Wednesday, July 17, 2013

Intellectual property and Marvel

(I told you I'd connect Stan Lee to this)

For about the past fifty years the company which is now Marvel entertainment, has made a spectacular amount of money and has done it in virtually every medium from comics to television to film to video games to  novels to even, Heaven help us, the stage.

This is all the more remarkable when you consider that shortly before its period of dominance the company was a third rate imprint that was, by some accounts, on its last legs.

The rise was a remarkable achievement both in American publishing and pop culture. In economic terms alone, it shows how a small company with almost no resources or structural advantages can come to dominate an industry and generate billions of dollars.

One aspect of that story which is particularly relevant given our recent posts on the subject is the way Stan Lee used public domain (and in some cases, not-quite-public domain) intellectual properties as an important part of his business model.

First a quick and hopefully painless bit of comic book history.

Superheroes were the first big original content hit of the medium. Starting with Superman in 1938, they dominated that side of the industry for almost a decade. Licensed titles (like Dell's Disney line) were, by some sources, bigger sellers but if you were creating characters specifically for comics in the early Forties, superheroes were where the money was. By the end of the decade, though, the boom was largely over and other fads such as crime, horror, Western, funny animals, funny teenagers and (with a very unlikely origin) romance took turns as the next big thing.

Of course, comic book publishers kept trying to bring back the genre that had started it all. Lots of companies tried to introduce new superheroes or dust off old ones but without real success. Among others, the company that would become Marvel was particularly badly burned by a superhero push in the mid-Fifties). The big exception here is Magazine Enterprise's Ghost Rider in 1949 but as Don Markstein pointed out, that character blended the faded superhero genre with the up-and-coming genres western and horror.

It was not until 1956 that a team working under DC editor Julius Schwartz came up with a workable formula: take a dormant mid-tier character from the Forties; completely rework the character (sometimes keeping only the name) with a science fiction origin, streamlined jump-suit inspired costumes and a heavy emphasis on space age themes.

In rapid succession and generally with great success,  Schwartz applied this rebooting approach to a number of properties and soon other companies were trying their hand. As early as 1959, Archie Comics (which had been known for a relatively successful and very violent collection of superhero titles in the Forties) had hired Joe Simon and Jack Kirby to rework their character the Shield. As the Sixties got going almost everyone was in on the act.

In 1961, Marvel Comics joined in. Marvel was a small part of Martin Goodman's middling publishing company but it did have a couple of significant assets: a few well-remembered Golden Age characters (the Human Torch, Namor and Captain America) and comics auteur Jack Kirby. Given the market conditions of the time, Kirby's brand was extremely valuable. There was a tremendous demand for all things associated with the previous era of superheroes and Kirby had been a major player with an exceptional level of prominence. In an era when most stories went unsigned, his name was a big enough selling point to be featured prominently on the covers.

Much myth has accumulated around the creation of the Fantastic Four, partially because of the impact the title would go on to have and partially because none of the people involved (Goodman, Lee, Kirby) can be considered reliable narrators, but if you simply look at the book itself and what had been going on in the industry at the time, FF #1 is about what you would expect, combining Schwartz's formula with the group dynamics of Kirby's team comics and elements of the monster comics Marvel had been producing (the two most unusual aspects, the lack of costumes and secret identity were completely dropped when Marvel introduced Spider-man less than a year later).

I don't mean any disrespect for Marvel here. This is usually how companies really work. You find an existing business model, modify it slightly, then use it to establish a revenue stream and a loyal customer base. That's what Lee did. That's what Sam Walton did with Ben Franklin stores. The big ideas and innovation tend to come only after you have a successful stable operation (which was certainly the case with Marvel). That leads to a much bigger point.

We have seen over the past few years a tendency to grant intellectual property protection to ideas that would previously have been considered general parts of a business plan (for example, offering free wi-fi to customers). What if the ability to borrow and recombine elements of business plans in kind of a de facto genetic algorithm is an important part of a creative economy? What if being derivative is the first step for coming up with something original?

There are also some interesting IP questions involving the creation of Spider-man (Wikipedia has a good summary), but that's a discussion for another time. The part of the story that's most relevant comes a couple of years later.

As mentioned previously, from approximately 1956 to 1966, the big thing in comics was to modernize and reboot Golden age characters. This left Marvel with a problem: With the exception of Captain America, the Human Torch and Namor, the company had a very thin bench. You very soon got down to really obscure characters. The whole purpose of the reboot model is to cash in on name recognition so rebooting the virtually forgotten is of limited value. (You have to wonder how many readers in the Sixties had ever heard of the Thirties Tarzan knock-off Ka-Zar.)

Lee's solution was to launch characters using at least the names of three of the biggest sellers of the Golden Age: Daredevil; Ghost Rider; and Captain Marvel, none of which actually belonged to Marvel, but were instead arguably in the public domain. It is the third one that required considerable nerve.

Captain Marvel had been, by some standards, the most successful character to come out of the Golden Age, outselling even Superman (nuisance suits from DC were a big factor in the decision to eventually cancel the series in 1953). What's more, the publisher, Fawcett was big and, though out of the comics business, still very active, publishing title including Family Circle, Woman's Day, Mechanix Illustrated and Gold Medal paperbacks.

Lee was betting (correctly as it turns out) that Fawcett either wouldn't notice or wouldn't bother to sue an obvious copyright infringement. It was a bold but not a reckless move. Attitudes toward copyrights have changed greatly and many of those changes involve the earlier emphasis on active properties and going concerns. Up until recently, the primary reason you acquired and held copyrights was because you wanted to do something with those properties. As a result, if someone went out of the comics business and no one had an immediate interest in their properties, the copyrights were often allowed to lapse or (in the case of Fawcett) go unenforced.

There's a lesson here about creative destruction. Companies, particularly those in the creation business, often start out by borrowing business plans and skirting copyright and patent laws. You can certainly argue that this lowers the value of the intellectual property they are making use of, but I think you can also argue, as or more persuasively, that the returns on tolerating this behavior from small, young companies far outweigh the cost.

For more on the IP beat, click here, here, and here.

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