Steve is 7 years old, and he's a fan of Marvel Entertainment's (NYSE:MVL) Spider-Man, right down to his Spidey sneakers. He watches the movies and the cartoons, and he plays the video game -- but he has no interest whatsoever in the wondrous web-slinger's comic books.

That can't have come as good news to writer Peter David, who met Steve the other week while taking his young daughter to the playground. (David happens to be the writer of the Motley Fool Stock Advisor pick's new Friendly Neighborhood Spider-Man comic, which makes its debut in October.) In the long run, it's probably not good news for Marvel, either.

Don't get me wrong -- Marvel's doing well now, and it will probably continue to do so for years to come. With the popular characters it can export to Hollywood, TV, and toy store aisles, it hasn't even exhausted its A-list. But we Fools are taught to buy and hold investments for the really long run -- and in my opinion, Marvel will make a poor prospect in the future unless it revitalizes its publishing efforts today.

The comic books that gave birth to Marvel's current prosperity are increasingly overshadowed by the company's licensing efforts. Marvel is currently gorging on the fruits of 40 years' worth of writers' and artists' creativity. But it's not adding epic new stories and top-notch characters to accompany those properties as quickly as it's wearing out the old ones. What happens when the fabled House of Ideas runs out?

Golden oldies
Nearly all of the famous characters that define Marvel today were created between 1963 and 1965. The majority of them -- including the Fantastic Four, Iron Man, the Hulk, and the X-Men -- sprang from the pen of the late Jack Kirby. (Neither Kirby nor Steve Ditko, who co-created Spider-Man with Stan Lee, ever saw significant royalties from their creations.)

Marvel hasn't created an enduring hit character since 1974, when the improbably coiffed mutant Wolverine turned up in an issue of The Incredible Hulk. Even among the 10 big screen-bound properties Marvel recently announced as part of its production deal with Paramount, only two -- C-list teams Cloak & Dagger and Power Pack -- date past that period, and they launched back in 1983 and 1984, respectively.

A secret vulnerability
In its most recent quarter, Marvel's publishing arm tallied $20.9 million in net sales, comparing respectably with its licensing ($43.9 million) and toy ($23.4 million) ventures. But remove that mask and look at the operating income: While licensing brought in $28.2 million and toys commanded $13.2 million, publishing brought in only $7.89 million -- down more than 12% year over year.

Though the comic book industry moves in boom and bust cycles, the average circulation for even the most popular comic books has gone nowhere but down over the past four decades. Comic book readers -- at least the ones in which superhero comics like Marvel's are concerned -- are a dying breed.

Pandering to the fanboys
Superhero comics are largely a boys' club. That's why the latest incarnation of Supergirl -- from DC Comics, Marvel's Time Warner (NYSE:TWX) competitor -- dresses like Britney Spears, and it's also why the recently revived Spider-Woman leaves little to the imagination. The obvious attitude toward women, along with superhero comics' frequent focus on conflict over character, can limit the appeal of Marvel and DC's comics for girls, and that cuts the companies' potential audience in half. In all fairness, though -- and to its credit -- Marvel has recently launched a slate of titles featuring strong, smart, realistically dressed and anatomically feasible young heroines. However, all but one of those titles is written by men, and none is selling particularly well in comic book stores.

In addition, both companies' continuity -- the ever-expanding record of who did what in their fictional universes -- has grown increasingly convoluted and dark. DC's ongoing "Infinite Crisis" storyline kicked off with a second-tier hero getting his brains graphically blown out by a former friend; it's so complicated that DC has to publish guides to all the various tie-ins. Marvel's own big event, "House of M," has served largely to resurrect a secondary character who was killed off in last year's big event.

No wonder young Steve would rather stick with video games.

Here comes Godzilla
None of this means that kids have abandoned comic books -- in fact, they're reading more of them than ever. But most of those comics aren't coming from Marvel or DC -- or even from the U.S. at all. The flourishing popularity of Japanese manga digests has turned the American comics market upside-down.

In direct-market comic shops, Marvel and DC are nearly neck-and-neck as the top dogs of market share. Marvel commanded more than 41% in June 2005, with DC right behind at just over 36%. But in big chain bookstores like Barnes & Noble (NYSE:BKS), manga is eating the mainstream publishers' lunch. According to the Nielsen BookScan ratings of bookstore sales, in early August 45 of the top 50 sellers in the graphic-novel category were manga. In the first half of 2005, DC's graphic-novel sales grew by 13%, and Marvel's increased by 9%, while manga publisher Tokyopop notched 40% sales growth, including 81% growth in the first quarter.

