Marketing a new universe of heroes; how Milestone Media broke open the comic book industry with a blockbuster distribution and publishing deal.

How Milestone Media broke open the comic book industry with a blockbuster distribution and publishing deal.

There is a revolution going on in a Manhattan high-rise on 23rd Street near the Avenue of the Americas. On the fourth floor, a small army is busy creating a new universe. It is a world not unlike ours, full of colorful heroes and sinister villains: Blood Syndicate, Hardware, Icon, Kobalt, Shadow Cabinet, Static Xombi. The denizens of this world are made in the image of their creators - a band of artists, editors and writers of backgrounds not limited by race, age or gender. It's a strange new world, one you may not have heard of yet, largely because its universe is the comic book industry. As a poster in a far corner of these offices proclaims, "This Revolution Will Not Be Televised."

At least not yet.

Welcome to Milestone Media Inc., a three-year-old, black-owned comic book company based in New York. Milestone's operating philosophy is based on the premise that comic book characters with "powers and abilities far beyond those of mortal men," as well as the artists and writers that tell their stories, should be African-American, Asian, Latino and female - as well as white and male.

That premise has been validated at the cash register. Since Milestone's first comic book debuted in February of 1993, the publishing company has sold about seven million copies of seven monthly titles to the retailers that make up the industry's direct market. Sales for 1993 alone hit 3.5 million copies, raking in more than $5 million in sales. Milestone's fans range from U.S. Supreme Court Associate Justice Clarence Thomas to filmmaker John Singleton.

But diversity alone is not what makes this company special. Afrocentric and multicultural comics are far from new to the industry (see sidebar, The New Adventures of Blacks in the Comic Book Business"). The Milestone revolution is driven by the application of a more basic business premise: The greatest product in the world won't make money if you can't make consumers aware of it, and then get it to them.

By cutting an unprecedented marketing and distribution deal with industry giant DC Comics Inc., Milestone's principals, President and CEO Derek T. Dingle, V.P./Editor-in-Chief Dwayne McDuffie and V.P./Creative Director Denys Cowan, have staked a claim on a $1 billion industry, long lacking in minority representation.

Partnerships between large corporations and small independent companies are hardly new, but Milestone serves as a model of how a small black firm can benefit from forging a strategic alliance with big business.

WHO'S FRONTING?

Such alliances bring with them their share of challenges, particularly for black companies. For example, several other black comic book publishers have charged Milestone with not being truly black-owned, but merely a division - or worse, a front - for DC's courtship of the black consumer market.

However, Milestone is quick to note that DC has no equity in the company. The partners pooled over $300,000 in personal savings to bankroll the start-up, and the company is now looking to establish lines of credit with local banks.

Milestone's relationship with DC can be likened to that of an independent film production company affiliated with a major Hollywood studio, or an independent label tied to a major record company. Milestone hires the writers and artists to create the characters and develop the story lines. In turn, DC, which is owned by multimedia giant Time Warner Inc., prints, markets and distributes the books.

In fact, Milestone's partners compare their alliance with DC to Spike Lee's arrangement with Universal Pictures, and the deal with Warner Bros. made by the artist formerly known as Prince. These partnerships do not mean that Forty Acres And A Mule Filmworks or Paisley Park are not black-owned companies.

"We are going to continue to see these types of relationships in the industry," says Maggie Thompson, editor of The Comic Buyers Guide, a comic book industry trade publication. "There are a lot of big entertainment companies out there looking to diversify either through partnerships, expansions or acquisitions."

When stacked up against other small publishers, Milestone is holding its own. All seven titles are in the top 300 of some 1,600 titles sold each month, while Milestone's overall title market share was 0.5%, according to t he August issue of Internal Correspondence, a comics trade magazine.

That's not bad when you have a host of smaller publishers fighting over the 20% share left from the top six comic book publishers, says Roger Fletcher, vice president at Diamond Comic Distributors Inc., the world's largest distributor of American comic books which represent over 4,000 retailers. The top industry guns right now are Marvel, DC, Image, Dark Horse, Malibu and Valiant.

