FM INTERNATIONAL: "STILL ALIVE"

[MattBrady]

The stories of FM International’s demise are a little…premature, to say the least, though cofounder Wayne Markley can still find it funny when people respond with surprise when he picks up the phone at the Madison, Wisconsin-based comic distributor.

“I’ve been reassuring people that we’re not dead yet,” Markley told Newsarama earlier this afternoon. We’re still in business, the doors are still open.”

That said, the ten year old distributor, the second largest in the country behind Diamond, has recently radically changed its business model. Now, down to two employees, Markley and Jerry Stoltenberg, FM no longer handles new releases of comic book product, and is focusing instead on backlist.

“New releases just wasn’t cost-effective – the sales just keep going down,” Markley said. “But we’re still doing backlists and still shipping product every day. We’re still encouraging people to order.”

When asked about FM shipping books back to publishers in recent weeks, Markley told Newsarama that the distributor did so to repay debts to the publishers, as well as to clear shelves of older stock that was not selling. "Older stuff from publishers doesn't sell that well for us" Markley said. "So, we're working to move that out and return it to publishers so we can make room for more current backstock."

In regards to FM no longer handling new releases, Markley noted until the change, they still handled every publisher that wasn’t exclusive to Diamond, with Fantagraphics and Bongo being the biggest. “Drawn + Quarterly did well for us, so did Slave Labor and NBM. But in overall numbers, retailers are doing more superhero business, and in regards to non-superhero stuff, the sales have just slacked off. For us, it got to the point where it wasn’t profitable for us to carry them – to do the whole process of a monthly catalog and solicitations. So, we were looking for a way to cut costs, and the catalog was a major cost for us. Overall, we’re looking for ways to reorganize the company, and just keep going. But at this point, we’re still here and still chugging along.”

With FM ceasing to carry new comic releases, Diamond will now handle the vast majority of new comic releases from publishers, with Cold Cut handling non-exclusive independent publishers. For smaller publishers and some independent titles, the change in business by FM could not have come at a worse time – Diamond recently raised its thresholds for titles to sell in order to be carried by the distributor. Already, some small publishers are feeling the pinch of Diamond’s new policy, and now, a back-up distribution option, if they are dropped by Diamond, is gone.

In Markley’s view, the fundamental changes FM has seen, and is still seeing are rooted in changes within the industry, principally, publishers electing to sign exclusivity deals with Diamond, and the continuing erosion of independent comics within the marketplace.

“Every time a publisher would sign an exclusivity deal with Diamond, we would lose customers and sales, IDW was the most recent example of that” Markely said. “With Tokyopop, for example, we were doing a phenomenal amount of business, and when they went exclusive, we lost all of that business. We had better pricing, got the books to retailers earlier, and we lost all of that. We also lost customers as well, because many of them would tell us that they didn’t want to order from us because they couldn’t get product from a specific company. When we had Tokyopop, many retailers were ordering in substantial volume and enough money to make it worthwhile for them to order from us. When we went down to a handful of books that we were offering, retailers would tell us it wasn’t worth their effort to order from both us and Diamond. Unfortunately, it’s a battle of economics, and there’s an 800 pound gorilla in the ring to start.”

Historically, the root of the problem itself dates back to 1994 when Marvel acquired Heroes World, and opted to distribute exclusively through that outlet. DC reactively signed an exclusive distribution agreement with Diamond in 1995, with other major and many minor publishers joining DC. The “Distributor Wars” followed as publishers were courted by Diamond and the then operative Capital City, Capital City was acquired by Diamond in 1996, and Marvel signed with Diamond in 1997, after filing for Chapter 11. Since then, many publishers have signed exclusive distribution agreements with Diamond.

Asked for specifics on what FM still has for sale, Markley said: “Anything we have in stock – Bongo’s comics, collections, Fantagraphics books, NBM books – any publisher we carry. If it’s on their backlist, we still offer it. We also are still doing a lot of DVD sales, minimal gaming, and some mainstream books as well.”

Markley said that changes are coming for FM, though he declined to say what the changes will be, as well as the direction the distributor will take. Although, when pressed, he gives even odds as to whether or not FM will be around in a year.

“We’re hoping to be,” he said with a chuckle. “As for a year from now, though? I can’t say. We’re not making huge amounts of money on reorders, so, unless something dramatically changes within the market, or independent books start being bought again, I can’t really say.

