TOOTHLESS V RUTHLESS
Sometimes (though not very often) I make notes for future columns. I had a pretty decent (I thought) idea for a column about seven weeks ago, so I jotted it down, and then we had the Ten Days That Changed Everything. Well, I found the note this week, and I thought "There's still life in this one", so let's see?
What I wrote was:
Diamond = Monopoly = Missing the point!
Diamond = Toothless
DC + Marvel = Ruthless
It's sort of like math!
A lot of people moan on and on about Diamond's monopoly status in the comics industry. I mean: fair enough, yes they are what I would consider a monopoly, but insofar as "doing damage" goes, the problem, as I see it, really isn't Diamond, but rather their two primary "exclusive" publishers.
Diamond's crime is more, as Mrs. Lovett would say, "foolishness".
It is a little weird for me to be in the position of Diamond Apologist, but when I think of things like them raising their minimum purchase orders, or being more selective in what they stock, they're honestly not doing anything that nearly every retailer in America doesn't do - trying to stay profitable, to stock material that turns decently, to not let their product-in-stock swell to untenable levels.
I do this constantly, and so does every other retailer I know - there's a fine balance between having the right amount of stock on hand that your customers want to purchase, and drowning in unsold (and unsalable!) product. With the sheer volume of material that comes out every month, and the ever-increasing amount of backstock that one can carry, not everything is going to make the cut. It can't!
One of the things I frequently tell new creators coming to me for advice is "You're not just competing against all of the other comics coming out that week; you're now competing against the best comics that have ever come out for most of the history of the medium!" At the end of the day, if I have $20 to spend, and I have to make the choice between stocking another copy of "Watchmen" or "Maus" or "Locas" (or fill in the blank of the high-turn, high-quality item of your choice) and stocking your unknown, under-promoted new title, my dollars are much more likely to go to the Known Quantity.
This is nothing personal, this is business.
Yes, thankfully, this isn't necessarily a 1:1 choice - and, in fact, it generally is that copy of "Watchmen" that gives me the profit that allows me to stock your book - but the fact remains is that if a store has a decent GN section, the first three hundred or so linear rack feet are going to go to the best-selling 1000 books. It kind of has to.
You may be lucky enough to live somewhere that has a choice of World Class comic book stores, where they're not only committed to the breadth of the entire medium, but they have the rack space to do so, but I have certainly been in enough stores that don't even have three hundred linear rack feet for GNs in the first place, so if you're going to capture some of those precious inches, you have to have (or show the potential to) a book that performs stronger than one of those Known Quantities.
At Comix Experience, there are scores of items that I still carry that were first released twenty years ago. And every year that goes by there are hundreds of more items that get added into permanent stock. There is, in every meaningful way you can think of, an utter glut of high quality long term sellers. Certainly there are worse problems one can have, but we've reached a point where it simply isn't practical to stock "everything" for the majority of stores.
Fourteen months ago I gave you a rundown of how I've been "purging" my store of slow turning material - this is before Diamond announced their similar plans, please note - so it's not like I think that Diamond is doing anything "bad" or "wrong".
You have to be better than the material that's already out there, and that's just how it is.
It seems to me that, for the most part, the people who are complaining the most about Diamond's position are those whose work isn't up to the commercial standards of the overall market as it is constituted today. Not all, of course, because distribution (be it Diamond or "bookstore" distributors like Baker & Taylor) has its own peculiar blind spots, but most.
I want to be clear here that I think that Diamond does a fairly lousy job at stocking as full of a range of Medium-building material as they should - in fact they typically have half or less of the books I'd like to be buying from them on any given week's reorder cycle; that's bad. But the same is true, for me at least, for B&T or Last Gasp or (back in the day) Cold Cut.
You can make the argument that Diamond should be doing a better job, as a comics specialist, than a bookstore generalist would do. I'll buy that argument, and, certainly, there are thousands and thousands of dollars of sales that Diamond is causing me to miss out on each and every year, but that's a problem of vision, rather than of being evil or something.
Diamond is certainly guilty of being pennywise and poundfoolish when it comes to discounting policies - when I look at a publisher like, say, Drawn & Quarterly, which is cheaper to buy Anywhere But Diamond, it makes me sad. But it isn't like there aren't other options to buy those books, and a healthy and wise retailer isn't sole-sourcing in the first place.
