Yet another comics publisher revealed itself to have been critically wounded by last year's failure of a major distributor to the book trade, when Fantagraphics (publisher of The Comics Journal) announced May 29 that it was close to shutting down. The publisher said it was reeling from the one-two punch of loss of income from its bankrupt former distributor and increasing expenses due to overprinting for the bookstore market.

The seriousness of the problem had been brought home at Fantagraphics a week earlier, as four of its 30 employees were laid off and a fifth quit in protest of what she called the company's "disorganization and poor management." The layoffs were intended to rein in payroll costs that had grown out of control as a result of generous raise policies over the years, but a review of the company's finances the following week revealed that a cash-flow crisis was much more imminent than had been suspected.

On May 29, publishers Gary Groth and Kim Thompson swallowed their pride and sent a mass e-mail to two dozen Web sites known for disseminating comics-related information, as well as subscribers of Fantagraphics' regular promotional newsletter. Under the subject heading "Fantagraphics Books Needs Your Help," the e-mail announcement explained, "Due to two major financial obstacles over the last two years, we're hard against it. Our former and now bankrupt book trade distributor went out of business owing us over $70,000 -- which we will never see. (To add insult to injury, we learned that the owner is selling copies of our books that he should've returned on e-bay!) This unexpected shortfall necessitated taking out a couple loans which have now come due. In late 2001, our line was picked up by the W.W. Norton Company, who took over our bookstore distribution, and has done a magnificent job of providing us unprecedented access to the bookstore market. Inexperience with the book trade resulted in our erring on the side of overprinting our books too heavily throughout 2002, so that our anticipated profit is in fact sitting in our warehouse in the form of books. Loans must be paid in cash, not books. The only way to get out of this hole we've dug ourselves into is to sell those books. Which is where, we hope, you come in.

"Over the last few weeks, we've worked to fix our in-house problems (which included, most painfully, laying off several fine and long-term employees). We have put in place a system of checks and balances by which we will watch our inventory growth scrupulously. But we have a debt to pay down and wolves at the door. It's so severe that this month we envisaged shutting down our active publishing, seeking outside investors or similarly odious measures. (Fantagraphics continues to be owned 100% by Messrs. Gary Groth and Kim Thompson. We'd like it to remain that way.) If you've respected what Fantagraphics stands for and what we've done for the medium, if you've enjoyed our books, and if you want to insure that this proud tradition continues into this new and ominous century, we're asking you to help us now in our especial hour of need by buying some books. Put simply, we need to raise about $80,000 above our usual sales over the next month, and the only way to do that is to convert books into cash."

If both the dilemma and the appeal to the alternative comics community for salvation seem familiar, it's probably because last year at about this time, the Journal was reporting a nearly identical series of events involving Top Shelf Books. (See "LPC's Chapter 11 and Top Shelf's Near Death Experience," TCJ #243.) The cash assets of LPC, Top Shelf's distributor to the book trade, had been seized without warning by LPC's bank, leaving Top Shelf with bouncing checks and a $20,000 shortfall. Consumers were mobilized to place so many direct-mail orders through Top Shelf that the tottering small-press publisher's shortfall was eliminated literally overnight.

In the Internet message-board discussions that followed, some attributed Top Shelf's near-miraculous recovery to the schmoozing and networking abilities of Chris Staros and Brent Warnock, who together make up the management and staff of Top Shelf. The company is so small that volunteers had to be recruited to help fulfill orders. Some questioned whether the same community would come to the rescue of a company like Fantagraphics, which had alienated many in the industry via the Journal's iconoclastic editorial stance. Fantagraphics' e-mail plea put the question to the test.

As word spread through the fan community, some commented on message boards that Fantagraphics was merely suffering the just deserts of its own hubris, predicting that the publisher had such a reputation for narrow-minded snobbery and brutal criticism that comics readers would not lift a finger to keep it from sinking. Others, loyal to capitalism's Invisible Hand, seemed offended that Fantagraphics should try to circumvent the economic judgment of the marketplace by appealing to the comics-reading community for support.

In Fantagraphics' favor was a solid line of important, award-winning books. Even creators whose work in the mainstream had often been savaged or ignored in the pages of the Journal made public statements of support for the publisher. Writer Warren Ellis notified the recipients of his e-mail list of Fantagraphics' need for emergency book orders, just as he had for Top Shelf a year earlier. Groth had offered in his e-mail plea to make a personal thank-you call to anyone who placed an order of $500 or more, and writer Neil Gaiman offered to make such calls himself to anyone who preferred to receive an expression of gratitude from the creator of DC/Vertigo's Sandman. Cartoonist Art Spiegelman, whose Little Lit had been sharply criticized in the Journal, offered to provide the company with a piece of original art to auction on eBay. Cartoonist Scott McCloud, cartoonist Steve Lieber and publisher Jeff Mason, whose works had received mixed reviews in the Journal, all helped to rally supporters to Fantagraphics' aid.