“From our point of view, there’s no longer Bone, there’s no longer Cerebus, Finder is gone from the shelves – those were all strong independent titles, and there hasn’t been anything to pick up the slack for them. Retailers now are putting all of that money back into superheroes. The marketplace is condensing, and getting smaller when you only cater to superhero fans. But at the same time, we’re seeing comic creators moving to Pantheon and Scholastic, where they’re reaching a broader audience that the comic marketplace can’t or isn’t reaching.”

In terms of generalities of any kind of reorganization, Markley said that FM is looking to get into new markets, or looking for new ways to sell the products it carries. “We’ve never sold direct to consumers, and that has always been our goal, as it was with Capital City before us, is that the retailer comes first. Now, we’re wondering if we should sell directly to the consumer. There’s a much better profit margin, that’s for sure. Distribution brings in very little money – you’ve got very small margins. And when you’ve got retailers leaving for one reason or another, it’s difficult to keep up and running.”

edit - added Markley's comments about returning books to publishers, 2:45 pm

[render man]

Well good luck to them. Comics need more alternatives!

[defjoe]

As a guy who self publishes his own book... Diamond sucks ass. they are a monopoly. Even though there is CC and FM they stil have moved themselves in a position where to make it in this industry you have to go thru them. Now with FM being gone to new titles and the thresholds raised, how do we have a chance?

[Spaz_Monkey]

The good news is that with only Diamond as a supplier, they're now a monopoly. That means if enough complaints are lodged, they'll be broken up, like the phone company (bell?) in the early 80s.

Hopefully, by breaking them up, outfits like FM will prosper.

[Doug Smith]

Originally posted by defjoe
As a guy who self publishes his own book... Diamond sucks ass. they are a monopoly. Even though there is CC and FM they stil have moved themselves in a position where to make it in this industry you have to go thru them. Now with FM being gone to new titles and the thresholds raised, how do we have a chance?

Is selling your books directly to the major online stores an option? Eliminating the distribution middleman by shipping your books straight from the printer to Mail Order Comics or Mile High and/or any of the other companies?

I'm not knowledgable about the business side of comics, but when Diamond announced their new thresholds, I wondered why the smaller publishers wouldn't go that route. Especially since so many local shops won't even carry these types of books.

[sequart]

Has Diamond done anything wrong besides provide the service better than any other distributor has? Just because they're good at what they do doesn't make them a monopoly...

[ShadoJakk]

Originally posted by sequart
Has Diamond done anything wrong besides provide the service better than any other distributor has? Just because they're good at what they do doesn't make them a monopoly...

I consider this company a monopoly. It has nearly total control of the comic book market. Most of us that buy regular new comics from comic shops NOW get their books from Diamond. Also,ask all the independents about the lovely new conditions that have to be met to be included in their catalog,with longtime publishers such as Claypool that may be forced out of business because of this.

I have also know two comic shop retailers,who both are now out of business for various reasons,but a PRIMARY reason is Diamond. Both complained about the lack of courtesy from their spokesperson at the company in reguards to questions and complaints, constant shipping problems(including books not being sent on a constant basis, and misships), and ordering problems.
My local comic shop closed on Dec. 31,and Diamond was a considerable factor(thou not the only one) why it closed. It was also the ONLY comic shop in my city left.

I do not like Diamond,yet unless i wish to get out of my lifelong hobby of over 3 decades,i will have to still get my books thru them. I dislike that alot.

[majorjoe23]

Originally posted by Spaz_Monkey
The good news is that with only Diamond as a supplier, they're now a monopoly. That means if enough complaints are lodged, they'll be broken up, like the phone company (bell?) in the early 80s.

Hopefully, by breaking them up, outfits like FM will prosper.

The problem is, comics are viewed as periodicals, and diamond is far from the only distributor of periodicals.

[delawarejoel]

Originally posted by Doug Smith
Is selling your books directly to the major online stores an option? Eliminating the distribution middleman by shipping your books straight from the printer to Mail Order Comics or Mile High and/or any of the other companies?

I'm not knowledgable about the business side of comics, but when Diamond announced their new thresholds, I wondered why the smaller publishers wouldn't go that route. Especially since so many local shops won't even carry these types of books.

.

And another question -- if Diamond is in fact a monopoly, well, sometimes that word is a bad word in the anti-Trust world. Maybe there's too much money involved in soemthing like that, but I wonder what would happen if somebody threatened to sue Diamond for monopolizing the comics business? Or would that make things even worse for comics and make Diamond even more combative?

