How do free manga make money in a declining manga market?

Since my last translation of something about the anime industry was something of a hit, I thought I’d do a little pandering and take a look at an emerging free manga in Japan as reported by Weekly Oriental Economy:

Free manga magazines: How exactly do they make money?

People are abuzz about the free weekly manga (comic book) that is being handed out around Tokyo. The person behind it all let us know his business model (printed in Weekly Oriental Economy’s Feb. 3, 2007 edition)

free-manga-gumbo-123_1.jpgThe first free manga magazine in Japan, Comic Gumbo, has been released in Tokyo. Just recently, a “free paper” market has sprung up upon the success of Recruit Co.’s “R25” and “Hot Pepper” (see some of the contents of R25 at neomarxisme). In response, this manga magazine has pounded its way in.

The printer is Digima, a venture publishing firm. Company president Akihiko Kai (age 36) founded the company in Sept. 2005 after serving as an operating officer at Dentsu (Japan’s top ad agency) and Trans Cosmos (marketing/offshoring). Gumbo’s target audience is salarymen aged 20-40, and every Tuesday and Wednesday 100,000 copies are handed out at areas including major stations on JR’s Yamanote Line.

The size of Japan’s comic book market is approx. 500 billion yen (about US$4.1 billion, in annual sales I’m assuming). However, readers, who are mostly young people, have been stolen away by mobile phones and the Internet, setting the market on a downward trend. Kai explains: “To get into the market as a latecomer we needed to be bold by making our product free.”

What’s surprising is the fullness of content in the pages that wouldn’t make you think it’s free. The inaugural issue for Jan. 16-17 contained 12 series and was 230 pages long. There is also an impressive lineup of writers, including Tatsuya Egawa, author of Tokyo University Story (he’s doing a manga version of Botchan [English translation of the original novel at No-Sword]). The manuscript payments made to regular contributors are reportedly in line with other manga magazines.

Aggressive use of the Internet

So, can this be profitable? The company has not released its revenue plans, but there are only 26 pages of ads, constituting 10% of the entire book. This is far fewer than R25, which is 40% ads, indicating that they are not relying on ad revenue.

Actually, Digima allows readers to access past series on the Internet for a monthly fee of 500 yen. If membership grows healthily, then this by itself will serve as a major revenue source. In addition, the company intends to issue a trade paperback in the first half of this year. These two are what Kai envisions as the main revenue streams for his company.

The reason that Gumbo has included 12 series is simple. The more series there are, the more likely it is that one will become a hit. If a hit emerges, the trade paperback edition will become a long seller, allowing for healthy returns.

Free distribution is simply a method to lower the hurdles for entry into the market. The subsequent non-free businesses will be the main focus, making this fundamentally different from the free newspapers. The inaugural issue immediately “sold out” its 100,000 copies, succeeding in finding their way into readers’ hands. Will it be able to earn loyal fans? Gumbo’s true battle will be from here on out.

(Writer: Akihiko Fujio; Photo: Koichi Imai)

Comment: I don’t know about paying 500 yen/month just to read manga unless there were a series I was really into (or if I were into scanlations), but hey it sounds like a good enough model if the quality actually is high enough to result in hit paperbacks and TV/movie licenses.

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