I’ve been going to comic book conventions since 2003 and have been audio recording panels and awards since 2005. Along the way creators have spoken about some behind the scenes happenings that don’t always become public knowledge.
On the Comics Can Be Good column at CBR, Brian Cronin writes about the 1993 DC Bloodlines Annuals. In these annuals a new superhero character was created, which was a selling point to get fans to buy these books. The vast majority of these characters were not very popular and went into comic book limbo almost immediately after their appearance. The same thing happened with the 1993 Marvel Annuals that had new characters in them too.
Creator Mike Grell wrote the Green Arrow Annual #6 and came up with a character called The Hook. Grell was at the 2008 Toronto Hobbystar ComiCON and was on a panel along with Bob Layton and David Michelinie. It was called The Men of Iron / Sketch Off Panel where Layton and Grell did sketches and all 3 talked about their careers, focusing mainly on their time on Iron Man. The panel was moderated by Blake Bell.
The conversation drifted towards working with editors and around the 37:30 mark, David Michelinie spoke about declining to work on the Marvel annual (he was writing Amazing Spider-Man at the time). Mike Grell spoke about working on the Green Arrow Annual #6.
Michelinie: I remember one year in the annuals. (…) One year they had everybody create a new character which Marvel would then own. So I declined to do the annual that year. You always have a choice. You can always say no.
Grell: DC had that policy. There was a line of books that they did. They mandated that everybody had to create a new character and by the way, it was work for hire and DC owned the character. Being a professional prostitute [laughter from the panel] I did, but I accidentally created a good one. I had already sent in the outline for the story as soon as it went in I went “OH CRAP! THAT’S A GOOD CHARACTER!” [Laughter] I got on the phone with the editor and I unsold it. [Lots of Laughter] The character that I created, I convinced them it wasn’t very good. The character I created, the one that showed up in print was this war veteran who had a prosthetic hand or a prosthesis and when he would active his power, his hook would become this giant hook/claw thing that could cut through anything. By the time I’m done the editor was going “Yeah that’s great! That’s great!” *Whew!* that was close.
Marvel and DC likely did this because of Image Comics. They began publishing in 1992 and very quickly became the #3 publisher in the industry. Image was creating lots of new characters that had fans excited. Marvel and DC likely wanted to counter with their own “exciting” new characters but didn’t want to pay creators for them. So they got what they got. I should say that not all characters to come from this were a bust. Garth Ennis and John McCrea created Hitman, who had a well loved solo series.
I can’t speak for all creators, but I think with a lot of creators would really hate to have created a character and have it earn all sorts of money and none (or very little) of it going to them. It bothers them a lot and it can bother them for the rest of their lives. Much like if somebody broke into your house and stole your prized possession and then flaunted it in front of you at every chance they got for the rest of your life and you can’t do anything about it. The pain is such they’d rather not have created the character at all.
Plus there is always the possibility that they might use the character in a situation where it’s much more agreeable to them. It could be with another publisher or even the same publisher with different editorial policy down the line. Some creators work in other mediums like prose books, cartoons, video games, etc.. and those other fields may provide better deals. There is simply no reason for creators to provide good characters to non paying publishers if they think they’re going to regret the decision.