DC Comics leaving Diamond Distribitors

[MRP]

https://bleedingcool.com/comics/dc-c...what-about-uk/

DC has sent a letter to their retail partners that they will no longer be distrusting their comics through Diamond Distributors. Moving forward only the distribution arms of Midtown Comics and DCBS will be the distributors of DC Comics.

This will be a seismic shift in the direct market.


-M

[Earth 2 Chris]

It's like the 90s all over again. I worked at comic shop when Marvel briefly tried to make a go with Heroes World. We'll see how this goes.

Chris

[hedrap]

The industry shrink has as much to do with Diamond's control as it does Marvel and DC. If Heroes World survived, things wouldn't have become so pigeon-holed.

[Blue Meanie]

What I find funny is that they are leaving the "Monster" that they helped create with Marvel and Image. Basically screwing every indy out there by going exclusive with Diamond. Diamond had the power as soon as all of the big 3 signed on as exclusives. THEY dictated to the comic book industry the how, when, and why of comic books. Good to see DC is showing some backbone...but the damage has been done already. You created a monopoly in Diamond and now that it doesn't suit you anymore...it's time to move on. Cry me a river DC. Might be the death knell for DC. Too little too late in an industry that has been having problems for the better part of the last 10+ years. I am a DC reader and even I can see that it is almost time to call it a day as far as publishing is concerned...both for DC as well as Marvel. Indy has been what I have read for the most part of the last 10+ years. The only way they keep the publishing part going is if they reduce the titles they are printing or go to Trade Paperback / Graphic Novels. It has always been a money grab as far as trades have been concerned...literally a week to 2 weeks after a story arc ends or a mini series ends...BAMN!! trade paperback. What is the sense...oh yeah, the collectors mentality of I have to have every version so I can put the original comics away and read the trade whenever I want to. They know this and they play on it and have been for the better part of 20 years.

[palitoy]

It's like the 90s all over again.

I wish, an improved hairline and an endless supply of new music.

[PNGwynne]

I can't picture this suceeding, isn't DC struggling?

[ToyTalk]

I had a long conversation last weekend with friend of mine that owns a successful comic book shop. He has been in the business for over 20 years now. Even he said that DC is simply leading the way. The profit margin for comics is so low compared to other avenues: movies, graphics, TV shows, etc. Comics have priced themselves out of daily collection and the new generation prefers everything digital. This will be the beginning of the end for published books from DC. Wait for it because Marvel and Indys will be heading the same direction in the next decade. The signs are there folks, it is inevitable.

[MRP]

DC is asking comic shops to buy their product through the shops online competitors who have been underselling brick & mortar stores for years (Midtown & DCBS). They are asking comic shops at a time when cash flow is tight and shops have not had income in months to pay more shipping, get lesser discounts, have worse payment terms, and in essence now operate on smaller margins for their stock. Diamond now loses about 1/3 of their market share and had plans in place to help some shops survive the cash flow crisis created by the Covid shutdown (just as Geppi helped hundreds of smaller shops survive the speculator bubble burst int he 90s by offering loans, delayed payments, and other cash flow helps) but will no longer be in a position to do so, which may mean the end of several smaller shops. Retailer discounts from Diamond are based on total volume of the orders, so losing 1/3 of the volume of orders means several shops will be getting smaller discounts, i.e. paying more for remaining product, so margins will be smaller but also they may buy fewer books which means less variety on shelves for customers as only proven sellers will have shelf copies bought. Also, any shops who use the point of sale inventory software from Diamond to track sales and prepare future orders will have to find or pay for something else to track DC books as the new distributors are not going to be compatible with the Diamond software, so its additional cost and labor for retailers to track their inventory. Those costs will have to be passed on to customers or shops will have even less liquid cash flow available.

And all of this on a Friday with no notice, when final order cutoffs were due form Diamond and all the DC product in those orders was cancelled with no notice giving retailers only a small window to set up accounts with the new retailers and get orders in so as not to miss that product.

The reaction I have seen from a dozen retailers already is that they are now only ordering DC product only for subscription/pull customers and will not be stocking it in stores on the shelves moving forward. So if you are not a pull customer at these shops, and you do not preorder DC books you want, you will not be able to get DC Comics there. Several prominent and influential retailers (such as Brian Hibbs, author of the retailing column Tilting at Windmills currently on The Comics Beat and the retailer who spearheaded the filing of the class action lawsuit against Marvel about late books and won) are embracing this model and advocating more retailers do the same. One of our semi-local shops, who was an Eisner winner for best retailer has sent out notice to their customers that they will be following this model. Other local shops in the area are considering it. Other retailers I know of refuse to create accounts with their competitors, and refused to order form them when they were set up choosing to only get their DC product through Diamond, and now that DC is no longer working with Diamond these retailers will no longer carry DC product at all. DC has not made many friends among the retail community with this move and may see their market-share shrink substantially as a result.

