SPECIAL REPORT: TokyoPop Shutdown: The Real Story

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As many of you already know, TokyoPop publicized the end of their U.S. publishing efforts on April 15. The announcement came amid massive corporate layoffs, with a rumored six employees left at the end of the chopping block.

"The terrible news of TokyoPop closing their U.S. department down was a shocker to me and to thousands of fans. TokyoPop has brought us many great beloved series, too many to even name," wrote John Matthews, a TokyoPop fan and avid manga collector, in an email. "This shutdown is a sign of proof of the terrible economy and the poor way it's being handled. As a result, many things that we have come to cherish and love are being torn away from our everyday lives."

But in the weeks since TokyoPop's announcement, many media outlets have quickly accepted one overlying reason as the cause of the shutdown: Borders Group's bankruptcy. On what claims? A March interview with ICV2 where Levy talks money:

The facts are simple. Borders -- our biggest customer -- went bankrupt, owed us a lot money, which they didn't pay us, and as a result we are in a very challenging situation, and have had to react quickly to the situation.
"A lot" of money, but how much? Border Group, Inc. filed for Chapter 11 Bankruptcy this past February and began closing stores (about 200) to get out of the red. All potential creditors were sent notices in the mail with the proper filing procedure on www.bordersreorganization.com. The site contains public court records of Borders' case and list of creditors.

After searching the list one by one, TokyoPop never appeared among the names of publishers, meaning they either never filed or have not been processed. The final date to file a claim with Borders is June 1 -- one day after TokyoPop officially closes its U.S. operations. Despite our best efforts, we were unable to reach TokyoPop for comment.

Why would TokyoPop fail to file a claim if they were owed a large amount of money and if they potentially knew these losses in March? The most likely answer is that there is little legitimacy behind their claim, or that they are only guesstimating the loss of sales profits from the closure of 200 Borders stores. At one time, Borders was said to account for nearly 40% of the manga market, the highest among U.S. chain bookstores. As Borders closes more stores, less manga will be sold, TokyoPop loses money, and now, (according to a few media outlets) we are witnessing the end of manga before our very eyes.

But if this was true, wouldn't other manga publishers like Viz Media and Yen Press be just as screwed as TokyoPop?

"Regarding the TokyoPop shutdown in the U.S., it's never easy to watch a competitor close their doors like this, and our sympathies go out to all of the employees of the company and to the fans who are left wondering if they will be able to complete the series that they have been faithfully following," wrote Kurt Hassler, Publishing Director of Yen Press, in an email. "As far as this being the ‘end of manga,' though, I think that is a gross overstatement of the situation. Our own business has been growing steadily -- even exponentially -- in the four years since we were established."

The truth is, there are multiple layers to TokyoPop's demise, and we're out to tell a few pieces of puzzle: the rise of the scanlation market and OEL contract scams.

America: The Scanlation Nation

Scanlations are fan-translated manga titles mass distributed online for free (illegally). Aggregator sites like OneManga and MangaFox host scanlations for free, often by the thousands, and operate by providing many Japanese manga titles that U.S publisher do not yet have the rights to.

"As far as scanlations are concerned, yes, I am very much of the opinion that they have had a significant negative impact on the market, and I would venture to say that they are one contributing factor leading to TokyoPop's closure," Hassler wrote. "Arguments are made all the time that scanlations have been around for years and therefore could not be responsible for the challenges that the market is facing in recent years, but that ignores the fact that the very nature of scanlation has changed fairly recently."

Cue in the aggregator sites. In the past, scanlation groups would host a few titles on their own websites, making it difficult to attract users back to the site. Once sites like MangaFox and OneManga organized and offered search filters, rating systems and fan forums, users were suddenly able to find their favorite titles at the click of the mouse, read as many as they want and discuss their feelings with other fans. The combination of social network with free file sharing made aggregator sites almost unstoppable.

"You have massive sites aggregating hundreds if not thousands of series and actively working to cater to as large an audience as possible for their own gain," Hassler wrote. "If you trace the recent declines in the manga market in the U.S., you can see that they align almost perfectly to the establishment of some of these aggregator sites, and as traffic on those sites increase, sales have continued to dwindle. I think this remains a significant problem for all of the publishers still operating in the market."

OneManga recently discontinued hundreds of scanlations through pressure from a new anti-piracy, RIAA-type publishers group, but with an unpredictable number of scanlation groups constantly translating new titles all over the world, they can quickly switch from host site to host site before anyone can stop them.

"If so many people like to see them on the sites then why not actually distribute them? I am a man that likes… real material possessions, not digital," Matthews wrote. "Think of this people, if you would actually buy the manga… instead of getting it all for free off the Internet… then great companies like TokyoPop would not have to worry so much about closing down and thousands of people can be happy with their lives."

Some aggregator sites even feature mobile versions compatible with Smartphones to enable easy navigation and readability, which is starting to impact the digital manga market. Many publishers like Yen Press just released iPad apps at the beginning of this year. Viz Media unveiled a new iPhone/iTouch app at the beginning of May. With uneven pricing (some titles only $1 less than a paperback copy) and a limited number of titles available to buy and download, the digital market isn't quick enough to compete with the scanlation market.

