TILTING @ WINDMILLS 2.0 #24: DIAMOND

[MattBrady]

by Brian Hibbs

(#140 – January 2006 – “Crisis on Earth-D!”)

I like to talk a lot about what I think the structural problems of the market are. For example, I’ve made no secret of the fact that I believe that the number one long-term issue facing the Direct Market is that there are not enough comic book shops, and that no one seems to be doing anything to combat that. As current owners “age out” (or otherwise close), we don’t seem to have enough people to replace them. This is fixable, of course, even “easily” fixable, though it needs vision and determination and resources. Much of which is, sadly, hard to find in today’s Direct Market.

There are also nearer-term problems that need to be solved, that dramatically affect us all. This year, Heidi MacDonald asked a number of bloggers/opinion leaders/whatever what we thought the big story of 2006 would be, and I went with Distribution as my number one issue for the New Year.

Well, let’s see, I should probably add a disclaimer or two in here before I go forward in writing this installment. To whit: This month’s Tilting at Windmills (like every month) is an opinion piece. All opinions contained here are pretty much mine and mine alone, and, I’m quite sure, don’t represent the opinions of Newsarama, Matt Brady, or, really, anyone at all other than myself. Nothing that you read here should be considered fact, just one retailer’s view, opinions and understanding of how things are. Even things that look like they’re being presented as fact should be viewed with a great deal of suspicion, because many things in the world come down to semantics and perception. I do, whenever possible, endeavor to put enough “weasel words” (can, may, sometimes, seem to, possibly, etc. ad infinitum) to Cover My Ass, but I really want to stress way up front here that this really is opinion. You’ve been warned.

Click here for the full column.

[Batty Pete]

Nice article Brian. Thanks for your insight.

It constantly amazes me how Diamond is allowed to continue as it is structured now. It is quite obviously a monopoly and should be forced by the government to split apart a la Ma Bell way back in the 70s/early 80s.

I hope they haven't just let it slide because of the fact that it is a niche marketplace, and not a concern to the overall general public.

Some of the things you mentioned, such as reorders, might become more problematic again, but overall the comic shop owner would be much better off if there was a little competition in the distribution of comics and comics related products. That, in turn, would make it easier for more comics shops to open and stay open and that is how you can really grow this industry.

[Spaz_Monkey]

Is Diamond, at this point, pretty much of a monopoly? Seems that since they're making so many 'exclusive' contracts with publishers, they're just setting themselves up for legal action, and an eventual forced split.

[EDITED TO SAY...]

See? that's why I should take the time to read the ther posts before i throw in My 1 Cent

[Comic-Reader]

On the other hand, would competitors for Diamond really help out smaller publishers? If the big publishers were able to use any distributor, they would all be fighting for that business, not to give a better deal to Drawn & Quarterly. Every distributor will want to stock the "hits" no matter what.

I don't know if it's the best analogy, but I remember in the early days of the multiplex theaters how it was surmised that having ten screens in a building would give more outlets to independent films, foreign films, and the revival of classic movies, but all we got was "Star Wars" playing on 5 of those screens. The extra "bandwidth" for movies did not lead to a wider variety of movies readily available. You still have to search out the one theater in town that plays your cult-favorite movie.

Obviously, Diamond is pretty much a monopoly, but the brokered publishers benefit from the service Diamond, acting as sales agent, can give them. I would think that if the investigation were reopened, you might see Marvel and DC testifying on behalf of Diamond because, for them, the existing system works just fine.

[Dman]

I was working at a comic shop when Marvel first thought of self distribution and everyone else went exclusive with Diamond. things were pretty weird for a bit, we didn't know what was going to happen, then with everyone exclusive well now Diamond can do whatever they want. I don't know how this effected other stores.

My LCS is still around, but I think if possible that they should get off the exclusive bandwangon, but with Marvel & DC doing it with creators it seems to still be the trend

[TheWriteJerry]

Excellent piece of writing, Brian.

I would add here that the consumer is also hurt by the current distribution system. Many shops have weekly inventories made up of almost 100% Marvel and DC product. Finding books by the other brokered publishers - Dark Horse and Image - is difficult, and getting your hands on other publishers' works is nearly impossible.