There's one place I'll certainly get genuinely angry at Diamond, and that's the 3% discount penalty on reorders - it is beyond stupid to penalize retailers for buying more product - but most retailers I know respond to this by shifting greater and greater percentages of our reorders away from Diamond. If we had an actual viable second national distributor for comics, the Invisible Hand of the Market would likely have forced Diamond to eliminate this regressive penalty. The worst part of it is that Diamond has been promising retailers for more than three years that as soon as they re-write their terms of sale they're going to do something about that - but they've yet to re-write those terms in all of that time.
I know a great number of retailers are really upset about Diamond's recent move to their new Olive Branch warehouse, and the impact this has had on accurate picking and damages, but here's an area that I don't think monopoly or lack thereof would make much of a difference. Fixing the OB problems has to be costing Diamond many tens of thousands of dollars every month, and from an Invisible Hand POV, that in and of itself should be all the Stick that Diamond needs to recognize and fix their problems.
The thing to remember is that Diamond (or any distributor for that matter) is, generally, working on very small margins. If they send me ten books, and there's a problem with one of them, fixing that problem has almost certainly wiped out their profit on the other nine books!
So that's what I think of Diamond these days - even if they were not a monopoly, they still wouldn't be carrying every title from every publisher, in great depth and doing it perfectly. And it's extremely foolish to think that they would.
As I said at the top, I feel the real problem, for the market as a whole, is the brokered publishers themselves. Particularly Marvel and DC.
The thing to bear in mind is that it is understood that the brokered publishers operate on a fixed percentage of the cover price to Diamond - and that percentage is significantly less than the percentage that Diamond makes from any other publisher. Further, it is my understanding that the brokered publishers are given "most favored nation" status in that virtually any request they make must be accommodated. Finally, Diamond has no (or next to no) say in what these publishers bring to market. If one of them tomorrow decides that they wish to release 1200 new titles in the month of January, Diamond has no choice whatsoever than to accede to them.
Or, to put it another way, the brokered publishers are essentially consuming more resources, at a greater cost to Diamond, then the non-brokered publishers. Diamond makes (he said, pulling a number out of the air, that may or may not be precisely accurate) an 8% smaller discount on a Brokered publisher release then they make from, say, an IDW release, even if those two books sell exactly the same number of copies.
If one were to make a chart of market share since the exclusives era, one would see the four brokered publishers gaining a larger and larger percentage of the overall marketplace - it stood at about 87% for August 2009 shipping books (10 years ago that was only about 75%) - and I think that's largely a function of the brokered publishers being absolutely ruthless in their line expansions. When the "front of the book" publishers start soaking up the purchasing dollars, that leaves less for everyone else - especially because the purchasing and discount terms are so lopsided. Books from the brokered publishers have retailer discount that are generally at least 5% higher, and can be as much as 15%. That's a huge uphill battle for non-brokered publishers, and thus it is less surprising that so many have chosen to get out of the periodical business (despite the fact that this, too, causes their market share and awareness to drop)
When I look at promotions like DC's "Blackest Night" Ring promotion, where stores are being asked to by 25 copies each of titles they're normally selling 5 copies or less of, it makes me angry. While some stores can make those numbers without even trying, and while others have used the promotional opportunity to its fullest, there are still huge swathes of the country that aren't going to have access to the promotion because of the high buy-in. Marvel and DC can effectively do whatever they want, and they generally do.
When I accused Diamond of "Foolishness" above, it is because, really, even a child could have seen this coming - when they have to work harder for the brokered publishers, for less of a percentage return, nothing good can come of it. Had I been Diamond in 1996, when the "Exclusivity Era" began, I would have worked as hard as I could to help grow "the next 'Bone,'" looking for opportunities to increase the market share and awareness of the things I was making my best margins from. There was a great opportunity to use their new position to really work with upcoming publishers and to expand the way that they carried and promoted books.
Instead they've put all of their eggs in one basket, and they may be finding out sooner rather than later that this basket has a few major holes.
Brian Hibbs has owned and operated Comix Experience in San Francisco since 1989, and is a founding member of the Board of Directors of ComicsPRO, the Comics Professional Retailer Organization. Feel free to e-mail him with any comments. You can purchase a collection of the first one hundred Tilting at Windmills (originally serialized in Comics Retailer magazine) from IDW Publishing. An Index of v2 of Tilting at Windmills may be found here. (but you have to insert "classic." before all of the resulting links) You may discuss this column here (but you have to insert "classic." before all of the resulting links).