The Diamond semi-monopoly was not a good thing, but springing this on your retailer partners with no notice at a time when they are cash-strapped and in survival mode is not the way to go about trying to change the retail landscape. Changes they make should be additive to Diamond not in place of Diamond. This won't expand your customer base, it will shrink it along with your marketshare and do substantive damage to the overall landscape of the marketplace. Diamond emerged as a monopoly because they were the only distributor with enough liquid capital to survive the chaos of the Heroes World debacle and failure. They were essentially the only one in a position to keep the market alive when the other distributors folded or sold out when Marvel unilaterally cut every distributors market share with the Heroes World move. In the wake of the shrinking direct market over the last decade and the losses coming out of the Covid shutdown, there may be no one in a position to keep the market afloat if this fails and comes crashing down on DC's ears.

The only growth market in comics over the last five years has been the young adult book trade (i.e. books distributed to bookstores not through Diamond) which saw 16% growth in 2019 while the direct market shrunk again in consecutive years. DC had been tapping into that market as an additive source of sales with their former Ink/Zoom books and I applauded those efforts. They were additive efforts that reached out to new readers and created new customers even if they did not affect periodical sales in the direct market. I also applauded their Walmart initiative with the DC Giants creating accessible stories featuring classic characters for casual readers together with reprints and marketing for trade editions in a value priced product ($5 for 100 pages), another additive attempt (which it seems they are now abandoning as the cancelled most of the already solicited direct market versions of the books, distributed the original stories in those cancelled books as digital only products and will not be renewing the deal with Walmart which ends soon). Both of those additive attempts were spearheaded and championed by Dan Didio, who is now gone form the company. This move is not additive, but subtractive, steps away form the growth market to double down on a shrinking market while at the same time taking money out of the pockets of the people in that shrinking market you depend on to sell your product. It smacks of shortsightedness and desperation by people who do not have a vision for the future of their product in the marketplace and are trying to milk a few pennies more in the short terms. Pennywise and pound foolish.

-M

[MRP]

Diamond issued this statement...

Today, DC sent out a retailer communication indicating they are ending their long-standing relationship with Diamond. In April, we were informed that DC was going to begin distributing products through additional partners. At that time, they asked us to submit a proposal for a revised agreement with the understanding that Diamond would continue to be one of their distributors. Which we promptly did. They then requested an extension to June 30 which we also accommodated. Last week, DC requested an additional extension through July. We responded with questions and DC indicated they would reply today, June 5. Instead of receiving a response, today we received a termination notice. While we had anticipated this as a possible outcome, we, like so many others in the industry, are disappointed by their decision to end our partnership so abruptly at this time.

Although we had hoped to reach an agreement with DC, every great change also presents great opportunity! Rest assured, Diamond is a strong company and our success does not depend on the actions of one business partner. While we recognize this change impacts the industry, we are well-positioned to seize growth opportunities and are committed to the success of our publishing partners, the Direct Market and our industry as a whole.

We continue to be excited about the growth potential in the comic, game and toy industries as well as growth opportunities for our other Geppi Family Enterprises companies. I truly believe that our comeback will be bigger than our setback and our best days are ahead.

Thank you for you continued support and for all you do. -Steve

Steve Geppi

Chairman, Geppi Family Enterprises Founder, Diamond Comic Distributors

It seems DC decided to pull out rather than work with Diamond when Diamond wouldn't roll over and accept whatever terms DC wanted them to and asked questions. Instead of answering those questions to hammer out a new deal, DC terminated the whole shebang.

-M

[Confessional]

The profit margin for comics is so low compared to other avenues…

Curious how much that is today?… when I was actively buying/reading in the late 80's through the 90's I was paying $2 – $5 retail on most weekly/monthly stuff. What do they sell for now?, what is the retailer's margin?

[hedrap]

Between Barnes & Noble + Amazon, DC now has the avenue to own a larger market than Marvel. They had to get out from under the LCS comes first approach.

I read the MIle High guy make the same 90s analogy. Thats not apples to oranges, it's apples to Cuisinart's. The single issue will become POD (print on demand). Trades will be readily available and exclusives will be in-store or part of WB offers. LCS cutting back on DC orders actually increases the value of DC's published work.

