Continuing from yesterday; if you’re interested in some of pictures of these sessions, Gilead Pellaeon has ’em, along with his writeups of these sessions.

Webcomics 103: Making Money
At the podium, Bill Barnes (Unshelved)
On the panel, Robert Khoo (Penny Arcade), Howard Tayler (Schlock Mercenary), Jennie Breeden (The Devil’s Panties), Phillip Karlsson (Dumbrella Hosting), and Scott Kurtz (PvP).

The Sign Said, “I’ll Just Blow It On Bandwidth”
Barnes opened up the floor to questions, and the first one dealt with making money when starting out — and how can comic books be a part of that? Khoo leapt to the fore with a strong answer that we’ll quote here: “I don’t know why everybody has a fuckin’ hard-on for the book deal. This is webcomics. The goal is not to make comic books when you can do so much more. You can create lots of kinds of content, you can monetize lots of different things.”

Recall that this session took place at the largest collection of comic book fans on the continent, and perhaps not all of them have shed the dead-tree sensibilities; if you’re doing webcomics because your ultimate goal is to do a comic book/comic strip, some of this advice may not help much. But also recall that Khoo’s been working for Penny Arcade for four years, and Attack of the Bacon Robots! only came out six months ago. In the meantime, there’s been no shortage of income for Penny Arcade Industries, during a period when the print comics market is rapidly shrinking.
Takeaway — If you think being on the web is slumming, these lessons probably aren’t for you.

Kurtz took a slightly different line: if you’re just starting out, it’s silly to think about inventories when you don’t have an audience. A donation button may bring in some money, and if the comic is good, your audience will find a way to help. Kurtz recalled a time four years ago when he mentioned on his site that his dog needed surgery that might not be affordable; he wasn’t asking for money, but it started coming in from readers who wanted to help. So much so, that he felt guilty and printed up sticker gift-packs to thank everybody who gave to The Kirby Fund. This story neatly echoes the Webcomics Manifesto by Jerry Holkins in the back of Bacon Robots!, where he goes on at length about how readers will help creators whose work they enjoy.

Karlsson added some B-school theory to the discussion, noting that income levels from a webcomic will be a function of:

• Size of the audience
• Percentage that converts to customers
• Margins per item or event

What drives the equation is that first term: audience size. With a few hundred readers, even a near-100% conversion rate is going to require enormous margins in order to make this month’s rent. With a mass audience, a more modest profit margin per item/event can provide a higher total income. The conversion rate will depend on how much the audience likes the comic, and the accessibility of the item (c.f.: Webcomics 102 Class Notes, characters on t-shirts vs. non-strip-specific designs).
Takeaway — The readers will take care of you given a reason; that reason could be altruistic or consumerist, but the readers have to be there first.

Show Your Work
Continuing the theme, Tayler warned against the Field of Dreams approach to marketing; just because you build it doesn’t mean that they will come. Regardless of which kind of merchandise, Tayler stressed the importance of knowing your market and what the audience is willing to buy; sinking money into inventory that will sit in a garage is a bad idea. Tayler further recommended testing the waters with digital content (desktop art or some such), as the only investment is time, and it won’t cost anything for production, storage, or shipping. Breeden stressed the importance of building a solid relationship with readers before offering merchandise, and addressing the idea of books, recommended print-on-demand services such as Lulu.
Takeaway — Figure out how to work a spreadsheet, and know how large the buying audience is.

Oh, That’s What You Wanted
Breeden continued with a story about knowing what the audience wants. Originally intended as an exercise, she has been running pictures of playing cards on her site on Sundays. They might not want much of her other merchandise, but fans at cons have been clamoring, “When are you going to print up the deck of cards?” Answer: as soon as the rest get painted. “I never would have thought of selling the cards, but it looks like that’s where the demand is,” she added.
Takeaway — You never know what they’re going to want to buy, but when unrelated people start asking you for something, start planning on how to deliver it.

The 4.5% Solution
Tayler came back to address one more aspect of the discussion at hand — how to know audience size and demographics. Answer: do a survey; when he put up his, he got about 4000 responses (which represents the most passionate readers), asking about what kind of merchandise they wanted (a book!) and how much they’d be willing to spend ($10 – $15!). “That was information I could take to the bank,” Tayler said, and he did. The survey convinced him to sink $8000 (Breeden: “More commas!”) into printing Under New Management, which has netted a handsome return. Khoo concurred on the importance of surveys, recommending SurveyMonkey.com as the tool used by Penny Arcade.
Takeaway — Standing in line at the Penny Arcade booth on Preview Night, I overheard a woman ask Khoo what the female readership of the strip was. He knew the number off the top of his head: 4.5%. It is critical that you know about your readership in detail.