Curious....

[defjoe]

Originally posted by Doug Smith
Is selling your books directly to the major online stores an option? Eliminating the distribution middleman by shipping your books straight from the printer to Mail Order Comics or Mile High and/or any of the other companies?

I'm not knowledgable about the business side of comics, but when Diamond announced their new thresholds, I wondered why the smaller publishers wouldn't go that route. Especially since so many local shops won't even carry these types of books.

Always and option and everyone should look into that. but then I have to call and convince Joe Blow to sell my book (which should be done via marketing even with Diamond) and then i have to ship it, etc. now i do give copies to my local shops. but if i'm not listed in Diamond... they really could care less. That's what i meant by diamond has worked it so they ARE the only Distributor. Alot of shops won't deal with CC and FM.

I actually have just skipped Diamond sell via Paypal and do as many cons as possible. Grassroots campaign you can call it.

[defjoe]

Originally posted by delawarejoel
.

And another question -- if Diamond is in fact a monopoly, well, sometimes that word is a bad word in the anti-Trust world. Maybe there's too much money involved in soemthing like that, but I wonder what would happen if somebody threatened to sue Diamond for monopolizing the comics business? Or would that make things even worse for comics and make Diamond even more combative?

Curious....

don't think that could happen, as Majorjoe23 pointed out... comics are periodicals and there are many distributors of those. Diamond is in a unique position and they know it.

[Perfect Strangler]

Well, Microsoft isn't the only provider of software for PCs and it has been subject to anti-monopoly investigation (when it started including Internet browser with Windows). Wasn't it?

So I'm not sure if the whole "there are many periodicals distibutors, so Diamond isn't monopoly" argument is valid here.

(Just curious, I don't know myself.)

[Nat Gertler]

Originally posted by Doug Smith
Is selling your books directly to the major online stores an option? Eliminating the distribution middleman by shipping your books straight from the printer to Mail Order Comics or Mile High and/or any of the other companies?

I'm not knowledgable about the business side of comics, but when Diamond announced their new thresholds, I wondered why the smaller publishers wouldn't go that route. Especially since so many local shops won't even carry these types of books.

Various retailers do order directly from the publisher, although I cannot say whether MOC and/or MH is among them. However, if you're talking about doing that instead of going through Diamond, this does not seem to be a way to become big in the direct market. If your orders are low enough that you're in risk from the Diamond thresholds, it's not likely that many stores will sell enough of your book to make the special ordering effort worthwhile for them.

The Justice Department looked into dealing with Diamond's monopolistic situation (Googling "Justice Department" and "Diamond Comics" will bring up various references to that), and did not move ahead with it.

(Remember, though, that being a monopoly is not itself illegal; rather, you are prohibited from doing certain sorts of things to create or maintain that monopoly.)

[The Nun]

Originally posted by sequart
Has Diamond done anything wrong besides provide the service better than any other distributor has? Just because they're good at what they do doesn't make them a monopoly...

No. But effectively being the sole distributor for the entire industry does make them a monopoly.

[CitC]

defjoe, where can we see your book? Is there a web site that focuses on self published books: a Newsarama for self published comics?

comicsintheclassroom.net

[defjoe]

Originally posted by CitC
defjoe, where can we see your book? Is there a web site that focuses on self published books: a Newsarama for self published comics?

comicsintheclassroom.net

Duh... that would be nice huh? I'll have to eventually put a link into my sig. One book I worked on as an inker is here.

If you go into the forum there... in the General forum, I have 3 pages on my own book (CRY) I am almost done with. i'm actually looking for printers now. Have a few qoutes and waiting for some more. I have 20 pages (of 30) fully done and 4 more inked and another penciled. so I have 5 more to do. Best case is to have it ready for the FX Show at the end of the month. but if I don't make that I'll be ready for the MegaCon next month.

I'm going to buy a domain soon and i have a site ready. I just want to have the book available to buy online first.

[King CBR]

(Just curious, I don't know myself.)

Do any of us REALLY KNOW ourselves, though?

I blame my indecisive nature and my poor sleep habits on Diamond. Monopolizing bastards....

[Perfect Strangler]

I don't know the meaning of life either. That's probably Diamond's fault, too.

(Seriously, though: Was "I don't know myself" a linguistic mistake or just a phrase with double meaning? I'm not a native English.)