The picture being missed here is the film division crapped the bed, so the old "monthlies create ip" to justify being a loss leader is over. ATT doesn't want to hear it. The only reason they haven't sold DC is for streaming rights. Otherwise, they would ship it to Amazon in a heartbeat.

I give Didio all the credit for trying to turn the ship, but Tsujhira's takeover and the loss of Legendary screwed everything up.

[thunderbolt]

at this point who cares? Until they figure out a way to make books affordable and get them to retail they are going to flail around till Disney and WB are looking to make cuts.

[cjefferys]

at this point who cares? Until they figure out a way to make books affordable and get them to retail they are going to flail around till Disney and WB are looking to make cuts.

Agreed. The market is dying because the prices for a measly 32 page comic has become astronomical and because of poor distribution. Compare that to the comic book market in Japan, why is it so robust there? Because you can buy super thick comic anthologies for around five bucks and they are for sale virtually everywhere. The US market has been so poorly handled over the years, catering only to die hard collectors and mostly ignoring casual and younger readers by pricing them out of the market. So when all the collectors start dying off there aren't nearly enough new readers coming up behind them to sustain the industry.

I feel bad for the LCS's, they've already been struggling, then the pandemic and now this. How many will survive after we are though all this? Less than half?

[MRP]

Between Barnes & Noble + Amazon, DC now has the avenue to own a larger market than Marvel. They had to get out from under the LCS comes first approach.

I read the MIle High guy make the same 90s analogy. Thats not apples to oranges, it's apples to Cuisinart's. The single issue will become POD (print on demand). Trades will be readily available and exclusives will be in-store or part of WB offers. LCS cutting back on DC orders actually increases the value of DC's published work.

The picture being missed here is the film division crapped the bed, so the old "monthlies create ip" to justify being a loss leader is over. ATT doesn't want to hear it. The only reason they haven't sold DC is for streaming rights. Otherwise, they would ship it to Amazon in a heartbeat.

I give Didio all the credit for trying to turn the ship, but Tsujhira's takeover and the loss of Legendary screwed everything up.

I am no fan of the monthly direct market. The problem is that the monthly periodical release is what pays for the creative costs in making the books. The book trade does not move enough units to keep margins worthwhile if the creative costs have to come out of the book revenue streams without the supplement of the monthly releases. Every digital first program and previous OGN first initiatives have been shut down because the revenue stream form them has not been profitable. Also, going into the book first trade, they will now have to compete with other book first publishers, i.e. the graphic novel imprint from the big book publishers for talent. Those publishers are offering advances & royalties to creators rather than page rates which means more oft he revenue stream goes to the creators. Can DC afford that since they aren't making enough of a margin now. If they can't compete in compensating top talent, will a talent flight ensue as it did in the 1950s when the shrinking market that resulted from the institution of the comics code forced a lot of talent into other lines of work.

The problem with the direct market is that all of DC (or other publishers) were in one basket. This move doesn't address that. It just switches which basket the eggs are in for DC and throws away the old basket essentially, without knowing if there is sustained growth potential in the new basket, how sturdy the new basket is.

The success and the growth in the book trade is in the young adult market. DC has created content specifically targeted that market (Ink & Zoom stuff) and some of it has done well, but not all. Very few of DC's collected editions have fared well in the book trade-for every Watchmen or Dark Knight Returns that have become evergreen sellers, there are several hundred titles that never even sold out their small initial print runs. Most of the content they produce is unsuitable for the YA book market and is DOA on the adult book market. They are going to have to change what they produce as well as how they produce it, and find a large enough audience to sustain in without alienating what existing audience they have. Can they do it? Maybe. I wish them well. But this seems just another half-assed knee-jerk reactionary move that has characterized DC over the past decade or so that shows no clear vision or plan of how to move the company forward into the future and jumps on things in the short term without thinking through how it will impact the long term health of the company and the market for their products. It feels more like a first step to get out of publishing as a whole rather than a step towards making the future of publishing more viable.

-M

[hedrap]

^Re: costs, that's a valid point. The thing about ATT's ownership, is now they have an ad revenue owner that can actually produce large buys. I wonder if they could lower the cost of digital to a dollar/title and have a company wide ad buy cover the three dollar drop for creators. Then POD stays at a premiumm but can use the digital purchase, DCU/HBO sub, ATT Uverse/Cell service etc...for rebates.