(For the record, I live on Long Island, NY. My normal travels actually take me the breadth and width of the island, and there are 3 comic book stores I can hit by going just a bit out of my way, and 2 others that I occasionally go out of my way to get too. Finding more than a few Star Wars titles from Dark Horse and a couple of the licensed books like Conan and Red Sonja takes a couple of stops, and I have yet to see anything from any of the other publishers who still put out regular ("floppies") comics. Heck, for that matter, the stores here order so tight-to-the-bone on Marvel and DC books that there is no such thing as seeing something and having it catch your interest; if you aren't a regular Wednesday buyer of a title, it's gone before it hits the shelves.)

It's as if the retailers have become zombies inside the distribution system and care little themselves about servicing new customers or growing their businesses. I've taken to waiting for trades (which means I actually give fewer series a try) or sometimes ordering something that looks interesting online.

Publishers, Diamond and retailers need to focus more on getting the product out there and cultivating regular customers.

[ZGrog]

I have a question :
what if tomorrow -for any reason- Diamond decides to close doors ?

[Nat Gertler]

Originally posted by Comic-Reader
On the other hand, would competitors for Diamond really help out smaller publishers?

Yes, on several levels. We saw it working back when there were several distributors. If distributor A said "no, we won't carry your book", it gave distributor B all the more incentive to carry it. The distributors used the depth of their selection in encouraging retailers to deal with them. They also ordered to have copies in stock, rather than just to meet preorders. And without the brokering, smaller publishers got more equal placement in the catalogs.

what if tomorrow -for any reason- Diamond decides to close doors ?

Tomorrow's Saturday. They probably will close their doors. Open 'em again on Monday, I reckon!

[solid-one-love]

I have long held to the belief that the rise of exclusivity deals with distributors and the fall of Capital City was the worst thing that has ever happened to the direct market.

[TheWriteJerry]

Originally posted by solid-one-love
I have long held to the belief that the rise of exclusivity deals with distributors and the fall of Capital City was the worst thing that has ever happened to the direct market.

Actually, you can trace this back to when Ron Perlman (the Revlon guy, not the actor) bought Marvel and decided to use it as a fast-milking cash cow. He sucked the business dry, cashed out and walked away. His wife divorced him around the same time. I like to think that she got all of the Marvel money he made in the settlement...

[AlterEgoComics]

You are preaching to the choir Brian...

[Kish]

Love the article Brian, and as somebody who owns one of those midsize/small shops I'm pretty much stuck with Diamond.

Diamond also has an annoying tendency to ship us bookstore returns as new

We had this happen not too long ago, forgot the book, but it had somebody elses price sticker on the back.

[jedifish]

Interesting article Brian.

[render man]

If only those in control would listen to what you are talking about. As a huge alternative comics fan, its sad to see how things operate on the distribution and retailer levels.

[Rodrigo Baeza]

Just two weeks ago, I had a real doozy – we received a copy of Lone Wolf and Cub v9 that had its cover razored off (A sure sign of a return), and no one at Diamond in any of the steps of product handling (taking the return, filing the return, shipping the book to me – and possibly several other steps besides) even noticed. I mean, sheesh.

Why did Diamond have a returned copy in the first place? How does this happen (do they handle Dark Horse's bookstore distribution, or did Dark Horse mistakenly send Dark Horse a damaged copy)?

Rodrigo
http://rodrigobaeza.blog-city.com

[Kish]

Originally posted by Rodrigo Baeza
Why did Diamond have a returned copy in the first place? How does this happen (do they handle Dark Horse's bookstore distribution, or did Dark Horse mistakenly send Dark Horse a damaged copy)?

Rodrigo
http://rodrigobaeza.blog-city.com

In our case it was an older Marvel book, think it was the Doom tpb.

[solid-one-love]

Originally posted by Rodrigo Baeza
Why did Diamond have a returned copy in the first place? How does this happen (do they handle Dark Horse's bookstore distribution, or did Dark Horse mistakenly send Dark Horse a damaged copy)?

Odds are that the bookstore returned it to their book distributor, who returned it to Dark Horse. Diamond then bought it as a reorder and shipped it to the comic store.

The practice of reselling returns as new is not particularly controversial; here is where I disagree with Brian.