Not long ago, comic book buyers were into gimmicks and fancy, specially packaged books, such as those with glow-in-the-dark covers, says Fletcher. "Now comic book fans are returning to buying books that have good covers, illustrations and stories. Milestone has all three."

A sample of Milestone's wares: Blood Syndicate, a multiethnic, super-powered street gang; Icon, a brother from another planet who started out on Earth as a slave and is now a conservative black attorney and superhero; and Hardware, a technological genius who challenges the corrupt and racist employer who exploits him and his inventions.

In addition to quality artwork and storytelling, retailers and distributors are impressed with Milestone's 100% ontime delivery record, compared to an industry average of between 60% and 80%.

Milestone's talent pool consists of about 15 full- and part-time employees and about 120 freelancers, including writers, pencilers and painters. To help recruit and retain talent, Milestone developed an equity relationship with its staff. "Artists and writers who create characters for us receive money from any licensing or merchandising deal for that character," says McDuffie, who oversees the editorial content of every book, from concept to print.

THE BEGINNING...IN

A PLACE NOT

FAR AWAY

The principals of Milestone, each of whom owns an equal share of the business, make for unlikely revolutionaries. Their partnership is based on each bringing skills and experiences critical to the success of the company. The mildmannered Dingle, 32, developed a keen understanding of business and deal making during 11 years as a business journalist, including stints as managing editor of BE and as a senior writer at money magazine. The 32-year-old McDuffie, an amalgam of goodnatured seriousness, is a former editor at marvel Comics, which is Coca-Cola to DC Comic's Pepsi. And the playful Cowan, 33, is simply one of the hottest comic book artists in the industry.

A 20-year comic book artist veteran, Cowan was essentially the point man for starting Milestone back in June of 1991. He made the initial phone calls to the two other partners about starting an independent comer book company. "It was important for me to bring together people who had the skills to complement the ones I didn't have," explains Cowan, who had worked with the best and brightest in the business since graduating from New York's High School of Art and Design.

McDuffie brought editorial experience to the relationship. Cowan and McDuffie met when they created a black superhero, Deathlock, for Marvel. A University of Michigan graduate and former New York University film student, Mcduffie was hired by Marvel as an editor in 1987, but got the chance to write for nearly every major Marvel character, including Spiderman. In 1990, he left to become a full-time freelance writer for marvel, Harvey Comics and Valiant.

Dingle was invited to join the team because of his business acumen. A graduate of Norfolk State University, Dingle is a childhood buddy of Cowan's. As youngsters, they would sit next to each other in class, reading comic books. After school, they would create their own with black characters. A fourth founder, Michael Davis, is another veteran artist who as worked for Marvel and DC. He would be responsible for finding and nurturing new talent for the venture.

The group faithfully met, for six weeks, at Cowan's Brooklyn studio apartment every Thursday evening. "From a creative standpoint, we decided to show a range of multicultural superheroes," says Dingle, who was still holding down his job as a senior writer at money at the time. "From a business standpoint, we wanted to be extremely competitive, so we decided to create a line of books with a shared universe of characters."

Creating the product would be a piece of cake compared to distributing it. Many black comic book publishers have great characters and fascinating story lines, but they are hamstrung by the difficulty of getting enough product out each month to develop a large and loyal following. Milestone's solution: strike a distribution deal with a major publisher. This way, they could reach 8,000 retailers while bolstering industry confidence in their line.

The group went with DC Comics because of its progressive and innovative stance in the comic book industry. Furthermore, DC generates billions of dollars from television animation and syndication, movies (including the Batman films), product licensing (ranging from trading cards to cereal), promotional tieins and other trademark deals.

Cowan's stalwart reputation at DC, notably his work on the Batman 50th anniversary comic book, also made it easier to get the proposal to Paul Levitz, DC's executive vice president and publisher, responsible for business operations and legal negotiations. The 40-page, hardcover bound document covereed three main areas: market information on how the company could tap into a ripe billion-dollar industry, including the $7.9 billion black teen consumer market, an outline of the books and a financial profile of the company's structure.

Despite the risk of partnering with a start-up, Levitz says he was very excited about such a new creative approach. "The partners who made up Milestone included some of the most talented and well respected writers and illustrators in the industry," he says.

