Comic Economics: Diamond change their order threshold. The comic industry shudders….

Published On January 25, 2009 | By Joe Gordon | Comics, General, News

You may, or may not, be aware of the rather momentous changes that have come to light in the world of comic retail this past week or so. Now, bearing in mind that I’m not involved in comics retail on any serious level any more but take an interest after years of working at the coalface. So any ideas I put forward after this are purely my own and certainly don’t reflect the official view of Forbidden Planet International. Primarily because; a) I have no clue what the official view is and b) Given the nature of the changes I imagine FPI’s official position, like most retailers, is just acceptance of the change and a determination to look into the potential implications.

So, on we go….

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Diamond Comics Distributors are the main comic distributor of US comics. They exist in a virtual monopoly and have exclusive deals with a number of the larger publishers (Marvel, DC, Image, Dark Horse etc). This means that a comic retailer has to use Diamond. And consequently, if you’re a publisher looking to get your comics into comic shops then you really have to use Diamond as well.

Diamond have recently announced two very important things:

1) They will be severely curtailing the Offered Again facility in the Diamond Previews catalog; a good source of extra revenue for smaller publishers as the increased visibility for previously published material stimulates sales.

2) They will be increasing the minimum orders for publishers from $1500 to $2500 for all books whether they are comics or graphic novels. This may not seem like much but it will impact a considerable number of publishers, not all of them small. Indeed, some of the lower sellers from very famous and critically acclaimed companies would have a hard time hitting these figures. Effectively, and the numbers vary depending on the discount terms the publisher gets, it means that a $3 comic would have to sell somewhere in excess of 2100 copies to make the grade. (source: Dan Vado).

Various folks from around the Internet have had things to say, but few Diamond accounts are going public about it. Take these private soundings received by The Beat:

“It is going to be rough for us Top 20 publishers. It will be epic for anyone smaller. Lots of folks will vanish due to this, even some bigger guys.”
“I expect the new threshold to annihilate many of the smallest publishers and keep a lot of new ones out of Previews.”
“I suspect that this will put a severe crimp on what little remains of the B&W pamphlet field.”
“This is the single biggest event since Diamond became the monopoly that ruled comics.”

Of those that came out publicly with comments, Dan Vado of SLG was most forthcoming and allowed Comics Reporter to reprint his letter to them in full, of which these jump out:

Vado: “Diamond is in essence asking everyone to sell more in a recessionary environment or find themselves out of the catalog. Short term, a lot of publishers are going to find themselves with no distribution.”

Vado: ““Lots of people, be they publishers, retailers or creators, who have been around for a long time are going to suddenly with no business left and no place to turn. People, and I mean everyone from fans to creators to publishers to retailers, need to use this as the last wake-up call after years of hitting the industrial snooze button and finally find a way to get together and address our common lifelong problems and find answers to them.”

(the full text here).

One thing that does need saying is that very few folks are criticising Diamond over this; after all, they are a business and have to take steps to protect the future of the business in these troubled times. Indeed Diamond have been getting praise for the manner of the notifications, with many publishers receiving the news from phone calls from their account managers rather than an impersonal e-mail. And to his credit Diamond Vice President of Purchasing Bill Schanes has gone on record at Newsarama and ICv2 to give his side of the story.

(Newsarama interview here, ICv2 interview here)

Back to Dan Vado for his sensible take on it: “this is not a Diamond problem, it’s an industry-wide crisis situation for which Diamond is not the cause….. I think Diamond is now doing what the rest of the world’s business are doing, finding ways to get smaller, leaner and back to profitability. I may not like it, it may hurt us and even drive us out of the Previews, but that does not mean I don’t get it.”

So, what does it mean? Complete meltdown? The end of the direct comic sales market (comic shops to you and me)? Cancelling Spider-Man?

Probably not on all counts to be honest. For a start Marvel, DC, Image, Dark Horse and many other of the Diamond exclusive publishers; those publishers who only distribute product through Diamond) are pretty much above these sorts of policy changes, both due to their numbers being higher and their exclusivity earning them special treatment negotiated in the terms of their exclusivity.

But it will have a serious impact upon quite a few publishers. Many smaller publishers just wont have the numbers to be able to publish comics any more. But even the bigger publishers aren’t exempt and many of the most critically well received books are slow burn titles, with miniscule initial orders that build and build through word of mouth and reviews to become eventually good sellers. Does this mean that a Drawn & Quarterly book or Fantagraphics book that was under the cut would be rejected? Doubtful. I imagine that Diamond would look at the publishing history of these established players and let the odd under threshold book go out anyway.