Chris Ware donated a page of original art that went for $2,864 on eBay, and Tony Millionaire donated original Sock Monkey cover art that sold for $465. Blueline proofs of Fantagraphics comics were also auctioned on eBay, including R. Crumb's Mystic Funnies #3 (which went for $220), Spain Rodriguez's Nightmare Alley ($149), Jason's Hey, Wait... ($100) and the Hernandez Brothers' Love and Rockets Vol. 2 #5 along with color film of the cover ($100).

Even celebrity comedy and rock performers outside the comics field offered to put on benefit concerts for Fantagraphics, but Fanta Marketing Director Eric Reynolds said, "I'm just not comfortable planning something like that when I don't know quite how financially desperate we are at this point. I'd prefer to avoid charity as much as possible."

Top Shelf, which normally sold all its books at conventions and through distributors to comics shops and bookstores, had been unaccustomed to direct mail orders and went out of its way to encourage customers to return to buying from retailers once the publisher's crisis was over. Fantagraphics, by contrast, already had longstanding phone, mail and e-mail sales operations set up and was better equipped to handle the flood of orders that came in response to its plea for help. Groth said it hadn't occurred to him or Thompson to appeal to retailers for additional orders, figuring that retailers are generally in the same one-check-ahead-of-creditors condition that Fantagraphics was in. It also didn't occur to Groth or Thompson -- as it had to Staros, the networker extraordinaire -- to include a diplomatic statement about the importance of patronizing retailers in their mass e-mail. But if retailers were upset at being circumvented by Fantagraphics' fundraising efforts, there was little sign of it. Several posted online statements of support for the publisher.

By and large, detractors were drowned out by a chorus of Fantagraphics boosters. Orders poured in at a rate faster than the company could immediately process. At press time, more than a dozen customers had taken Groth up on his promise to personally thank purchasers of $500 or more worth of books. In addition, Gaiman also made thank-you calls, as promised, to seven or eight customers who met or exceeded the $500 mark. Within a week, the publisher had raised $80,000, the amount it had identified as its immediate shortfall, and a second mass e-mail was sent to announce the good news and thank the company's many benefactors:

"We have been awed and humbled by the voluminous response to our open letter of May 29, and want to thank everyone who spread the word, beat the drums on our behalf, endorsed our efforts, supported us, and defended us against our few but vociferous detractors. We are pleased -- and relieved -- to announce that we reached our immediate goal by the end of the work day on Friday, June 6. We have moved from depression to elation to a state of dizzying exhaustion over the course of that long, frenzied week."

The e-mail went on to report, however, that, while the windfall of orders had made it possible for the company to satisfy its most demanding creditors, some Fantagraphics creators were still waiting for overdue royalties: "It's no secret that over the course of 27 years of publishing The Comics Journal and 22 years of publishing comics, we've been woefully undercapitalized and have more often than not relied upon the patience, if not the kindness, of our authors, to weather difficult periods. Our cartoonists have stuck with us through thick and thin (and vice-versa, of course), many of them for 10, 15, 20 years now, and although we firmly believe we'll catch up in due time, we consider it an imperative to catch up sooner rather than later. The more books we sell now, the faster we can catch up on royalties to our authors."

Some critics objected that it was manipulative of Fantagraphics to solicit orders in support of its endangered publications and then to hold up the still unpaid creators of those books as a lure for further orders. In response to this criticism, Groth told the Journal, "We have for as long as I can remember lived through cycles of falling behind and catching up on royalties to our cartoonists. It's absolutely true that at the time this crisis hit us we were behind on some of our royalty payments and we felt that we may as well let people know this at a time when they were most acutely aware of our difficulties. We were in a slightly odd position. We didn't want to tell people that everything was hunky-dory, because it wasn't. On the other hand, we emphasized that we felt we could catch up on our remaining debts over time and that the emergency nature of our situation was over. I think that was a fair and honest appraisal of our circumstances."

Fantagraphics' Future

How real can a recovery be that is founded on a one-week buying binge by loyal consumers? The most obvious risk is that the readers who make up Fantagraphics' customer base have simply concentrated their purchases into a tiny time span and will now be sated for the next several months. There is strong evidence, however, that that is not the case. Some customers have indicated that they were buying books that they wouldn't have otherwise bought to give as gifts or donations to libraries. According to Groth, the numbers show that 50 percent of the new orders are from people who had never ordered from Fantagraphics, which suggests that the publicity around the crisis has allowed the company to genuinely expand its customer base. Groth is also confident that the strength of upcoming books will continue to coax new orders, as well as sales through retailers.

One has only to look to Top Shelf for a test case of the long-term effects of such short-term fundraising. Staros told the Journal, "We didn't see sales drop off drastically. We saw them return to normal but not below normal."

Asked how the small publisher is doing a year after its crisis, Staros said, "Same old same old. Struggling as always." But this, at least, is the kind of struggle the company is accustomed to and not the edge of the abyss that precipitated its e-mail plea. Top Shelf's release schedule since its near-death experience has been modest, but Staros has high hopes for the summer with books by Craig Thompson and Alan Moore scheduled to hit stores.

