The webcomics blog about webcomics

Idea For Somebody Out There With Modestly Deep Pockets

Since I keep seeing referenced everywhere in the blogodrome, I guess yesterday’s link to the 1000 True Fans piece was worthwhile. It’s gotten me thinking a lot about the economics of independent artistic types. See, I’ve had a particular conversation with multiple webcomickers that roughly runs, “I want to do x, but I have to raise the money for it first.”

Fill in x with whatever — merch, books, animation, print. They’ve got a fanbase, they’ve got an idea that will definitely sell, but to get to that point they need seed money to actually produce x. On the one hand, that’s the beauty of pre-orders — you can gauge demand and raise that money and have an idea of how much you might make on the back-end.

But the downside is that pre-orders take time and effort — both of which prevent the creator from making other stuff, and delay the earliest pre-orderers from getting their stuff while waiting for the Okay, fire up the presses threshold to be passed.

So I’m wondering if what The Webcomics Biz needs isn’t some sort of cross between angel financing and Grameen Bank. Somebody with some bucks to burn fronts the money, takes a cut off sales until repaid with some profit and (this is the important part), runs the proceeds back into a cash pool for the next use. Couple-few iterations of that, the original seed capital’s been repaid, and the pool could be self-sustaining. In a perfect world (Ha! I crack me up sometimes), this could allow creators to work on riskier projects, with longer times to the break-even point.

While theoretically this is the sort of thing that the members of a collective could do, most of them don’t have a formal legal structure set up, being arranged instead around circles of friends. And we all know the old cliche about loaning money to friends. Really, it needs an outside to offer the service to the community at large. Hell, I’m tempted to make a run at it myself, but whatever shaky journalistic ethics we at Fleen have would be sorely strained by having a financial stake in particular webcomics.

Still — is this a totally stupid idea? Or might there be some part of it that could actually work? Let’s get brainstorming, peoples. I don’t want to put any pressure on you, but we very possibly might be able to look in our work and say I dunno, Larry. It’s a wacky idea, but it just might work!

The core problem is that webcomics (by and large) are not a good investment. A few comics are making enough to support the creators and very few are supporting an empire of sorts, but those are not the comics who need such a thing.

What I think would suit this issue is rather then an investment company is a company that makes merch or (perhaps even better) a specific type of merch (plushies, shotglasses, vinyl figures, whatevs) and will go into a joint venture with a webcomic (or many webcomics) so rather then lending the webcomic money that may or may not come back, they can each sink a certain amount of money into a single venture.

Using the simulatron I have concocted a possible scenario from the near future:

ImInUrPlush – a company that makes plushies of indie webcomic characters. They know the plushy market and the webcomic market. They have their own fanbase, loyal customers, and e-commerce infrastructure. They employ artists that know the plushy medium and its merits and limits.

DorkFightr – an indie webcomic that has an audience that is just getting to the stage where they think they can start milking them but they have no merch or experience with merch or even any business savvy.

DorkFightr hears about ImInUrPlush through a PW ad, (I love those things) because ImInUrPlush works primarily with Webcomic properties they have relevant testimonials from people that DorkFightr know and trust. ImInUrPlush looks at DorkFightr’s numbers (traffic, sales, PW clickthrus, etc)
and with their past experience produces a magical number – 600. They say “We think that a run of 600 plushies based on your main characters would do well, this is how we split the costs, and this is how much of that you can offset in terms of ads during the promotion period”. DorkFightr can almost do that kind of money… they start taking preorders from their bestest friends and ring up their mums and ask for some hundred dollars.

Worst Case:
DorkFightr loses an amount of money that they could afford to lose and don’t owe any money. They still have prospects of getting some money out of the plushies if sales ever do pick up. ImInUrPlush is stuck with a bunch of DorkFightr plushies that aren’t selling, but they hold onto them knowing that if DorkFightr increases in popularity they may still be able to sell them. Perhaps they could offer to sell the entire stock to DorkFightr at something close to breakeven?

In this scenario hey both still build their brand/increase their exposure in a meaningful way.

Good Case:
The DorkFightr plushies sell out. DorkFightr and ImInUrPLush each make money and build their brands. They start planning the next set …

An organisation with money… who will front you the cash (say a few thousand) until you pay it back with a small profit (perhaps at a fixed interest rate) – I dream of a world where such organisations could be found on the streets of every town!

[...] Gary Tyrrell ponders the question of starting capital for the independent artist. Okay, he’s talking about [...]

For several of the Bruno books and when I tried to self-syndicate Little Dee, I borrowed thousands of dollars from my readers at a fixed annual interest rate I offered them. I wrote on my site “hey, book coming out, and I’m looking to borrow money.”

The Bruno books EVENTUALLY paid for themselves, the syndication failed, and I just slowly paid people back from my own pocket.

I think that if the money being paid back only had to come from product profits, that deciding who gets money would be tough, cuz who wouldn’t want ot try out a dozen products (plus it reminds me of Kevin Eastman style investing).

I think I’m kinda in support of people looking at SBA loans, considering asking their readers, considering selling their body to science for a month (like director Robert Rodriguez, or like myself back in 1995), or simply saving up.

but I think it’s possible. Someone webcomic savvy who had to approve each individual project, and who took back most or all of the earnings until the “loan” was paid off, and then also take a bit extra to support themselves and the fund. but I think that person would also have to play a big role in supporting the artist working with vendors, because most of these cartoonists if they don’t have the capitol, also don’t have the experience working with vendors or who to use. Plus, accountability. A cartoonist get a bunch of money from initial sales, they’re already poor or else they’d have their own money to invest, and so the problem occurs of making sure they’ll get you the money; in fact, i think that initially, it’d be in the fund’s best interest to control the paypal account used until the money’s been paid.

I don’t know.

Anyhow, I don’t know if I’m a good source of info here or bad, I’m certainly not objective, because I came from a poor family and have had to work and scramble for every penny, and have lost thousands of dollars in things I’ve tried for webcomics. I even took it a step further, and took out a SBA loan this autumn for the Little Dee book reprints.

But i think it’s good stuff to think about.

There is a site launching next month that may be of help:
http://www.kickstartr.com/

It’s very much like http://www.donorschoose.org , but will focus on for-profit projects from entrepreneurs and artists of all kinds.

I’ve talked to the founder and I know they are sincere in wanting to help people like cartoonists.

[...] of yesterday’s musings on angels; I was particularly glad of Chris Baldwin’s story of his experience with capital-raising. I hope that with the current credit crunch, such bank loans are still available for deserving [...]

As John Allison rightly points out, high street Banks do Small Business Loans, and there are tried, tested and legally binding rules for what happens to the money after that.

I’m not convinced that there needs to be any “new” structures specifically for webcomics. Our core (merchandise) business isn’t different enough from the tons of other small businesses out there is it?

[...] Tyrrell muses on webcomics startup financing, which begs the question of what would constitute an investment-grade [...]

[...] everytime I hear it. So much so that a year ago I mused that what webcomics needs is some form of angel investment or aggregated micro-lending. It seems foolish to compare John Allison to the sort of micro-entrepreneurs that the Webcomics [...]

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