No Way, A New Question?
Hands shot up, and the next question was, “How much do technical services, hosting, and bandwidth cost?” The consensus is, “Almost nothing” for a webcomic that’s just starting out. But, Karlsson stressed, it’s important to have a solution that can scale upwards as the traffic grows; free site space through an ISP or $10/month for Webcomics Nation will last you for a while, though. Tayler volunteered that all of the Blank Label comics combine for a total of 10 million pageviews/month, with server bills running between $250 and $400; this does not include Real Life, which has another 5 million pageviews by itself and is hosted by Karlsson.
Takeaway — Bandwidth is cheap, but keep in mind things like Flash, podcasts, and forums will eat up more resources.

Can You Say, “I Hate Jack Thompson” On A T-Shirt?
Next up: legal issues relating to merchandise. Khoo answered that if the IP is yours, there’s no copyright issues to worry about. However, anything that’s likely to piss off a specific individual ought to be run by a lawyer familiar with satire and parody law.
Takeaway — Yes, at least until the cease & desist arrives.

The Economics Of Self-Publishing, or, Your Mileage May Vary
Barnes invited Tayler to expand on numbers associated with publishing books, and Tayler was happy to oblige. Imagine you’ve got a book on sale at Borders for $10 — pretty sweet, right? Hang on a minute, because you aren’t going to get $10 a copy. Here’s how it breaks down:

• The store sells it for $10, keeps $4, and pays $6 to the distributor
• The distributor keeps $3, and pays $3 to the publisher
• The publisher keeps $1, pays $1 to the printer, and $1 to the author
• You’re the author

There’s a lot of hands in the pie, and you want as many of them as possible to be yours. If you can contract with printers directly, you can get the $1 that the publisher would keep. If you can bypass distributors like Diamond and shop the books around yourself, you can keep $3 more (although this is likely to severely cut into the number of retail locations you can place the book in, which will depress sales). If you have the garage space, a postal meter, and help from friends and family, you could do mail-order fulfillment yourself and keep the store’s cut ($4) along with the distributor’s.

If you don’t have those skills, there are print-on-demand services like Lulu, or webcomickers who do shipping and fulfillment, but you will have to pay for those out of the $10. Point being, the more you do yourself, the more you get to keep. About 20 members of the audience raised their hands when asked, “How many of you are planning on doing a book in the near future?”
Takeaway — What’s greater, 10% or 90%?

Lightning Round!
Q: How do I put together the business plan?
Khoo: You don’t. If you’re creative, you can’t. Find business-oriented friends.
Tayler: Friends that you trust.
Khoo: And never work with friends.
Karlsson: When Jon [Rosenberg] and I owned Goats, we put everything on paper; there weren’t lawyers or contracts, but we put down in writing what we decided, and that’s how we stayed friends for nine years in business together. You have to know there the friendship is, and where the business is.
Breeden: There’s lots of trial and error involved. I used to get excited that I’d made enough money at a show to cover a table, and my mom asked if I’d covered the costs of getting home. (Fuck!) Then I’d get excited that I’d covered the costs of the table and travel, and she’d ask if I’d covered what I would have made at work, so I could pay my rent. (Fuck!) In the meantime, plan on spending nights in your car, on somebody’s couch, with pirates…

Q: When should I do all this business stuff?
Barnes: We started the strip, we didn’t expect to need to. About six months in, it was growing and then we did all the planning. It didn’t seem worth it when there wasn’t any traffic.
Kurtz: I didn’t incorporate until it was worth it. It was because I got an accountant, trying to figure out what to do with this money that was starting to come in, and he advised me how to legally keep my assets apart from those of the comic with an LLC.
Khoo: If the comic is based on parody or satire, put up a legal barrier between you and the comic as soon as possible to limit your exposure.
Tayler: Find out what you’re passionate about, figure out why you want to make money with it, and find a balance between the two. Then it’s time to incorporate.

Q: How do you get Google ads to work?
Karlsson: Make sure you have some text on the page, not just graphics, so that the Google engine has something to key off of. It helps to get your fans to transcribe your comics so that relevant text strings can be found.

Q: How many unique visitors do you get a month?
Barnes: I’m not sure anybody here wants to say exactly how …
Khoo: 3.5 million.
Barnes: Okay, fine. 30 thousand.
Tayler: I’m not sure about per month, but 25 thousand a day.
Kurtz: 1.2, maybe 1.3? Robert, yeah? Okay, call it 1.3 or so.
Breeden: 1.3 what?
Kurtz: Million.
Breeden: That’s two commas. Okay, 10 thousand a day.
Karlsson: I don’t run a webcomic.

Final Takeaway — It’s going to be a lot of hard work, you’re going to have to be very smart, you will learn to a lot more than you thought you would, and you’re going to be pretty poor until you do. It’s just like grad school, only without office hours.