From September to October, Milestone's principals held some seven tow-hour meetings with Levitz to talk about how they'd create the books. Over the next three months, a second stage of three-hour meetings was held three times a month to go over the legal structure of DC serving as Milestone's distributor.

While working out the kinks with DC, the Milestone partners were consulting a lawyer and accountant. "We had to make sure we had everything in place in terms of our own business and legal structure," says Dingle. The company was structured as a Subchapter S corporation, which is designed to protect a limited number of shareholders (fewer than 35).

By February, DC and Milestone were ready to negotiate different points of the contract. At that point, other DC executives were brought in. Including the business plan, Milestone's proposal, referred to as the "Living Bible," had grown to 400 pages (it's now up to 900).

Milestone had three key demands: (1) total creative control; (2) copyright ownership; and (3) final say on merchandising and licensing deals. To further structure the deal, Milestone borrowed a contractual innovation from the film industry, whereby a major Hollywood studio pays an independent production company a creative service fee for a movie, while sharing royalties. Thus, DC now pays Milestone an aggregate service fee of $500,000 or more, depending on the size of the order, for every comic book title it creates.

In addition, DC serves as Milestone's media and product licensing agent, pitching characters to potential manufacturers. Warner Consumer Products, the licenser for DC, helped Milestone land its deal with SkyBox International, a leading producer of nonsports trading cards. DC and Milestone share any money generated from licensing and merchandising agreements, as well as royalties for each book sold. The contract with DC was finalized in May of 1992.

The gateway to Milestone's universe officially opened a month later on June 8, 1992: a 1,200-sq.-ft. office in the Printing Arts Building, only a few doors down from Cowan's private art studio. Last year, Milestone moved into larger, 4,200-sq.-ft. offices in the same building.

Milestone took further advantage of its vendor relationship with Time Warner, getting the company to furnish their offices (with mostly secondhand furniture). Milestone's telephone line is also wired through Time Warner's system, reducing their rates by 50%. And DC's printer, Montreal-based Ronald Plant, handles Milestone's books.

Between February and may of 1993, Milestone launced four monthly titles: Hardware, icon, blood Syndicate and Static. This year, the company released three more monthly books: Shadow Cabinet, Xombi and Kobalt.

WHEN WORLDS COLLIDE

While 1993 was a boom year for the comics industry, 1994 saw many small publishers and retaileres go bust. Several battles continue to rage among the survivors. There's the fight between blackowned publishers looking for their piece of the action in an industry dominated by white publishers, writers and artists. Another is between companies trying to grab minority readers, who make up roughly 30% of the market. Recently, former Milestone Director of Talent Development Michael Davis was appointed CEO of Motown Animation and filmworks, which will produce a multicultural comic book line.

Mileston's titles definitely benefit from being under the DC imprint, says John Miller, editor of Comics Retailer, a trade magazine. In addition to riding on the coattails of DC's cooperative advertising programs, "Milestone gets better shelf space and a higher profile than other African-American publishers," he says.

The potential of the Milestone/DC alliance was recently displayed by the financial and popular success of their summer joint-publishing effort, Worlds Collide, which sold 1.8 million copies. The 14-book series featured characters from both the Milestone and the DC universes. Worlds Collide helped boost Milestone's visibility and position in the comic book industry. Sales on its titles increased by between 30% and 50%.

Milestone is pumping up its campaign to reach a broader audience. New efforts include a host of comic book mini-series; a newsstand magazine aimed at kids as young as six, Milestone for Kids licensed apparel; and possibly some trade paperbacks. The firm;s first set of 100 trading cards, released by Skybox International, was listed as one of the best in 1993 by Hero Illustrated, a comic book trade publication. A second 100-card set is due out in mid-1995.

Milestone's stake in the industry depends heavily on the potential for lucrative merchandising deals, movies and television series, note industry experts. "They're doing pretty good, given their characters aren't nationally recognized," says Miller of Comics Retailer, "meaning, they haven't appeared on television, ensuring that everyone who walks into a comic shop knows them by name."

Then again, don't be surprised if certain Milestone characters storm into you living room soon. Word's buzzing about that an animated series is in the works. The Milestone revolution may be televised after all.