This past weekend, amidst a flurry of C2E2 news, comiXology announced that they would be ending all in-app purchases through their iOS and Android apps. If you missed the news, we touched on it right here. The long and short of it all is that comiXology will only be selling comics through their website, effectively cutting off Apple and Google from any sort of revenue they had previously received from in-app purchases through comiXology.
This is after a long journey for the digital giant, from Mac OS widget to multi-million dollar digital retailer. I’ve used their products every step of the way, and this announcement is yet another milestone in their journey.
This news, however, came with a fair amount of criticism from users, in addition to support from creators and fans alike. I mean, this is comics, right? Big news is going to be polarizing and I think we all know that. But what does this all mean for comiXology and their brand new parent company Amazon? Is this the right decision, both for the company and its massive user base, or is this simply one monolith cutting off revenue stream to another?
There’s a lot to unpack here, so let’s dive in.
Who’s Affected?
The initial impact of comiXology’s move away from iOS and Android will not only affect users of the main comiXology app, it’ll have an impact on publishers and creators as well. For better or worse, every person involved in any way with the sale of comics through comiXology is going to feel this.
1. Customers
When considering the impact on customers, the first thing to keep in mind is that a lot of comiXology’s customer base probably don’t read comic sites. It’s a safe assumption that plenty of people opened their app on Sunday and were greeted with an empty store front telling them to go download another app. Then, once the app was downloaded, they couldn’t actually buy anything. For that, they have to go to a website and register as a customer, which seems like a lot to spring on someone just looking to do some light reading or to buy some more comics.
Now all customers, regular and casual alike, must adjust to a new routine when buying their comics. On one hand, I commend comiXology for having enough respect for their customers to believe that they will understand and roll with these new changes. I like that they know we’re not idiots and can understand simple directions. But, that said, a brief look at the comiXology support Twitter does show that there is some level of confusion among customers.
The most common complaint for users, however, is that they simply can’t buy their comics in their app anymore. The simplicity of the product was beloved, and it allowed users to finish a comic and move onto the next one with the greatest of ease. While comiXology is certainly right that there isn’t a huge difference, many users look at this and wonder, “if there wasn’t much a difference, then why change it?” The average customer doesn’t care about comiXology’s or the creator’s bottom lines. They care about getting their comics in the least amount of time and clicks possible, and this change inarguably went the opposite direction.
2. Creators
If comiXology can make this change appealing enough for customers to maintain or increase the amount of money they spend, then comic creators stand to make out pretty well in the deal. You see, Apple takes 30% of the revenue of any purchase in iOS apps. That’s Apple’s cut, and it’s the cost of doing business through them. From there, another 30% went to comiXology, and the remaining 40% was the publisher/creator take. (As an example, for a $0.99 digital comic, the creators would get roughly $0.40 per purchase, which is then split up even further.)
With this new business model, if it’s how it seems, then the publisher/creator cut jumps up to 70%, and that’s pretty darn spectacular. If every dollar spent through comiXology’s iOS app could make its way over to their web store, then a lot of people’s work will suddenly become much more profitable.
Continued belowOf course, that only happens if users continue to purchase at the same rate. If the changes to the app drive users away from comiXology, or even from books they’d otherwise try with the click of the button previously in the app, then they might see a lot less coming back their way than that 30% gain they’re theoretically getting per purchase.
3. Publishers
Practically every major American comics publisher has a lot at stake in comiXology’s success. While digital numbers have never been 100% transparent, if we could see the numbers I’m sure you’d find that vast majority of Marvel, DC, Image, Boom! and many other publishers digital sales come primarily from comiXology.
Whether through their main app or the publisher and series specific apps they power, comiXology has positioned themselves as an integral part of the digital comics that reach readers today. I’d also think that publishers would want to take note of things like the tweet pictured to the left. The wording is interesting, isn’t it? That ‘yet’ could prove to be pretty crucial down the road.
Now, this will all affect different publishers in different ways. For example, it’d appear that DC and IDW have all of their digital eggs in comiXology’s basket. Any decision that would negatively impact comiXology’s bottom line could have ramifications for these publishers.
Other publishers, like Marvel and Image, have begun to diversify their digital offerings. While the lion’s share of these two companies’ digital sales may be through comiXology, they are better positioned to pivot toward in-house sales than others. And beyond that, publishers like Dark Horse, Viz and 2000 AD never even entered into comiXology’s ecosystem, opting instead to build their own distribution mechanisms.
A Walled Garden
comiXology’s business model is what is referred to as a ‘walled garden’. What that means is that if you, as a consumer, decide to do business with them you will have to make certain concessions. You’ll never really own the comics you buy, as you can only access them through the app or website. You’ll also probably lose everything you bought if comiXology ever closes up shop (as JManga users found out the hard way). In exchange, you’ll have a massive library at your fingertips that can be enjoyed in what is arguably the best digital comics reader on the market.
In the past I’ve said in conversation that as great of a service as comiXology is, it’s clearly not something that is going to last forever. It’s convenient and works well, which is why it has become so popular; it has worked hard to introduce a massive number of people to the concept of reading comics digitally. comiXology has successfully lead the charge to convince people that this new product is the way of the future.
