San Diego Reader

At one time, nearly all American comic books were created in New York City, distributed by union trucking firms, and sold on newsstands or in convenience stores. Only a few dozen comic-book stores existed. Throughout the '60s and '70s, two New York publishers had a stranglehold on comic production -- Marvel (birthplace of Spider-Man and the Hulk) and DC (Superman and Batman's home turf). Few competitors in the four-color field managed to swipe more than crumbs from the $400 million annual pie, either on the publishing side or in newsstand distribution, the latter business having reputed mob-related monopolies.

Then along came Bill and Steve Schanes.

The siblings opened their first Pacific Comics retail store on Cass Street in P.B. in 1974, when Steve was 20 years old and Bill 16. "We started as a mail-order company, selling to consumers via ads in the Comics Buyer's Guide," says Bill. "Later on, we took out full-page ads inside Marvel comics. As our business built up, we decided to add some retail stores, and as that built up, we realized that we couldn't get merchandise for our stores, so we opened up a distributorship...other stores in the area didn't have a distributor to buy from, so they started ordering from us."

Due in no small part to the success of fantasy-themed movies like Superman and Star Wars, comics geared toward older readers were selling in record numbers, earning mainstream press, and becoming popular -- and collectible -- with adults and teenagers. To service the growing network of comic-book stores, Pacific expanded its distribution nationwide, after raising $200,000 by closing its four San Diego retail locations and selling off inventory. The Schaneses' rise in the industry put them atop a brand-new distribution network that would be called the "direct market," i.e., comic publishers bypassing the traditional distributors and making direct sales to comic shops through independent distributors like Pacific.

The explosion of comic shops from the late '70s onward was essentially made possible by the Schanes brothers and rivals such as Phil Seuling and his East Coast Seagate Distribution (begun in 1974). Direct-market distributors serviced comic shops almost exclusively, offering comics at a much cheaper nonreturnable rate than did newsstand distributors. Retailers had the luxury of pre-ordering comics and keeping their extra copies to sell later as backstock, thus enabling collectors to purchase older issues of their favorite titles. Retailers could make a 40 percent profit on new comics instead of the usual 20 percent, then earn even more by marking up the older (and ostensibly rarer) leftover "back issues."

By 1980, around 1500 comic or fantasy-related specialty shops operated nationwide, many of them part of multistore chains, up from an estimated 200 or 300 in 1974. Pacific was operating out of a 2200-square-foot office-warehouse on Ronson Road in Kearny Mesa. The company had 500 wholesale accounts and grossed just under a million dollars that year, according to Steve. It soon rented an adjacent 2200-square-foot space as well.

Of course, Pacific's pipeline from the publishers direct to comic shops cut out the distribution firms that had long been supplying comics to retailers, under long-standing union contracts.

Greg Pharis ran a shop in Kensington called Golden State Comics. Currently the owner of San Diego Comics, near SDSU, Pharis recalls, "Steve was really worried about rumors that guys from the local ARA [periodical distributors], which was said to be Mafia controlled, were out to get him and Bill. He told me once that someone had knocked out his windows and he'd been personally threatened a few times...he was obviously anxious and scared, rightfully so, but you could tell he was also a little pleased and proud that he'd gotten the big guys' attention in such a big way."

Pacific's distributorship thrived in part because it carried titles produced specifically for the direct market -- Jack Katz's First Kingdom had debuted in 1974, Arcade (edited by Bill "Zippy the Pinhead" Griffith and Art "Maus" Spiegelman) and Harvey Pekar's American Splendor in 1975, and Dave Sim's Cerebus the Aardvark in late 1977. Wendy and Richard Pini's Elfquest and Eclipse Comics' first publication, Sabre, both started in 1978, Raw premiered in 1980, and Zap Comix creator Robert Crumb launched his magazine-sized comic anthology Weirdo in 1981.

Also in 1981, rival distributor Capital City launched its own black-and-white title, Nexus, a futuristic superhero series by Mike Baron and Steve Rude. With their own distribution network already in place, the Schanes brothers decided they were in a perfect position to become publishers themselves. This seemed unlikely, given their modest financial means -- they were still paying off debt from a $300,000 bank loan taken out in 1979 at 25 percent interest -- but the brothers were industrious, not to mention ballsy.