Like Fantagraphics, Top Shelf routinely overprints but, unlike Fantagraphics, limits the practice to its best-bet frontlist books, which are assured of eventual sales. Staros said Top Shelf's new distributor to the book trade, Diamond, "is doing fantastic."

Drawn and Quarterly is also pleased with its new distributor to the book trade, Chronicle Books, but according to publisher Chris Oliveros, the company is not doing very well for reasons similar to those plaguing Fantagraphics. "Based partly on the high expectations of Chronicle," Oliveros told the Journal, D&Q; overprinted its collection of Crumb restaurant place-mat art, the first D&Q; book distributed by Chronicle. Sales were much slower than expected and Oliveros said he "put the brakes on for later books. I saw we would be bankrupt in six months if we kept overprinting other books. Since then we've been more realistic." Asked if he had put the brakes on in time to prevent a serious cash-flow pinch, Oliveros said, "No, I didn't. It was a serious blow, the biggest loss by far that we've ever had."

Groth is not so sanguine as to see the bailout by supportive Fantagraphics customers as a magic solution to all problems facing the publisher or the industry. In fact, some of those problems are bigger than the industry. Asked to forecast a worst-case scenario, Groth said it was hard to overestimate such a scenario "with Bush at the helm and unemployment the highest it's been in nine years." Assuming, however, that we don't all end up huddled in bomb shelters with our duct tape and canned goods and burning Dixie Chicks CDs for warmth, Groth was able to foresee a best-case scenario bright enough for him to segue into a commercial for new releases: "Best-case scenario? We flourish. The Will Elder book kicks ass. Readers snatch up The Pirates and the Mouse...."

The Impossible Dream

The publisher has alternated between flourishing and nearly perishing over the years. It would have been out of business as long ago as 1978 if Kim Thompson hadn't poured his inheritance into the company's survival. In 1991, Fantagraphics was saved from closing its doors by the launching of its relatively lucrative erotic comics line. As recently as 1998, the company was forced into a round of layoffs. "It was a permutation of the same problem we've just had," Groth said, "except instead of printing too many copies of a title, we had too many titles. There was a year where we released more books and took in more cash than the previous year, but we made less profit. We had thought we could make up for lack of profit with volume, but it doesn't work that way."

If Groth's best-case scenario comes to pass, it will be not just a miracle, but the continuation of a long-running miracle. If nothing else, the current crisis has served as a reminder of how important that miracle is to the ongoing aesthetic potential of the comics medium. Message-board skeptics made the seemingly reasonable point that if Fantagraphics folded up tomorrow, that wouldn't mean that cartoonists like R. Crumb, Chris Ware, Dan Clowes, Charles Burns, the Hernandez Brothers, et al., would vanish from the face of the Earth. Surely their work would simply be put out by other publishers. Message board posts from some of those "other publishers," however, made it clear that companies like Alternative Comics, Drawn and Quarterly, Top Shelf and Highwater Books were already stretched to the limit of their meager resources. Even Groth was shocked to realize what an anomalous, if not impossible, phenomenon Fantagraphics represented.

"During the message board discussions, I was surprised to realize that several posters -- [Alternative Comics'] Jeff Mason among them, I think -- were absolutely right that our books couldn't be absorbed by all the other alt/indy publishers combined. D&Q; probably publishes five books a year and fewer than one comic a month. Top Shelf cranks the stuff out but eventually they're going to need a staff. Highwater's lucky to publish something every six months and Alternative becomes dormant for months at a time. As best I can determine, Fantagraphics is the only alt/indy comics publisher that's a real business to have stayed in business over the years. The only ones who've survived and who are alive are all one- and two-man operations with no overhead. All the ones in the past that were real businesses with employees, payrolls, office space, health care, etc. are dead. This would include Kitchen Sink, Pacific, Eclipse, First. I think the reason for this is fairly obvious: the economy of scale can't sustain a real business. The cost of our health insurance alone is probably a quarter of D&Q;'s entire annual operating budget! (There's Dark Horse, but they're sort of in the post-indy scene and sustain themselves by essentially being a commercial publisher with movie licenses.) We've survived by devising a thicket of revenue-generating areas: porn, mail order combined with the comics market and the book trade. If we published the Journal and two comics a month and six books a year, we could probably make do with me, Kim and a couple of part-timers. (Believe me, we've thought about this option.)"

If growth in the area of alternative comics has been limited by the budgets of comics-shop retailers and the small population of comics consumers, the promise of the emergent bookstore market for graphic novels was that it would bring a whole new population of potential consumers and make real growth possible. The most promising markets, however, are also the most treacherous, if the dot-com boom and bust and the comics industry's own speculator boom and bust are anything to go by. To see the risks lurking in the still unsounded depths of the bookstore demand for graphic novels one has only to look at the casualties and near-casualties: the failure of both distributors and publishers to correctly calibrate cash flow to the unfamiliar demands and opportunities of the book trade.

In the context, it may be less ironic than inevitable that even a publisher that had survived the worst that a shrinking market could throw at it came close to being put out of action by the promise of an expanding new market.

[To read the rest of this article, please see The Comics Journal #254.]

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