But where it would really impact is the new publisher or the never broken out big publisher. I’d imagine that the amazing, long running successes of books like Bone, Strangers In Paradise, Mouse Guard and many more would be impossible under this situation. I have no idea what initial numbers were, but I’d be willing to bet they’d have trouble making the threshold. These books all generated readers and numbers through word of mouth, eventually becoming best-sellers. But these Diamond numbers effectively stop any possibility of a slow burn success.
And of course, less publishers is a bad thing. Less variety means less potential interest from new readers. Which means a shrinking customer base. And that’s always bad news.
“Why don’t the shops just get theses books that Diamond wont stock from alternative distributors then?” you may ask. The sad answer to that is complacency and convenience on the part of the retailer. It takes a lot of extra work to source a new distributor and even more work to use and operate accounts with more than one distributor. Diamond accounts are familiar and comfortable for a lot of retailers and the prospect of actually going out and getting a new distributor just so the few regulars who buy some critically praised yet poorly selling books just isn’t deemed worth it. This may be a terrible attitude, but it does exist and it’s going to hurt publishers, going to hurt the medium and it’s going to hurt the customer. Forward thinking retailers will already have multiple distributor accounts to source graphic novels from many different companies.

Forward thinking retailers will already have a shifting stock base as well, with their product mix moving away from the comic and towards the graphic novel. This was happening anyway in a lot of shops, but this minimum order threshold will only make it more important. As the threshold contraction takes place and the smaller publishers dissapear and the established publishes decide that their best bet to get those threshold numbers is to publish the material in a graphic novel at £15 rather than 6 individual comics at £3+ each the comics market will increasingly be made up of just the big companies.

Because comics just don’t work economically any more. And Graphic Novels, although still not great value for money, are certainly better than comics. More importantly Graphic Novels deliver something very important in these difficult economic times – a definite and complete reading experience. You pay £15 for a graphic novel and that’s your commitment over. You pay £3 for a monthly comic and you’ve just entered into a contract, admittedly a non-binding contract, to spend £3 every month on the comic.

In a difficult retail market I’d speculate that it’s going to be the comic sales that fall and the graphic novel sales that fall less. It’s easier to justify an occasional one off purchase of a graphic novel than it is to justify a regular monthly expense of a comic. Effectively Graphic Novels become the treat and comics just become another monthly expense. When trying to reduce your budget, the first thing that gets looked at is how to cut down on the regular expenses. The treats tend to stay because we don’t tend to factor them in and they become something to cheer us up after trimming our regular expenses so hard.

There’s much more on this across the Internet thingy. Try these:

The Beat: here, here, here,
Comics Reporter: here, here, here.
Rich Johnston: here.
Newsarama: here, here.
Comics Worth Reading: here.
Comics Chronicle: here.
And all of those have enough outward links to keep you reading all day on this subject.

In the end, it’s all too easy to see the headline of Diamond raising the threshold and start yelling monopoly and accusing the big distributor of all manner of evils. But, like everyone else, Diamond needs to stay in business. But, unlike every publisher Diamond needs to stay in business for itself and for the greater good of the comic industry. Because, whether you like it or not, whether you agree with how they got to their stauts of being (almost) the only game in town, a comic industry without Diamond distributors would be no sort of comic industry at all. To lose Diamond at this point would be an unimaginable disaster for the industry and consequently, and far more importantly, for the medium’s future survival.
Finally, I do realise that Diamond also announced major changes to the Adults Only comic market and it’s Previews Adults Supplement. But in the UK, there are very few retailers who import these adult comics. And to be honest, the market for these things collapsed as soon as broadband meant round the clock porn was a mouse click away. (Or so I read).

(You know, this was meant to be a quick recap of the issue. I emailed Kenny Penman at FPI with a few questions on the subject to see what he thought of it and as usual, he came back with more interesting points from the perspective of retailer in his role as a director of FPI and publisher as one half of Blank Slate. So instead of cutting his stuff up and including it here, we thought best to put it up tomorrow. We figured your poor eyes would need a break from all that text.)

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About The Author

Joe Gordon
Joe Gordon is ForbiddenPlanet.co.uk's chief blogger, which he set up in 2005. Previously, he was professional bookseller for over 12 years as well as a lifelong reader and reviewer, especially of comics and science fiction works.

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