Noting that graphic novels and trades recently overtook pamphlets in the comic book market, he notes,"What if you could produce the material and sell it online before it was collected - then you could also avoid the cost of ever having to make the hardcopy comic in the first place. It may sound a little fanciful but let’s consider the economics of it..."
(Before I go on, please note: As I've said before, I am no one to trust when it comes to sales analysis, profit margins, anything to do with money. I tell this to people all the time: "If it's about money, ask Dan." I don't pride myself in this, and I am trying to get a better business brain, and I guess you are seeing part of that development.)
The business model Kenny uses is Marvel's, in which artists and writers are paid page rates rather than royalties, as they are at SLG (unless they do Disney comics--then there are page rates). Estimating that a Marvel comic must make $11,500 to break even, he writes, "If you go to the digital distribution model using a price point of 99cents (not that I think people will actually pay this) then at 11,500 downloads there would already be a profit generated. Maybe as low as 7,000 downloads would pay the cost of producing material you can then feed into the book channels as collections."
Here is the problem with this analysis: There is an assumption that the entirety of whatever it is you charge for a digital comic goes toward a possible profit, with the only expenses being what you paid the writer and artists. In his consideration of the economics, Kenny leaves some important components: Overhead and labor, especially considering Marvel is a much, much bigger machine than SLG.
The 99 cents that someone pays for a digital comic is not 99 cents in the pocket. First, there are credit card fees. We charge as little as 69 cents for a digital comic, and often people buy only one at a time -- this means that nearly 50% of that 69 cents goes to credit card fees. (We're looking into ways where we can "save" people's charges, as iTunes does, so that if they place more than one order in a given week, those orders will be charged together rather than one at a time.) Then there is the expense of site hosting and bandwith. If you have a large catalogue of downloadable comics, that expense can get hefty. Finally, there are labor costs: Currently, Dan and I are putting up most of the content at Eyemelt.com (I just put up Next Exit #3 yesterday, by the way)--converting and formatting files takes time, and our time is not free.
Thanks to Kenny for making more people aware of Eyemelt.com. I just wanted to note digital comics is not exactly a pie-in-the-sky enterprise. (Kenny writes "If I was a publisher I would be over the moon at the potential thought of a bigger online audience, generated by cheap price points, where I don’t have to share the revenue stream with old fashioned brick and mortar distribution and retail.") We are approaching it cautiously as we, like the rest of the industry, move away from pamphlets and toward graphic novels. For us digital comics are not yet a way to support the cost of printing a graphic novel, or even close to a profitable venture at present. However, as we add to Eyemelt.com's catalogue, we hope that the sales will increase as well.