[jagtech13]

Can't argue with the article. Consise, well written, and hitting all of it's arks. It seems once you get into niche material, monopolies are OK. Diamond skates the issues since they are a published material distributer, thus since they are not the sole distributers for all other magazines, it's OK in theory since comic books are lumped into the other facet of publishing, and not seen as a seperate entity. WWE wrestling is a monopoly also, the only major promotion, yet no one bothers them either since they are just looked at as a facet of the entertainment industry.

I am also wondering if a facet of what is hurting and preventing the opening of new shops is the internet? With online comic book stores, some offering discounts of 40% (I've tried some, they seem good except I didn't understand delays until I started with Newsarama so I was always pissed why somethng was not there.). Does the fact that someone can have a store operating from their basement, only need it open one or two days receive and then ship out books to a customer (cutting down overhead), can this also be a obstacle to the new stores?

I mean, when you deal with a $3.00 price tag on most books, 40% off means that book is now a reasonable $1.80 a copy, I have to rething the stores I use that offer me a 18% credit on purchases. And I hate to do that, since I like to support a brick and mortar, though I don't do comic debates. I visit newsarama, see something, try to throw in another perspective if mine is coherent and offers another insight, and try to ignore the trolls whenever I can. Or at least not get baited into fighting them. Doesn't always work as everyone here knows from experience.

[Cray_ws]

I'm curious, do bookstores like Barnes& Noble or Waldenbooks order from Diamond? If so are their (Diamond's) policies any different to bookstores from comicshops?

[Nat Gertler]

Originally posted by Cray_ws
I'm curious, do bookstores like Barnes& Noble or Waldenbooks order from Diamond? If so are their (Diamond's) policies any different to bookstores from comicshops?

Diamond has two arms, Diamond Comics Distributors and Diamond Book Distributors. DBD offers squarebound material from certain publishers (not DC or Marvel at this point, but plenty of other publishers, including About Comics) to the book market, and they do it on book market terms, most notably with returnability. DBD does not sell the pamphlets to the bookstores, those go through other routes.

Comic shops can set up bookstore accounts and order returnable materials; generally they would not be dealing directly with DBD, but with some intermediary such as Ingram. Some comic shops do this, most commonly to get things that are not kept in stock at Diamond (such as Understanding Comics as discussed in the article, although I suspect that Cold Cut keeps that one available. They do a good job carrying The Complete Idiot's Guide to Creating a Graphic Novel, I know.)

[Rawle Austin]

Very informative. A real eye opener.

Always a pleasure to read Brian's articles.


Growler

[Cray_ws]

Originally posted by Nat Gertler
Diamond has two arms, Diamond Comics Distributors and Diamond Book Distributors. DBD offers squarebound material from certain publishers (not DC or Marvel at this point, but plenty of other publishers, including About Comics) to the book market, and they do it on book market terms, most notably with returnability. DBD does not sell the pamphlets to the bookstores, those go through other routes.

So who are the distributor(s) for bookstores for pamphlets?

After seeing many comic shops disappear, I've heard enough to know its brutal business venture with below zero chance of growth. I had these intial dreams of possiblity that I could open & run a comic shop successfully enough to become a franchise. After all that I've heard in the last 10 years, It pretty much killed my interest in opening a comic shop.

Call me a defeatist but I'm not gonna run a shop if all I do is eat my own tail. As much as I love comics I want to get into this business making money, not just enough to order next weeks shipment. I want to be able to grow. That ain't happening in the world of exclusive comic book retailing.

I been considering opening a bookstore with an interest of having a much larger section for comic books. Sort of a comic shop inside a bookstore. Its the only way I can see it growing beyond its orginal store.

[khuxford]

Originally posted by solid-one-love
Odds are that the bookstore returned it to their book distributor, who returned it to Dark Horse. Diamond then bought it as a reorder and shipped it to the comic store.

The practice of reselling returns as new is not particularly controversial; here is where I disagree with Brian.

Reselling returns as new when they are not nearly in "as new" condition, though? That's pretty controversial.

[ATKokmen]

Originally posted by Cray_ws
So who are the distributor(s) for bookstores for pamphlets?