Marvel has made some halfhearted, occasionally disastrous efforts to adapt to the new medium, mostly by aping manga's look and digest-sized format. Its few successes thus far tend to feature Japanese-influenced art, high school romance, rebellious teens, and giant robots.

The real reason Marvel should fear manga is that it's becoming the primary influence on a rising generation of young male and female creators. Manga comes with an entirely new visual vocabulary and its own way of telling stories. It's as different from traditional American comics today as Marvel's flawed heroes and snappy dialogue were from DC's stodgy offerings back in the '60s.

Don't believe me? Check out this blog post from Rivkah Greulich, the 24-year-old writer/artist of Tokyopop's new American manga, Steady Beat.

The work-for-hire problem
When Marvel and DC were the biggest (and nearly the only) game in town for comics publishing, they naturally snared all the brightest and most ambitious young writers and artists. It's probably not a coincidence that popular new Marvel and DC characters largely stopped showing up around the same time that comic book writers and artists grew more aware of how much more money their employers made from their creations.

The comic book industry has long thrived on exploiting creators' ideas for maximum profit. Jerry Siegel and Joe Schuster, the teens who created Superman back in 1938, infamously sold the Man of Steel to DC for $135, and they eventually died in near-poverty. Any work done for DC or Marvel is work for hire -- the company owns all rights to it, lock, stock, and barrel.

Today's most talented and popular comics pros do work for Marvel or DC, often for the security of a steady paycheck and benefits or a nostalgic fondness for the characters of their youth. (Both companies now offer creators extremely limited royalties for book reprints, merchandising, and media licensing.) But those creators often publish the projects they're most passionate about through smaller companies that let them retain ownership. Mike Mignola's Hellboy and Frank Miller's SinCity are two recent examples of independently owned comics that have enjoyed significant successes in Hollywood.

Work for hire may be lucrative for Marvel in the short term, but in the long term, it's stifling the development of new characters that could earn big bucks for decades to come. Why should a writer or artist pour his heart into a fantastic new creation if someone else is going to own it and dictate its storyline?

If this be doomsday .
The kids who were reading comic books decades ago have grown up to become the same writers and directors who've made the best Marvel movies such rousing successes. And those movies have drawn inspiration from the great Marvel storylines of the '60s, '70s, and '80s: Frank Miller's groundbreaking run on Daredevil, Chris Claremont and John Byrne's "Dark Phoenix Saga" in X-Men, or Spider-Man's duel with the Green Goblin atop the Brooklyn Bridge in Amazing Spider-Man, among others.

With a few notable exceptions, Marvel isn't publishing those kinds of stories anymore. The '90s was a wasteland of big guns, tight spandex, and the notoriously convoluted "Clone Saga," in which Spider-Man confronted his long-lost clone. Most of Marvel's recent storylines have been little better, mucking with the events of previous tales or focusing on big, cataclysmic, confusing "events."

Lo, there shall come a reckoning!
If Marvel wants to stay relevant to readers young and old, and ensure that there will still be an audience for its licensed products in the decades to come, it can't afford to let its publishing efforts wither. It needs to create comics that are just as risky and genre-busting today as Amazing Spider-Man and Fantastic Four were back in the '60s. And it needs to encourage its writers' and artists' best efforts by sacrificing at least a trickle of its current revenue streams to give them a bigger financial stake in their creations.

Marvel has begun to show the faintest glimmers of working toward those goals, testing the waters of crime, romance, sci-fi, and Western comics, in addition to its staple superheroes. Its Marvel Adventures comics offer entertaining, kid-friendly tales of Spider-Man and the Fantastic Four. Marvel has also launched a new version of Amazing Fantasy, the comic that originally introduced Spidey, to try out new characters and concepts. And the creators of its Icon line, a showcase for its most prized writers and artists, fully own their work. That's a good start -- but it's not enough.

Face front, Mighty Marvel: The young Steves of the world may seem like your trusted allies today, but if you're not careful, one day they'll become your arch-nemeses.

More Marvel-ous Foolishness:

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Fool online editor Nathan Alderman started reading comics at age 7. At the time of publication, he held no financial position in any companies mentioned. The Motley Fool is investors writing for investors.