The fatal flaw in Diamond Digital

Diamond Comic Distributors' digital comics program, Diamond Digital, will shut down on Friday, although titles purchased through the service will continue to be available via iVerse's Comics Plus app.

The news broke Friday at The Hollywood Reporter, where Graeme McMillan picked up on an email sent to retailers two weeks ago. The stated reason: "18 months after its launch, results indicate that Diamond Digital has not gained enough traction in the marketplace to continue."

There are a lot of reasons why Diamond Digital didn't work, but I think chief among them is the initial concept was flawed. The idea wasn't to provide readers with a simple, easy-to-use digital comics service; it was to protect brick-and-mortar retailers by providing them with a digital comics service that wouldn't compete with them. That drive to avoid competition resulted in a clunky and almost-unusable platform. Meanwhile, comiXology took a different tack and expanded the comics market, bringing in new readers — who then found their way to comics shops and bought print comics.

Of course, the biggest problem operationally was that Diamond Digital catered to a market dominated by Marvel and DC but didn't carry single-issue comics from either publisher. And granted, that is a huge flaw.

It was also way too late to the market. ComiXology launched in July 2010; Diamond Digital was announced in February 2011 but then experienced a series of delays until finally launching in July 2012. By then, everyone was already on board with comiXology, including many retailers, as comiXology launched its retailer storefront program in August 2011.

Beyond that, however, the whole setup was designed not to sell comics to people but to protect retailers: You bought comics on Diamond Digital by either getting a physical download code from your local store or purchasing titles through the retailer's website and then reading them using the Diamond Digital app. You couldn't buy comics through the Diamond Digital app — about a year ago, I decided I would test out the service and I was completely flummoxed by that part of it. Now, if you are a regular customer of your comics shop, and if your comics shop is forward-thinking enough to set up a web store, and if you don't mind having your digital comics in two different apps (because you probably already have comiXology), then you might be OK with that, but I seriously doubt anyone was using Diamond Digital for any other reason than to support their retailer or, conversely, to stick it to comiXology. But that's not how most people make their shopping decisions; they do what's most convenient.

And cheapest. When it was initially announced, Diamond Digital was supposed to sell comics on the day of release at a discount compared to print — $1.99 for new comic. Go look, it's in the original announcement. But again, protectionism trumps logic. At some point after February 2011 (and this is where the delay really becomes a factor) everyone decided that to protect retailers, digital comics would be sold at the print cover price for the first couple of months (and in a lot of cases, that price never goes down). That's the paradigm, and it's working great for comiXology, but two years ago, you might have lured readers away with that discount, if you could negotiate it and if you could get Marvel and DC on board. Those are two big ifs, but the fact of the matter is, there was no discernible benefit to retailers to offering that discount — it would just undercut print sales.

The upshot was a service that didn't work very well even for the retailers who did all the right things. Brian Hibbs should be the best-case scenario here: He's a smart retailer who is enthusiastic about a variety of different comics, not just the Big Two; he has a web store; and he also has a well-known review site, Savage Critics, which linked to the digital comics from the reviews. Yet in his first year, he grossed $37.08. It's worth reading his post for the details of why this wasn't actually a great deal for the retailers after all. What's more, as I said, Hibbs is the best case: Torsten Adair did a little poking around and found that very few retailers have digital storefronts, many don't even have websites, and even those with websites didn't necessarily sell digital comics. And those who did have digital storefronts used comiXology.

There are different ways to look at all this; one of them is to attribute it to the shrewdness of comiXology in locking up all those publishers in digital exclusives and rolling out their retailer program first. But the fact is that while many retailers regarded comiXology as a threat, it has turned out (so far, at least) to be just the opposite. Here's what comiXology CEO David Steinberger told Rachel Edidin last month:

“We’re finding that a larger and larger percentage of our user base — our new user base — is people who are buying comics for the very first time with us,” Steinberger told WIRED. Those customers are then finding their way into comics shops: Of the 20 percent of ComiXology customers who bought their first comics online in the last quarter 2013, 64 percent have begun buying print comics as well.

Here's the big picture: The clientele of brick-and-mortar comics shops will always be limited by the fact that they are almost all sole proprietorships — there is no Barnes & Noble for comics. Most people don't know they exist, many communities don't have a nearby comics shop, and few people who aren't already comics fans would go out of their way to go to a special store just to buy a comic. Digital comics eliminate this geographical limitation and make comics available to everyone (and relatively easy to find via the iTunes store or a simple web search).

One last thought: Diamond Digital was run by iVerse, which will take some heat for the program's failure. However, iVerse has actually been expanding the market in different ways, including its digital comics service for libraries, the Pocket God comic (based on the game), and the translation services it's offering to Marvel and other comics publishers so they can market their comics worldwide. The key to digital comics, it seems, is to see them not as danger but as opportunity.

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