Platinum buys Wowio

Ace reporter Heidi MacDonald tracks down an SEC filing that indicates that Platinum has indeed bought Wowio. Scott Christian Sava talked to William Lidwell, the president of Wowio, and came out reassured. It sounds like the model will change a bit: Books will be offered for free viewing or for pay, and readers outside the U.S. can now access the comics.

The sales agreement indicates that all current Wowio contracts will be terminated, although an e-mail sent out by Lidwell seems to indicate that they are just being amended. (Be sure to read the comments to both of Heidi’s posts for enlightening snark and analysis.)

Creators who worked with Wowio up to now have generally had good things to say about the service, which allowed readers to download comics for free but paid creators 50 cents per unique download. Sponsorships were the key to Wowio’s finances.

Platinum has been attracting some negative attention of late, however, and an article in this week’s Publishers Weekly Comics Week paints a grim picture of the company’s finances. Auditors say that the company had a $9.5 million deficit at the end of 2007 and no assurance that they would be able to get sufficient financing to continue as a going concern. The new year didn’t bring any changes for the better:

In the first quarter of 2008, that trend has continued. A look at the 1st quarter report finds higher cash ($150,527) than at the end of the year, but also a higher accumulated deficit of $14.1 million. Platinum listed $4.8 million in total costs and expenses, compared to $179,382 in net revenue, for a net loss of more than $4.6 million, according to an SEC filing.

As a result, neither Platinum president Brian Altounian nor CEO Scott Rosenberg took their planned $300,000 salaries last year. They also paid a lot of creators late, and perhaps their biggest mistake was stiffing DJ Coffman, whose Hero By Night comic won their first Comic Book Challenge contest. Coffman became well known as a defender of the company’s work-for-hire contract, but when they stopped paying him for Hero By Night, forcing him to put it on hiatus, he became more critical—and the company retaliated by refusing to give him back the rights. In this week’s developments, Platinum sent Coffman a cease and desist order for using the URLs herobynight.com and .net, although they simply redirected to his own djcoffman.com address, and Coffman wondered in print where the $24,000 that Platinum had supposedly spent on marketing his comic had actually gone.

On the other hand, Drunk Dick co-founder Dylan Squires talks to Xaviar Xerxes of Comix Talk about his experiences with Platinum, which he describes as a dedicated company that put a lot of resources into growing Drunk Duck after they bought it in 2006. This is the other side of the coin: Platinum invested a lot of money in Drunk Duck; the problem seems to be that so far, they aren’t making much of it back. Word on the blogosphere is that the company is more interested in making movies than publishing comics, which means they are waiting for a big cash windfall rather than making do with a small but steady income stream. DJ Coffman:

“It was the ‘lottery’ approach, where they buy a bunch of lottery tickets (intellectual property) and throw them at the Hollywood wall and see what sticks … hoping for that big Hollywood payout, hoping for that next Men in Black.”

Tom Spurgeon sums it all up at The Comics Reporter. Go, read!

UPDATE: Platinum has posted the full transcript of the interview on their blog. Naturally, Altounians unedited answers present Platinum in a more favorable light, and Coffman somewhat less so.

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