Article 10: The CrossGen Kool Aid Acid Test

Mark Alessi?s Compound of Creativity has been making headlines again, this time for cashflow problems that have led some freelancers to speak out against the company. Has CrossGen reached a crossroads?
01 September 2003

Ah, CrossGen.

I don't generally write much about CrossGen. Nor should I, really, since I don't read any of its comics. As far as I can recall, the last two CrossGen books I read were the first issues CROSSOVERS and WAY OF THE RAT.

But CrossGen has been getting all sorts of attention in the last few weeks (mostly unwanted) which draws me in regardless. Rather than go through it all myself, here's an article from Newsarama that sums up most of the key points. Basically, though, CrossGen has a cashflow problem. Its last round of investment fell through, and it?s been unable to pay freelancers. Some of the freelancers have gone public about their grievances - not just the non-payment, but the way in which they say it's been handled - and much squabbling has ensued. This really involves two distinct stories: CrossGen's financial problems, and the way in which both sides have dealt with the press.

The good news, if you're a CrossGen reader, is that the publisher says there's another round of investment just round the corner, and it currently expects to have everyone paid by the beginning of October. Which makes this a short term problem, right?

Well, not necessarily. CrossGen boss Mark Alessi's wording was that they were "nearing the completion" of a new round of investment. To my mind, that means CrossGen has a deal but it's not signed and sealed. And deals of this sort can and do fall through at the last minute. Alessi and company should know - by their own account, it happened to their previous investment round. And while CrossGen now expects to have everyone paid by the start of October, the company previously said that it should have everyone paid by the end of August. Slipping deadlines are not a cause for panic - it happens all the time. But until CrossGen has the money in its bank account, it?s not out of the woods.

That said, the CrossGen business plan must be a little more off course than a mere cashflow problem. This time last year, Alessi was telling interviewers that he had realistic goals for his company: "I think in one year we'll be a solid number three. But I hope in two years [ie, next September] to be number one." And indeed, CrossGen has always maintained that, while it was quite naturally expecting to run at a loss at first, it would establish itself as one of the top publishers in the North American industry.

CrossGen normally get somewhere around 4-5% of the direct market share. July's figures were distorted by failure to ship some of their books, but in June they were the number fvie publisher in the direct market. In fairness, the market share of the number three publisher, Image, was only around 6.5%. The idea of CrossGen overtaking them is not ridiculous. But with Marvel and DC's market shares both hovering around the 30% mark, the idea of CrossGen expanding to such a degree that it could be the number one publisher by next year seems fanciful.

Of course, there's also the bookstore market to take into account. But anecdotal evidence of poor sales continues to circulate; and certainly, it's not the CrossGen books that are dominating the bookstore charts. If a new publisher is going to come from nowhere and become the number one in North America, it's probably going to be a manga reprinter.

Even allowing for a degree of PR rhetoric, CrossGen's idea of an attainable goal seems to me, and has always seemed, extraordinarily optimistic. Ambition is one thing, but when CrossGen's predictions for its own achievements deviate this wildly from reality, it does make me wonder just how realistic CrossGen's view of the industry is. Maybe Alessi will prove us wrong in the end, but when he's struggling to pay the freelancers, the signs don't look good. CrossGen may have a plan for success, but does it have anything to do with the realities of the industry?

That's the first issue; the second involves public catfighting, and is therefore much more entertaining. Should freelancers have gone public about their disputes with CrossGen?

It's certainly easy to understand why CrossGen would prefer these matters not to be publicised. Nobody wants their cashflow problems to be aired in public. Aside from anything else, once word gets round that you can't pay your bills, your suppliers start insisting on payment up front, credit becomes harder to obtain, and a vicious circle ensues.

But ultimately, none of these are the freelancers' problem. They have a simple and legitimate concern: they'd like to get paid. Moreover, they clearly feel that they have been treated unprofessionally by CrossGen. Is there any particular reason why they shouldn't go public with their complaints?

There are several factors that would normally dissuade unpaid freelancers from going public with complaints against CrossGen. As a matter of goodwill, they might not want to cause CrossGen adverse publicity. From a business perspective, they might not want to alienate a publisher who could provide more work in future. However, neither of those factors are likely to apply here - the freelancers in question have clearly already been alienated by CrossGen and have presumably passed the point of expecting to work for the publisher again.

That leaves a third practical issue, which is that you wouldn't want to be seen as a troublemaker in the industry - something that might put off other publishers as well. Of course, there are plenty of established freelancers out there with a track record of biting the hand that feeds them (or, depending on your perspective, not letting commercial considerations dissuade them from speaking their minds). And Peter David seems to be doing okay, doesn't he? Granted, inkers stand to gain less from being seen as controversial firebrand talents than writers or pencillers, but for established, competent professionals, the risk of lost work may be less severe than it first appears.

In any event, these are all practical, rather than moral, reasons for the freelancers to keep their mouths shut. Is there any obligation on them to keep quiet? Not one of confidentiality, that's for sure. A freelancer, to my mind, is in no different position in this regard than the company that supplies CrossGen's stationery. This is not inside knowledge; freelancers are not insiders. At least, not in the capacity that's being aired at the moment.

A more valid criticism would be that the freelancers could simply have gone to court to recover their money, which should have achieved their goal without causing so much embarrassment to CrossGen. I have some sympathy for this argument, but it's not a killer point. Litigation is slow and expensive - and not much use if the company goes bust before you get a decree, which is always a realistic concern in these situations. Moreover, it would apparently involve raising small claims proceedings in CrossGen's home state of Florida - hugely inconvenient if you don't live there.

And then it could be argued that, however valid their claims may be, if CrossGen doesn't have the money to pay all of its debts, there's no reason why these particular freelancers should be privileged over all the others who are owed money, simply because they've complained louder. This appears to be what Alessi had in mind with his notorious "blackmail" comment - why should they jump the queue simply because they shout louder? This is a fair point, but everyone knows that when a company is in questionable financial condition, you try to recover your debts while you still can. That's the way of the business world; surely it shouldn't come to Alessi as any sort of surprise.

Alessi has pointed out that the freelancers who are complaining publicly are a minority - some 30 to 40 freelancers are unpaid, he says, with only a handful loudly protesting. Of course, those other freelancers might be hoping to get more work from CrossGen, and might not feel personally aggrieved by their treatment; there's really more to this side of the story than mere non payment, as we're talking about what appears to be a total breakdown of relations with these particular freelancers.

Alessi also points out that even though CrossGen's financial problems have been an "internal issue" for some three months, "not a single person has left the company despite the fact the phones from Marvel and DC seem to have direct lines here to CrossGen". This sounds good, but how much weight can we really place on it? We saw when Mark Waid left that CrossGen's staff have restrictive covenants in their contracts that attempt to stop them defecting to rival publishers. It's hardly surprising, then, that CrossGen staff aren't defecting in droves - they aren't allowed to.

For all that, though, the dispute with the freelancers may well be a storm in a teacup. In my view it's still one that they're quite entitled to raise in public if they're prepared to accept the commercial consequences of that. It's an object lesson in the importance of maintaining good relations with even the low-value creditors, because they can cause trouble. The real story here, though, ought to be the wider state of CrossGen's health. When is this much-delayed money coming, and just how firm is CrossGen's grip on market reality?

Paul O'Brien is the author of the weekly X-AXIS comics review.

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