It's impossible to discuss the impact of manga on the American comics market without talking about Tokyopop and its CEO, Stuart Levy. The 39-year-old entrepreneur describes himself as a "weird creative person who understands business." He's a Georgetown law school grad, fluent in Japanese, who's worked as a graphic designer and mutimedia producer in Japan. While there he got the manga bug and went on to found Tokyopop in Los Angeles in 1997.

He's managed to aggressively publish manga in its original right-to-left reading format—teaching a generation of teenagers to happily read comics backward—while also managing to attract an unprecedented number of young American women to manga. PWCW dropped by Tokyopop's offices in L.A. to talk with Levy about global manga, the movie business and the ongoing state of the manga revolution.

PW Comics Week: We did a phone interview in '02 or '03. I asked you to predict the size of the manga market; you said it would grow to at least $150 million.

Stuart Levy: I was right.

PWCW: Icv2.com's numbers say that the graphic novel segment of the market is $254 million and about two-thirds of that is manga. So you're the prophet. Where is it going next?

SL: Another number? Oh man. I do think it can grow incrementally at retail. I do believe that. Can it double at retail? Yes, if Wal-mart and Target and those kinds of retailers get into the game in a really big way, and they probably will. Not with deep catalogue like B&N and Borders. But they'll do it. We'll make sure they do it.

They've been experimenting with the category for a while. Now with [our distribution and publishing alliance with] Harper, we can go into these stores together with a program. Of course they'll do what they always do—take all the hit titles. That's how they run their business. Which is fine. That's one way it can grow. The other way the category can grow—which is the way I really want it to happen—is that B&N and Borders go through another aggressive increase in shelf space.

PWCW: Will that happen?

SL: Well, retail isn't my strong point, but my own theoretical take is that they can and they will. Here's why: anybody in the book business that isn't tracking the media business as a whole has their head in the sand. We're all looking at a transforming shift from package media to ubiquitous digital distribution of media. How do you take a legacy business model and shift it? We have to deal with that and so do the retailers.

If B&N and Borders are paying attention and looking five years down the line, their businesses are going to need to move from being an event-based, activity-based establishment—where people read and have coffee—to a place where people can truly experience entertainment of all sorts in their stores. Blockbuster is working on it; everyone at retail is working on this. What are people going to want to do in those stores? Well, graphic novels are visual and they're closer to multimedia than anything in the book form. So, are book retailers going to keep graphic novels just a minor, small part of their stores when Amazon and Google are chopping their business up? They have to start to think about what is it that this generation wants to read, how they are going to want to read. What's the Netflix equivalent for books?

PWCW: Tokyopop and manga have changed the bookstore environment completely. Although women and girls were already in the bookstores, you got them to go there looking for comics.

SL: Well, we like to change things and there are a lot of people that don't like change.

PWCW: What about returns? Are they are a problem? For a while in the manga market there were almost none.

SL: No, returns are not a problem. They have been manageable since we first started getting a lot them in the first quarter of 2004. That's when it came in like a tsunami. It took us about a year to adjust to what that meant financially. Now we understand it and we know how to manage it.

PWCW: What's your relationship with the direct market? Comics shops are supposed to have a weird relationship to manga, but there's a lot more manga being sold though comics shops than I had thought.

SL: We're very bullish on the direct market. We think there's a mutually beneficial role between small comics shops and a manga publisher like us, specifically. We support local artists, the lifeblood of the comics shops. And we're both really passionate. The challenge for comics shops, I think, is to get newer customers into the stores. Now that I've studied the history of comics in America, I feel confident saying that they need to remember their own history. If they do, they'll know that back in the '30s, '40s and '50s, this is what the American comic book industry was like. There were all kinds of genres, all kinds of artists and wide popular appeal. The fact that the market happened to get narrow and the genres became more pigeonholed and stereotypical, that's not what made comics big in the first place. So in my opinion we're bringing the comics marketplace back to its roots.

PWCW: Is Tokyopop still growing?