Most bookstores that stock the pamphlet-y comic books get them through the same means they get other magazines, so that means via companies like Ingram Periodicals.

Originally posted by Cray_ws
After seeing many comic shops disappear, I've heard enough to know its brutal business venture with below zero chance of growth. I had these intial dreams of possiblity that I could open & run a comic shop successfully enough to become a franchise. After all that I've heard in the last 10 years, It pretty much killed my interest in opening a comic shop.

Call me a defeatist but I'm not gonna run a shop if all I do is eat my own tail. As much as I love comics I want to get into this business making money, not just enough to order next weeks shipment. I want to be able to grow. That ain't happening in the world of exclusive comic book retailing.

Well, that's a bit of unfortunate. If you can hold on to one element of optimism to hold onto in Hibbs' column, it's this:

I’ve made no secret of the fact that I believe that the number one long-term issue facing the Direct Market is that there are not enough comic book shops, and that no one seems to be doing anything to combat that. As current owners “age out” (or otherwise close), we don’t seem to have enough people to replace them. This is fixable, of course, even “easily” fixable, though it needs vision and determination and resources.

That is, despite all the headaches about being a comics retailer, Hibbs still believes that there's opportunity out there for more smart comics retailers. Doesn't mean it'll be an easy life, but there's certainly lost of reason to see opportunity there, if you're in the right area, have the right resources, keep the right expectations, etc.

Originally posted by Cray_ws
I been considering opening a bookstore with an interest of having a much larger section for comic books. Sort of a comic shop inside a bookstore. Its the only way I can see it growing beyond its orginal store.

This certainly seems a viable idea, with the possible added bonus that there are organizations like The American Booksellers Association that can provide help to start-up booksellers.

Originally posted by khuxford
Reselling returns as new when they are not nearly in "as new" condition, though? That's pretty controversial.

I don't know if "controversial" is the right word so much as something like "annoying."

It's true that books that are returned and are put back into stock should be in "as new" condition.

It is also true that mistakes happen and that returns in less-than-resellable-condition do get processed and do get put back into circulation. One can only hope that when this happens, if this is unacceptable to the customer, the supplier can correct the mistake with reasonable efficiency.

It is also the case that there is some level of individual opinion in what would consititute re-sellable condition for a return. A return still bearing a previous bookseller's sticker is a nigh-inarguable no-no, but when it comes to things like general shelf wear or less than perfectly shiny covers, there's a world of variation in what people may or may not consider acceptable.

[Oom Paul]

This article has to be about the best overview on the current distribution system that I've read. Brian is bang-on with all his points.

One point he made that hasn't been mentioned in susequent posts, and bears repeating is that there has been a benefit of Diamond's centralisation, and that is the availablility of backlist books. We go back to the days of multiple distributors, and Brian wasn't kidding when he said you'd have to hunt around for copies of "Watchmen". The consolidation of inventory, making books available to all retailers, not just the ones who "got lucky" with their distributor, was one of the reasons DC gave for going exclusive back in 1995.

...

As far as stock outages like Brian's exemplified "Maus" goes, Diamond is just locked into a ten-fifteen year old purchasing pattern that seems to still think of everything as a periodical. They may say they're in the backlist/book business, but they still think frontlist/Roll-In-Roll-Out.
And you know, your job's a lot safer if you don't take any chances, and taking inventory positions is about taking chances. Ask any retailer.

...

Bookstore returns: We get these constantly. While there's nothing wrong with cycling "as new" books through store after store, we do get a fair number of books that are visibly worn.

These don't bother me nearly as much as getting merchandised that was returned to Diamond as damaged re-shipped to us as new. I've received books and statues with notes taped on them by other retailers stating "Return to Diamond - loose cover" etc. I've even received stuff that I've returned shipped back to me as a "damage replacement".

This apparent policy of "just keep shipping until someone doesn't notice" is very annoying.
(And as an aside to AT, while these things can be rectified, they are costly: There's handling, claiming, credit followup, replacement handling for both the the retailer and Diamond. Labour (not to mention freight) isn't free.

...

Anyways- I'd say that this was a great article as usual, Brian, but it was even better than usual. keep it up!


-Paul
Astro Books/Librairie Astro
Montreal
www.astrolib.com