Interviewed in October 2003, Steve Schanes explains, "I figured if you want to get people's attention with a new comic book, who better to do it with than the King of Comics, Jack Kirby! We were already friends with Jack. We used to send him free copies of comics he'd drawn for other publishers because they never sent him any! So I just went ahead and called him on the phone, and he turned out to be a nice guy, completely accessible...we negotiated a whole detailed publishing deal between the two of us. No middlemen."

Jack Kirby was living in Thousand Oaks and doing animation designs for TV shows like Thundarr the Barbarian. He'd basically quit the comic business in 1977, after having received little more than a weekly salary since the '40s, despite creating or cocreating iconic characters Captain America, the Hulk, the Boy Commandos, and the Silver Surfer. Kirby received no money from the spin-off comics, reprints, TV shows, cartoons, or movies, nor from the lunch boxes, action figures, board games, Halloween costumes, trading cards, posters, buttons, T-shirts, footie pajamas, or Underoos.

This was because creators at Marvel and DC labored on a "work for hire" basis; they were paid a per-page rate and forced to sign contracts that granted them no proprietary rights to their own creations. To cash their paychecks, they had to waive all rights to their work, even to characters, story lines, and entire series they had thought up and developed. The publisher owned it all, right down to the original hand-drawn artwork, and the notion of royalties was unheard of.

The Schaneses told Kirby that they wanted only publishing rights to new works; he could keep ownership of anything new and copyrightable he created. They'd even help him license characters for use overseas or in television, film, or other media. Pacific was also the first company to offer Kirby royalty payments according to a comic's sales figures: 8 cents on the dollar and 10 cents for comics selling over 100,000 copies. If Marvel comics, selling around 150,000 copies on average, had offered royalties akin to Pacific's, this would have worked out to $13,000 in payments to the artist.

But this was not done in comics previous to Pacific. In the '70s, Superman creators Jerry Siegel and Joe Shuster had to sue DC Comics just to get meager financial compensation and byline credit for their billion-dollar creation (each settled for $30,000 annual lifetime payments -- Siegel and Shuster were both 17 years old in 1939, when DC paid them $200 for the rights to Superman).

Kirby had a partially drawn project called "Captain Victory and the Galactic Rangers," originally the storyboard to a proposed screenplay and then planned as a book-length graphic novel with no publisher in mind. The artist was happy to let the Schaneses break up his story line into chapters -- with Pacific staffers and freelancers inking and coloring the artwork to present Captain Victory as a bimonthly comic-book serial.

The first issue of Captain Victory hit comic shops in August 1981, selling around 70,000 copies. "Those were incredible numbers, right up there with Marvel and DC," Steve Schanes informs me. Within six months, circulation was up to 85,000 per issue, and the comic had been licensed for publication in seven foreign countries. The third issue of Captain Victory netted Kirby a $6000 royalty check, and Pacific's publishing and distribution ventures together that year grossed about $1.2 million.

1981 -- The Year in Comics: Marvel takes notice of the growing direct market and produces a title specifically for comic shops -- Dazzler #1, with a roller-skating heroine, sells 400,000 copies, about twice normal for a Marvel comic. Pacific Comics Distribution circulates 28,000 copies. Artist Frank Miller (who'd go on to revolutionize the Batman character in the Dark Knight Returns series) writes Daredevil, initiating a trend toward grim, urban story lines. John "X-Men" Byrne begins writing and drawing The Fantastic Four. The Flash hits issue #300. Dean and Jan Mullaney found Eclipse Magazine, an independent black-and-white series. Midwest distributor Big Rapids goes under -- two former employees, John Davis and Milton Griepp, form Capital City Distribution, headquartered in Madison, Wisconsin.

Steve Schanes says it fell upon him to find and negotiate deals with creators, while brother Bill took on the nuts-and-bolts aspects of business and accounting. "I just was a little older, with a little better vocabulary, not any smarter than Bill -- he's as smart as they come -- but I was a little more comfortable on the phone. And also I have a background in art, I have a degree in sculpture...so I'm very familiar with the terms of art, its vocabulary and how art is done, and that gave me insight into artists. It was natural that I was the one to talk to the creators."

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