SL: Growth from 2004 to 2005 globally is about 10%. Not a huge growth year, but there's been a lot of preparation for the future, man. Original manga, investment in global manga, is our main thing. We've invested literally millions in making our own manga. Not everybody supports it entirely yet. But you know, I greenlight it all and when I read this stuff, they're all absolutely films. Overall we publish about 500 books a year. How many are original manga? As much as we can afford. More than 100? Yeah, but probably 60 or 70 next year.

PWCW: The core market for manga continues to be teenage girls. The criticism of your publishing program these days is that Tokyopop is focused on original manga and original manga isn't what the market wants.

SL: Well, I am not a reactive person and we are not a reactive company. Every single thing we've tried to do here, there was no existing market for it. Know your history. People who say stuff like that don't understand where we come from. Me and my guys knocked on so many doors in the early days and we just got laughed at about publishing manga in the U.S. "Americans don't want to read anything from Japan!" They all knew what the market wanted, right?

Except that I believed something in my heart. I felt magic about this material. Here's the key. I knew it was real. I didn't know how to get manga to people, but little by little I found a way. Well, I feel the same magic with these original creators. They're smart and funny; they pay attention and they've got great influences. And you know what? I've had guys from a Japanese publishing company tell me that the next thing that's going to happen in manga is that Tokyopop is going to come up with something original that will influence creators in Japan. Because it's just natural that it will happen.

PWCW: One thing about manga, and the American book market in general, is that people love to say something is impossible to do, until someone does it.

SL: My personality is that when people say something is impossible to our face, that's when we're like: let's prove them wrong. But the next challenge is how to get to young boys, because I'm cool with the young girls. I've got no complaints. They're really smart, they know the topics and they appreciate the characters. But we've got to get the crazy boys. Boys are reading manga but not to the degree of girls. It's still typically 60% to 70% girls.

PWCW: Can other kinds of manga work besides shojo?

SL: First, anybody who says a teenage girl is a one-dimensional stereotypical consumer of entertainment doesn't understand teenagers at all. Teenagers are completely complicated and they are rebellious. Media needs to be cross-gender these days and appeal to guys and girls. Look at Naruto, Viz's #1 title. It's about a little boy ninja. Now, why is that something that teenage girls automatically like? Because they're the one's who are buying Naruto.

As a publisher, all I know is you have to stay true to your heart and make something entertaining. You can target an audience and do a focus group and analyze it to death, but at the end of the day, if there's not something magical in the story, if there's no character or conflict or protagonist that's riveting or interesting, the people aren't going to want it. It's not about a formula; it's about purity and truth, in my opinion. If it becomes homogenized, that's when you jump the shark [laughter]. Keeping it fresh, changing it up, that's the only way to make it in this business. And if you fail in the process of doing that, at least you did your best.

PWCW: What made you think manga might succeed in the American comics market, a market dominated by superhero publishing?

SL: I wasn't exposed to comic books growing up. I know you've been a comic book fan forever. But I grew up here in L.A. and my exposure was more or less limited to reading Archie and the Bob's Big Boy free comic I would get when I went to Bob's—which I read religiously, by the way.The other thing I used to read was the comics section in newspapers, which I loved. Calvin & Hobbes, Doonesbury. I was the biggest Calvin & Hobbes fan in the world; Far Side, also. I was a music fanatic; really a music snob—I broke up with a girlfriend because I caught her listening to Phil Collins [laughter]. I was a big music geek and I loved film. Comic books just weren't the thing for my generation in the '80s.

PWCW: There has been much discussion about recent generations that don't seem to be that interested in comics.

SL: Yeah, well everything beyond superhero comics has been ignored. So what made me think manga would work in the American market? I was in Japan and a really cool guy, a CGI designer, gave me my first manga. He said, read this, I want to turn it into an animated show. Tell me what you think. I said, dude, I'm not into comic books. In my generation growing up, it was just embarrassing to be seen with a comic book. I mean I liked girls. But now that I know comic book history, that was a big lull in the comic book business. So it was 1994 or '95 and this guy said you MUST read this manga. I was learning Japanese, so I thought, I'll work on that and no one will know I'm reading it anyway. Well, I started reading this manga and it blew me away.

PWCW: What's the book?