[EmeraldGuy32]

good luck to these guys.

[afterburnz]

I guess this means comics will have to get out of the "comic shop only" mentality in order to survive. Hit the direct market or else. Graphic novels over periodicals, perhaps.

[The Doc]

afterburnz wrote

I guess this means comics will have to get out of the "comic shop only" mentality in order to survive. Hit the direct market or else. Graphic novels over periodicals, perhaps.

I've been saying this for awhile now. Unfortunately, the type of genre comics that I do like (humor and horror, especially) are much better represented by Indie publishers than by the Big Two, which are dominated by superhero titles (Yes, I do know that DC publishes Vertigo, so there is some non-superhero stuff being done by the Big Two). Graphic novels, sold in bookstores, over the internet as well as at comic shops, are probably the best way for smaller publishers to circumvent the current distributor situation. Independent, smaller publishers who continue to rely on the direct market are going to have a tough go of it in the years to come.

NOW-

In regards to the distributor situation, I don't know why so many are willing to treat Diamond with kid gloves in regards to their new threshold policy. The plain fact of the matter is that Diamond, while not a monopoly when it comes to distributing periodicals, is a monopoly when it comes to distributing comics. Cold Cut and FM have never really been competitors on an equal footing with Diamond.

However, complaining about this at newsarama, or at any comic forum, is going to do little. If you dislike Diamond's new threshold policy, then you need to take action (and I don't mean by writing replies here at newsarama). The Congress didn't take any action on Diamond a few years back, but if enough comic fans write their congressman and senators about Diamond's monopoly and their current business practices, the Congress might re-consider looking into the situation.

For many, the very idea of government regulation is distasteful, but just the idea that the Congress might be looking into Diamond's business policies might make Diamond re-consider whether their threshold policy is such a good idea.

Of course, there's always the chance that if you do get the government involved that Diamond may decide to say enough is enough and close its doors. That's a chance you have to be willing to take, if you really believe strongly enough that Diamond is abusing its monopoly power.

[MattBrady]

Originally posted by The Doc
For many, the very idea of government regulation is distasteful, but just the idea that the Congress might be looking into Diamond's business policies might make Diamond re-consider whether their threshold policy is such a good idea.

The new threshold policy, as explained by Diamond, was insitutued to help it make money on titles and publishers that it was losing money to distribute, that is, if a title was costing Diamond money to distribute (it was seeing no return), they would/will be seriously reviewing carrying it, and possibly dropping it from their offerings.

I don't think the government, in any way, shape, or form, would legislate that Diamond must follow business practices that cause it to lose money. Congress isn't in the habit of telling businesses that they have to lose money if they want to exist.

MattB

[Nat Gertler]

Originally posted by The Doc
In regards to the distributor situation, I don't know why so many are willing to treat Diamond with kid gloves in regards to their new threshold policy.

Most of the folks complaining about the "new" policy are actually complaining about the old policy - that Diamond may choose not to continue carrying a series that doesn't have them writing a purchase order for a certain dollar amount. That policy has long been in place (although there are signs that they are exercising that option more vigorously.) The new policy is that if orders for a given issue don't reach a second, much lower dollar amount, they won't cut the purchase order at all - which is an awkward way of handling things, with consequences for the retailer as well as the publisher.

The plain fact of the matter is that Diamond, while not a monopoly when it comes to distributing periodicals, is a monopoly when it comes to distributing comics.

Only if you just look at the direct market. Newsstand distribution is handled by other folks, and Diamond is just one player in the distribution of squarebound material to the book market. (And if memory serves, Diamond technically isn't even the direct market distributor for Marvel and DC; Marvel and DC are their own distribution entities, and hire Diamond to handle the services. It's an odd distinction that makes little practical difference in most situations, but may have real legal significance.)

[Not From Around]

Originally posted by Nat Gertler
Only if you just look at the direct market. Newsstand distribution is handled by other folks, and Diamond is just one player in the distribution of squarebound material to the book market.

I don't think Diamond handles most manga, for one thing. And let's face it, that is now a BIG part of the comics market in this country. So in the bigger picture, Diamond hardly has a monopoly. That may well be part of what the regulators have in mind when they decide that Diamond is not a monopoly.

[Nat Gertler]

Manga wasn't nearly so big a part of the equation when the Department of Justice was making their investigation circa 1999.