Robot 6

Investors, not bosses: Ed Chavez on the Vertical deal

When the news that the Japanese publisher Kodansha and printer Dai Nippon had each bought a 46% share of the U.S. publisher Vertical, Inc., hit the internet on Wednesday, manga fans’ initial reaction was shock and dismay. Vertical is well known in manga circles for publishing a number of well-liked series, including Osamu Tezuka’s Buddha and the more recent Twin Spica and Chi’s Sweet Home. They recently announced two more series that had a lot of advance buzz, Tezuka’s Princess Knight and the wine manga Drops of God. When fans heard the news, many of them assumed these series would disappear or be put on hold.

Vertical marketing director Ed Chavez quickly got on Twitter to reassure them that Vertical’s manga plans would not change. In fact, when I spoke to Ed to clarify some of the details of the deal, he told me Vertical’s manga sales were up 650% between 2009 and 2010, which is pretty amazing when you consider that the manga market as a whole contracted during that time.

One of the things I wanted to know was which Kodansha bought a 46.7% share in Vertical: Kodansha Comics, which is publishing manga in the U.S., or parent company Kodansha? Ed said it was the parent company. This means Kodansha is pursuing two different manga strategies in the U.S. Kodansha Comics has taken over the former Del Rey line (which was owned by Random House) and is publishing manga directly, although they have hired Random House staff to edit and localize their books. The Vertical deal is different; Kodansha is simply investing in the company, not running it.

Here is the rest of my conversation with Ed.

Brigid Alverson: You have said on Twitter and in other places that Dai Nippon is the more important investor in the short term. Why is that?

Ed Chavez: The books we are getting with their help are impacting our catalog immediately. They are one of Japan’s largest printers and they work with every publisher in Japan, so they have those connections. They have their own small events at BEA where they speak with publishers like Scholastic, Chronicle Books, Lerner, and they show them children’s books from Japan so they can sell these licenses in the States. Last year, when we were going through this process with Dai Nippon, we were invited into that and they realized that we had a certain set of knowhow that was very unique, because we know Japan. They were also impressed that we were willing to not just be manga, not just be novels, so they could work with us not just as printers—they print Twin Spica and Peepo Choo for us—but they could start going into other ventures to try to make those connections with other publishers in Japan, bringing them over here.

A lot of the localizers here are directly connected with some publisher in Japan. It’s getting harder and harder to get contacts with the big guys. A lot of publishers tend to forget there are other smaller entities out there that are bringing out good content, you don’t see it in the States, you don’t see the books at Kinokuniya, they not talked about by the fans, they not scanned, they are children’s books, there is no exposure for that, you have to be looking for it

What’s unique is we were already looking at those other genres, craft books, cookbooks—our president, before he founded Vertical, was an agent trying to sell children’s books in the U.S. That really intrigued them and got that ball rolling even faster. The thing with Kodansha, we have been talking back and forth with them for more than a year now, and getting that extra stability and balance from Dai Nippon helped everyone involved. They pretty much helped clinch the deal.

Brigid: So, Kodansha bought 46.7% of the shares in the company and Dai Nippon bought 46%. Who holds the other 6.3%?

Ed: Those belong to people like Yani [Editorial Director Ioannis Mentzas] and Mr. Sakai [President Hiroki Sakai] and some smaller investors that have been involved from the beginning. We have had large investors in the past—I don’t think anyone has owned 45 or 46% share before, maybe 30% or a third by a large investment company, banks, trading companies in the past, but that additional 7% or so is held by the people who actually do the day to day operations, and Mr. Sakai, the founder, remains as the president of the company. The staff doesn’t change at all. We are not going to be hiring, but we are also not losing people. Because we have some money, we might get some more freelance translators and letterers.

Brigid: Will Kodansha be running the company, or will you continue pretty much as before, except with deeper pockets and better connections?

Ed: I think it will be the latter. Outside of having been given an offer to move into the Kodansha offices, it has been pretty hands off so far. We are currently contracting books for next year, and the majority of our books are going to be non-Kodansha titles. So far they haven’t made any suggestions, any comments about what we are going after. The president continues to be the same guy, he is the guy calling all the shots, and Yanni and I are the people who are selecting all the books. I went to Random House yesterday to discuss this, and we had nobody there from Kodansha with us. For the most part, this really is an investment in this brand that is Vertical, one that we needed.

Even with our growth, we weren’t exactly financially stable. We have been around for a while and we haven’t had too many quarters of sustainability. That’s not going to change overnight, or even over half a year with good manga sales, but with this influx of money, we can pay our bills and not have to worry about that. We can go after titles we might have been a little reluctant to in the past. For example, for this fall, we do have the Drops of God and Princess Knight, but ideally we would have wanted to have a couple of other series to release. Because we didn’t have the money we were staggering things out. I’m not going to say we will be increasing production too much more beyond what we are now, do 4 books a month but the way we have been trending we have been doing 2, 3 books a month, and hopefully we will get back to 3 to 4 books. Quality is going to continue to be important to us, we are not going to be crazy with that. We have staff and translation [costs], and if we are going to do it well, it isn’t going to be cheap.

As long as I’m selecting the manga, a lot of the books are going to be skewed toward my varied tastes. I have a lot of titles I would love to release, but I know they can’t be, so we are going to be as selective and as picky as we have been.

Brigid: So you will be publishing the books that were already announced?

Ed: Absolutely. If there will be any changes, I think it’s that Vertical will hopefully eventually be the Vertical that everybody is familiar with. It wasn’t until last year that Vertical started producing more manga than anything else, and I’d like to bring us back to being the source of Japanese content in English, because as much as you know I obsess over manga, maybe too much sometimes, I enjoy their novels, I enjoy their nonfiction, I’m a huge fan of Kentaro’s cookbooks. I love the versatility, I love being able to present and be a curator to a catalog like that, and I want to get back to that.

Brigid: Will Random House continue to be Vertical’s distributor?

Ed: We are still being distributed by them. They are actually really excited about this. They have known about our struggles for a long time, and they have known we were looking for investors. They know this is going to bring a lot more stability on our part, and they are happy that we can bring a little more balance to the catalogue. They are very curious to see what additional books we have access to, the kids’ books in particular. Picture books, not comics.

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