SL: It's a wonderful book called Parasyte. It's one of the first books we ever published. But there's a problem. We published it early on and our rights expired last year. It didn't sell in the States at all—the art is kind of boring to an American eye, but the story is amazing--and my staff was just doing their job and didn't renew the rights. Now Del Rey is publishing it! My baby! The book that launched the manga revolution! It's just wrong! For years a film was supposed to be made and never was. Supposedly there's a script now, so if Del Rey lucks out with timing, they'll have a film that I waited 10 years for. So I'm a little sensitive on this subject.

But that was the manga I fell in love with. I read it and saw a film in my head and said, maybe it's just this one story or maybe there's more here. I ran out to a manga store and looked at the shelves. Now, I'm a relatively mainstream guy and I liked it so much, I thought, there's probably a bunch of other people that would like it, too. I had a couple of people in the U.S. that I met with early on and together we went through all these titles open to us and picked the ones we should do. We got lucky with one of them and I can't even take credit it. One of our guys recommended Sailor Moon. It was fortunate that I didn't say no and thankfully that was the one that got us into a position to build a market.

PWCW: What's the licensing situation like now in Japan? Is it more competitive and more expensive?

SL: We've been licensing titles from Japan now for 10 years and the game has changed significantly since we got into it. When we got in, we could pick anything we wanted and everybody said, "You want to publish this in America? Are you nuts?" We said, "Sure." But, yes, the prices have gone up and it's more competitive, but it's been that way for a few years.

PWCW: How important is it for you to find your own artists as opposed to depending totally on licenses?

SL: I saw the writing on the wall a long time ago. My original dream was always to make films. I thought I could be a bridge between Hollywood and Asia, especially Japan. Manga's so exciting it's like watching a movie while you read it. When your dream is to make films, you learn early on that if you're going to make it in Hollywood, you've got to have something that other people don't have. That means original intellectual property. You don't have to own it 100%, in my opinion, but you have to have title clearance. My first thought was: build this beautiful manga library that we could use to move into multimedia properties and build franchises. But along the way, I learned that the way the Japanese work with their IP is, in some ways, very hindering to the business model we have in Hollywood. They have their own system, which works great in Japan. The rights to IP in Japan are more fragmented and that can stop a title from being cleared in a way that it could be turned into a Hollywood picture.

So licensed stuff is great, but my dream is to create my own stuff, too. Tokyopop is a business and a passion. I call myself a DJ--a good DJ remixes, samples, creates and sometimes simply plays other people's stuff, passively introducing cool shit. Other times you're making your own stuff from scratch. That's who I am. To be able to learn from our mentors in Japan and our mentors here in Hollywood and then to create something for the new generation and take manga and film to the next level. Dude, if I can do that and I can make a mark on society by doing that, tell me that's not cool. From a business point of view, [original manga] is the smart thing to do. But also, if I'm not creating something original then I'm not motivated to keep working my butt off all the time. I need to be passionate about something.

PWCW: So where's Tokyopop with Hollywood? Are there films coming?

SL: Hell, yeah! But it's going to take a couple years. There's Priest coming, which you know about. But there will be more announcements. Our goal is to have people in Hollywood turn to Tokyopop and say, "I know the stuff they've got and the value that they add, on the screen on TV," whatever.

PWCW: Can you talk about your digital initiatives—games, downloading, comics on cell phones?

SL: No one knows what exactly the business model is, per se. But a lot of it's viral. A lot of it is about community for us. You can come to the [newly relaunched] Web site. Let people know what you have to offer and people will tell their friends. We provide people with tools so that they can be creative and can participate. It's not just us delivering something to them. It's really a two-way street.

Recently we launched our digital business in Japan. We prepped for six months and launched our first digital manga for the cell phone. People can read manga on their phone. So we launched the Japanese version of Princess Ai [an original Tokyopop manga]. The first weekend we got 35,000 downloads. One of the most successful launches in Japan. We had a great character designer [the manga artist], which was an advantage. We sold more downloads—these weren't free—than the Japanese Princess Ai print edition, which is published by a small Japanese company we partner with. So that's a market. We're launching 10 titles this year. Maybe 20 next year. There's a business model and we get to experiment with it in Japan as well in the U.S. Of course if that was our only business we couldn't pay the bills, but it's a path that's out there.

