directions, and I think it may be coming.

Incidentally, another difference between a bank loan and raising this kind of capital is that when I give money I'm probably not as rigorous as a bank or, come to think of it, even as a person investing their own money in a project they want to do. In the case of the Dave Sim High Society crowd-funder, I blew it and thought I was getting a digital copy of High Society rather than what I got, which as I recall was a subscription to a bunch of digital comics, a series of odd extras and 10,000 e-mailed updates. And then when I realized this I just sort of had to shrug my shoulders and consider it a tip going Dave's way for making me laugh with the Wuffa Wuffa issue.

And yes, Robert, there are problems with everything, including all the different ways to raise capital. But the hell with using that as the reason not to explore, question and even potentially work on those problems strategy to strategy. Crowd-funding is here to stay, so let's talk about it so that we can have the best version of it possible.
posted 10:20 pm PST | Permalink

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