The Magazine

The Crash of 1993

As the great comic-book bubble showed, sometimes there’s no recovery from a speculative boom

Jun 13, 2011, Vol. 16, No. 37 • By JONATHAN V. LAST
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What Tolstoy wrote about families is true of economics: Boom times are all alike, but every crash is disastrous in its own way. That’s why stories about bursting bubbles are always instructive. There are lessons in the smallest of them, even the bubble that led to the comic book crash of 1993. 

Comics!

Once upon a time comic books were ubiquitous and worthless. Sold in drugstores for a dime during the 1930s and ’40s, they were fun, pulpy reading for kids and youths. Issues were printed by the hundreds of thousands—even a million for the top titles—and then read, passed around in classrooms, locker rooms, and barracks, and eventually thrown away. A few odd ducks collected the things for pleasure, but this barely amounted to so much as a hobby.

Over the years the appeal of comics narrowed somewhat, but the audience grew more intense as it shrank. Specialty shops appeared that sold nothing but comic books. By the mid-1980s, a brisk collectors’ market existed.

In 1974 you could buy an average copy of Action Comics #1—the first appearance of Superman—for about $400. By 1984, that comic cost about $5,000. This was real money, and by the end of the decade, comics sales at auction houses such as Christie’s or Sotheby’s were so impressive that the New York Times would take note when, for instance, Detective Comics #27—the first appearance of Batman—sold for a record-breaking $55,000 in December 1991. The Times was there again a few months later, when a copy of Action Comics #1 shattered that record, selling for $82,500. Comic books were as hot as a market could be. At the investment level, high-value comics were appreciating at a fantastic rate. At the retail level, comic-book stores were popping up all across the country to meet a burgeoning demand. As a result, even comics of recent vintage saw giant price gains. A comic that sold initially for 60 cents could often fetch a 1,000 percent return on the investment just a few months later.

But 1992 was the height of the comic-book bubble. Within two years, the entire industry was in danger of going belly up. The business’s biggest player, Marvel, faced bankruptcy. Even the value of blue chips, like Action Comics #1 and Detective Comics #27, plunged. The resulting carnage devastated the lives of thousands of adolescent boys. I know. As a 12-year-old I had a collection worth around $5,000. By the time I was ready to sell my comic books to buy a car—such are the long-term financial plans of teenagers—they were worthless. 

The comic-book bubble was the result not of a single mania, but of a confluence of events. Speculation was part of the story. Price gains for the high-value comics throughout the 1980s attracted speculators, who pushed the prices up further. At the retail level, the possibility that each new issue might someday sell for thousands of dollars drove both the sale of new comics and the market for back-issue comics. It was not uncommon for a comic book to sell at its cover price (generally 60 cents or $1) the month it was released and then appreciate to $10 or $15 a few months later.

But the principal cause of the bubble was the industry’s distribution system. Comic books are created and released by publishing houses. There are two giants (Marvel and DC) and then a raft of much smaller independents, which come and go with great frequency. All of the publishing houses left the task of physically getting comics from the printing presses to the retailers to a group of middlemen—the distribution companies.

These distribution companies determined who could and couldn’t sell comic books. They imposed requirements on retailers, demanding that they demonstrate financial reserves and guarantee certain numbers of orders each month. The reason comics were so slow to migrate from newsstands and five-and-dimes to dedicated comic book shops (a process that took nearly 50 years) is that it was hard for these small start-ups to muster the resources needed to secure distribution. These hurdles are why, in 1979, there were only about 800 comic-book shops in the entire world.

In the 1980s, two of the larger distribution companies—Diamond and Capital City—began an aggressive course of expansion. They wanted to nationalize their businesses and eliminate smaller, regional competitors. Their strategy was to lower the barrier to entry for prospective retailers.

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