"When it comes to the legitimate digital manga market, I would say that the business is far too small at this point to be having a negative impact on print sales. We're really just starting to see this business emerge in the last six months or so, and I think that it is going to take quite some time for that side of the market to establish itself," Hassler said. "I expect that we'll be seeing more and more titles available digitally, and I expect that we'll be seeing some experiments with digital-only publication, but while this part of the market will almost certainly begin rapidly expanding, I expect that print will remain the core of the market for the foreseeable future."

Interestingly enough, Levy and TokyoPop haven't once mentioned scanlations as a major contributor to their demise, despite the surrounding facts. There seems to be too many fingers pointing the blame in opposite directions to make sense of the shutdown. While Levy chooses to blame Borders as the source while other media corporations and even fans on TokyoPop's Facebook page blame scanlations -- wouldn't it be easier to blame piracy over a bankrupt organization TokyoPop doesn't (seemingly) have any claims with?

Even further -- how are publishers like Yen Press and DC/Marvel growing "exponentially" if they too face the same piracy challenges as TokyoPop? Either the publishers are exaggerating their growth or it relies on new media markets they are trying to conquer to combat piracy losses. This is where the Rising Stars Original English Language contract scam comes in. From social media, to web, to reality series, to anime -- Manga publishers can no longer just be publishers. They have to do it all, and TokyoPop's desire to dominate the international manga market lead them to a point of no return.

In an interview with Comic Book Resources, former editor Tim Beedle reflects on the massive changes that ultimately resulted in layoffs:
There were certainly times where working at Tokyopop could be a frustrating experience. Like most of the editorial team, I came to Tokyopop because I had a genuine interest in comics and manga and wanted to play a role in bringing some great titles to American graphic novel fans, whether they were licensed from Japan or produced in the United States. And I think we did just that while we were there. I'm proud of just about all of the titles I worked on, especially the OEL ones. However, as time went on, the company's interests and priorities seemed to shift. All of a sudden, we weren't simply manga editors—we were film developers, magazine contributors, social media website operators and reality TV producers. All of which are worthwhile career pursuits, but what's wrong with being editors? I think Tokyopop was at its best when its focus remained on publishing, and for all the time I was there, that's what I focused on.
Here's where TokyoPop doesn't want to blame itself for its own demise. While other publishers attempt to overcome piracy through multimedia efforts, TokyoPop somehow couldn't break into those other markets. And as I'm about to explain in the next section of this article, their ideas were great, but unfortunately flawed. In the end, it was much easier for Levy to blame Borders than to admit he played just as much of a role in hurting his company as he did creating it.

OEL Contract Scams

Original English Language manga are graphic novels created by Americans using the Japanese art form. Once called Amerimanga (though some argue it's not manga at all, but plain old "American comics"), TokyoPop sought to dominate the international market (and compete with scanlations) by marketing OEL manga through its Rising Stars of Manga program. Rising Stars hired aspiring artists to create short manga pilots. If the short was a hit, then the artist would then create a full-length series for the publisher.

How did they determine the success of the series? The editors posted the 24-36 page pilots online and let TokyoPop "community members" comment and rate the series. If it sounds too good to be true, it most likely is, and as many Rising Stars artists found out, the OEL contracts took away much more than it promised:
"Moral rights" is a fancy term (the French thought it up) that basically has to do with having your name attached to your creation and the right to approve or disapprove certain changes to your creation. Of course, we want you to get credit for your creation, and we want to work with you in case there are changes, but we want to do so under the terms in this pact instead of under fancy French idea. So, in order for us to adapt the Manga Pilot for different media, and to determine how we should include your credit in tough situations, you agree to give up any "moral rights" you might have."
Yes, this is written word for word in the "Manga Pilot Pact" (the original link is no longer available, along with TokyoPop's American website, but we obtained the quote here). In essence, TokyoPop gained the rights to the title, characters and storyline, leaving the original artist with a few bucks and a cramped drawing hand. While the payment was not listed in the final version of the contract, Comicsworthreading.com spoke with a source who said earlier contracts promised $750 per pilot ($20 per page).

TokyoPop published many of their OEL pilots online for free without any name attached to the work. When artists attempted to terminate the contract or take back their series, they had to haggle with the publisher's legal department. Some had no option but to buy back the rights to their storyline and characters.

To be fair, not every artist in the Rising Stars program was scammed out of his or her work, and many went on to publish three volumes of their pilot and draw for other companies in the future. TokyoPop was once a leading advocate and producer of OEL manga, but pulled the program inexplicably in 2008.

While manga fans all over the U.S. will mourn the end of TokyoPop, we must never assume the end of manga is near and instead reflect on the happier days… When Sailor Moon revolutionized the shoujo market and made comics cool for girls. When reality TV shifted away from fake tans and talent shows and introduced the search for America's Greatest Otaku. When an aspiring mangaka from Idaho could have the chance to publish his stories and be taken seriously as an artist.

Through Borders, scanlations, scams and layoffs, we may never know the full story of TokyoPop's demise, but we should take every report with a grain of salt as the publisher prepares for the final hurrah on May 31.

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