It’s a lot like AOL.
At one point America Online, another hugely successful walled garden, was how an enormous number of people got online. AOL introduced masses of people to the internet for the first time; email, chat rooms and buddy lists were suddenly a vital part of everyday life. But then AOL merged with Time Warner and the wheels started coming off. People began to realize that this new way of doing things (using the internet) didn’t actually require AOL. There were other ways of accessing the internet that were maybe a little cheaper, or even a little less convoluted. ‘You’ve Got Mail’ became a needless proclamation.
So folks canceled their subscriptions. All this time people believed that they needed AOL to use this wonderful new internet, but really didn’t. Ever. It just took everyone a few years to figure that out.
And that’s a lot like comiXology.
You see, we don’t really need comiXology. It’s absolutely possible to read comics digitally without them. Cartoonists sell their books on sites like Gum Road. Publishers like Image and Humanoids sell day-and-date DRM-free comics through their sites. As mentioned earlier, Dark Horse, 2000 AD and Viz went out and created their own app to sell their wares. All of these examples do the same thing: cut out the middle man.
So why would a fraction of their sales come from comiXology? The simple answer is ease of use.
Continued belowDropping Coin, The Easy Way
The key to comiXology’s success has been how absolutely easy it is to spend money. App users were able to impulse buy new releases, or simply hit a button at the end of an issue to buy the next. If you saw something you wanted to read it could be yours in two taps. comiXology’s iOS app didn’t rely on a shopping cart model of purchasing; instead, each comic bought is paid for à la carte, leaving no room for cart abandonment or second guesses. And that’s important.
There’s already been much said about comiXology’s loss of impulse buys, but that’s all just anecdotal for now. It’ll be at least a few months before we begin to see the real financial impact of this decision. While I’m sure that comiXology sees a pretty penny for impulse purchases, it’s my opinion that there will be a far greater impact to their bottom line than a few extra dollars here and there, and it has to do with their shifting completely to a web-based shopping cart model of checkout.
There’s a lot of analysis on the psychology of online shopping out there. Most stats say that around 70% of all online shopping carts are abandoned. The reasons for why are pretty varied, but can certainly be applied to comiXology. Everything from the speed and design of a site to whether or not guest check out is offered can have an impact. Vouchercloud put together a nifty little info graphic that pulls numbers regarding to online shopping (some of which you can see in the above image, which you can also click here to embiggen).
The top 100 e-commerce sites on the web can complete a transaction in an average of five steps. comiXology has that beat, as their checkout was three steps (four if you’re not already logged in). While it’s a longer process than iOS in-app purchasing, it’s not awful. But then you have to consider that, at this point, you’re still not ready to read. In the iOS app, once you paid you could begin reading immediately. With that gone, now after the transaction you’ll need to switch over to your preferred reading device, go to your library, find the purchase, and then download. It is easy enough to do, sure, but it’s far more involved a process than it was last week, and adding any additional barriers to entry is certain to cost them customers.
Another factor to consider is that 29% of shopping cart abandonment is simply because shoppers need to create an account. This is another huge advantage of shopping in the iOS ecosystem. Apple has your info, and it can be used for any in-app purchase you’d want to make without having to create any other accounts. It seems that, for whatever reason, taking the time to register with a site is a huge barrier for shoppers.
As of this writing, comiXology requires an account for all purchases — which makes sense, seeing as how purchases are primarily intended to be synced over multiple devices. Abandonment drops to around 15% when shoppers can opt to checkout as a guest, but with comiXology’s current model I don’t see how they’d be able to do something like that, and that could begin to impact them now that they’ve left the iOS marketplace.
The Beginning of the End?
It seems that the move away from in-app purchasing could draw a comparison to the industry’s shift away from the newsstand and into the direct market. comiXology was a heavy hitter in the Apple App Store, regularly ranking as one of the highest revenue producing non-game apps on iOS. It had high visibility and operated in a universally understood marketplace.
Now the process of buying a digital comic through comiXology requires visiting a website, registering an account, and syncing content. This is going to turn off a number of casual readers, just the same as when comics only became available through specialty shops.
Just like when that happened, publishers and the market had to adapt. Maybe we’re already seeing those adaptive moves, in the form of the aforementioned efforts by Image, Marvel, Dark Horse and others to go in other digital directions than what comiXology was doing. After all, if buying from comiXology is no longer any easier to do than it is from other companies and other, more attractive options began to appear, then why would people choose to use it over other options? Doesn’t it make sense for consumers to cut comiXology out of the equation and take their money straight to the publishers and creators?
Those are questions that many of those affected — the consumers, the creators and the publishers — will be looking at pretty intently in the aftermath of this decision.
For me, this has all the markings of disaster for comiXology. They won’t crash and burn immediately, but when comiXology actively made a decision that makes it harder for users to spend money on your product, they’re impacting an entire ecosystem that is fragile in ways that none of us really understand. Even with the benefit for creators this decision brings, one has to wonder if this is the first domino in the eventual downfall of the digital titan, and something that really pushes the digital comic marketplace to grow up in ways it previously didn’t have to.
