The Theory of Webcomics: How Webcomics Make Money
The question is how webcomics make money. The answer is: Most of them don’t, but the ones that do usually rely on numerous sources. These typically include advertisements on the site, donations from readers, merchandise sales, and paid online content.
The webcomic itself can play several fundamental roles, all of which rest on the same idea: You come to the site to read the comic.
When the revenue source is advertising, the comic consists of a draw that makes the presence of advertising acceptable, in the same model as a TV show. Depending on the hosting site (and the author’s preferences) these can be Google text ads, banner ads put together by Project Wonderful and similar ad brokers, or customized ads solicited and designed by the artist himself. The former two are the easier choice, and typically the available ones to smaller comics with less traffic. More popular comics can often solicit advertisements from online retailers or other comics. The biggest comics, such as Penny Arcade [link: http://www.penny-arcade.com/], have been known to attract advertisements from companies looking to tap into their audience, such as Sega.
When discussing donations, the comic plays the role of a bridge or connection between the author and the audience. The author is typically closer and more responsive to audience feedback than a novelist or print comic author could be, often maintaining comic forums or a Livejournal to communicate with them. Over time, the audience thinks of the author not as a faceless comic-making entity, but as a friend who gives them free stuff and deserves to be rewarded for that. Randy Milholland is the undisputed master of this, having dared his readership that he would quit his day job if they’d donate a year’s salary. Which, in a matter of days, they did.
When we talk about merchandise sales, the comic functions as an advertisement. Fans of the comic are far more likely to spend money on the t-shirts, posters, mugs, tote bags, original art or toys. (And the shirts and posters often, in turn, are advertisements for the comic. Jon Rosenberg of Goats has commented that his t-shirt line is less intended to tie into the comic directly, as to be attractive to an audience with a similar sense of humor.) A new comic starting out may put a few things up on Cafepress; well-established sites are likely to do the work themselves so as to keep a much larger percentage of the profits.
In a similar vein are book sales, either collections of the online strips, or additional material not available online (or most typically, both). A permanent, hard copy of their favorite strips can entice the audience to open up their wallets, and author’s commentary or bonus strips can sweeten the deal. Most books are self-published through print-on-demand services or vanity presses. A few comics get deals with major publishers, such as PvP [link: http://www.pvponline.com] and Megatokyo, published by Dark Horse Comics; and more recently Goats, published by Villard/Random House.
And finally, there’s paid online content, for which the comic is again an advertisement, a “gateway drug” of sorts. This can include another comic, such as David Willis’s subscription comic Joyce and Walky, or animated shorts, like Tim Buckley’s Ctrl-Alt-Del: The Animated Series.
Ad revenue ebbs and flows with the trends of business, and is wholly dependant on being able to pull decent traffic numbers and click-through rates. Donations are notoriously unreliable. Paid online content tends to run into the DRM issues I discussed in my last entry. Which leaves merchandise sales as perhaps the strongest choice, but unless you’re ready to quit your day job and set up your own merchandising empire, you’ll see the companies that are handling printing, production, shipping and billing eating up your profits.
In addition, there are several methods of money-making that aren’t often used because, well, they don’t work particularly well: One is making the entire comic, or the entire archive, subscription-based paid content. This detracts from the other methods (particularly advertising and donations), by reducing the time spent on the site and alienating the audience. It also has a tendency to turn the comic itself into a unknown quantity, making it hard to attract new readers, as they don’t want to pay the “entry fee” before seeing the comic or being able to read the archive and learn the continuity.
Another of these is the concept of micropayments. Scott McCloud pioneered the concert into webcomics, and revisits it from time to time, but the idea of creating a system with which to make very small transactions has proven impractical thus far. Jon Rosenberg even tried selling a Goats mini-comic via a micropayment system, and discovered that he made significantly less money than he would have otherwise: Content with supporting Goats by paying $0.50 for a digital mini-comic, readers spent far less on t-shirts and other merchandise.
And like I said before, this is all only worthwhile information to those lucky few comics that can make money. Why don’t most of them? That’s a topic for next time.
Next: Superstar Theory