PWCW: How much does anime figure in your business?

SL: We experimented with distributing anime on DVD a few years back. It wasn't our specialty and we didn't invest a lot, fortunately, since last year it crashed and burned [via the Musicland bankruptcy]. DVD use has peaked. People are downloading. Now Funimation handles our library of anime. They handle distribution, we co-market. It's not huge, but we had some hits, Initial D, GTO, some popular shows.

PWCW: Are the anime properties important to your business model?

SL: Yeah, definitely. The more media-related exposure, the more the print book sells. Ideally, we'd have the anime rights to every book.

PWCW: Is there a downloadable aspect for your anime titles?

SL: Absolutely. We'll be doing that on a number of fronts. Our philosophy on digital is to be nonexclusive, ubiquitous; go as many places as you can. We could easily make a bunch of our anime available for free on YouTube. We haven't made a decision on that yet, but my general philosophy is open content. But the challenge is that somewhere along the line, if you don't make money, you can't stay in business. So how do you turn that into a business model that's a winner for the content provider and for the consumer? That's what everyone's experimenting with.

PWCW: Can you give me an overview of Tokyopop in Europe?

SL: Our two markets are the U.K. and Germany, and they're very different. There was no manga in the U.K. until we went in. So it was similar to the U.S., a couple of imported things, and Borders and Diamond were doing some things. But there were no local publishers. We've been working on it for two years. We've just announced a new deal with Pan Macmillan, the number-one publishing company in the U.K. Our London offices are in the Pan Macmillan offices and we've just moved our people in. Like teaming up with Harper, in the U.K. our plans are to build the market. It's a younger market in the U.K., even younger than here. I think we're doing about 200 to 250 titles a year. Not our entire U.S. catalogue. It's English-language, so there's no editorial department there. We share inventory but we still have to get it over there and manage it.

Germany is very different. There's a full editorial department and a full production department. They all speak and read German and have to make all the books from scratch. They're also putting out about 200 books a year. The German market for manga actually predated the U.S. market. Mainly three local German publishers, Egmont, Panini and Carlsen, controlled it. We weren't planning on getting in the game there. But the manga guy at Carlson left a few years back, and he's brilliant. We immediately called him up. He came out here and talked and we decided to try Tokyopop in Germany. Ironically, he's the German partner for Shueisha, so all the Viz stuff in the U.S. is published by Tokyopop in Germany. The world is a wonderful and strange place. There's currently no Tokyopop entity in France. We have partners in France, in Italy, in Poland. We're in about 20 countries.

PWCW: I know it's early, but how far are we from seeing something produced out of the HarperCollins [publishing and distribution] deal? Is Meg Cabot [The Princess Diaries] the first book?

SL: Maybe sometime next year. Distribution has switched over. All our books are there, and we're in the midst of the Rupert Murdoch empire. We love them, they're smart, fast and they challenge us.

PWCW: Let me ask about the fairness or unfairness of the contracts for Tokyopop's original creators. You seem to see your global manga program as a partnership with artists.

SL: Like you said, it's really a pure partnership. If it's our idea and we want to execute it, we'll hire an artist and if an artist is willing to work on our idea for pay, we'll do a work-for-hire deal. But if the creator comes to us with an idea or if our editors and creators have brainstormed together and it's a creator's project, we say we can team up—if you want. You as a creator get to create the book—with our editors, by the way. You don't get to do anything you want because this is not fine art. This is about being commercial. Like film, you need a director and a producer. The creator focuses on creating, either drawing or writing. We focus on telling everybody about it and getting the world excited about it, distributing it and marketing and collecting the money so you can get paid. In exchange, we pay money upfront so you can eat. It's a very, very healthy, respectable sum of money. Everything's deal by deal, but generally speaking, in exchange we co-own it together. How much more fair can you get?

And just so the whole world knows, we are deficit financing this whole thing. What that means is that we have not made a dime on this initiative because it's expensive to create content from scratch. We're doing this because I believe in this group of creators. I believe in this generation. Even if people say there is no existing market, I still believe the market potential and audience is absolutely there. This is an investment, and unless we run out of money, we're not stopping.