In the 21st century there many companies and industries are still stuck on business models and practices from decades ago that do not make sense in today’s market. The music and film industry have learned the hard way that you can’t beat the internet, you have to work with it. After making ridiculous profits for decades, they now find themselves dying and struggling to keep with the times.
With that said, I asked the same question of an industry I love comic books.
Is Diamond Comic Distributors good or bad for the future of the comic book industry?
That’s a question I had never really thought much about until having a great 2 hour Skype chat with indie creator James Schumacher ( creator of the indie horror comic Inheritance. Stay tuned to Skatronixxx for news about it later this month) last week. So I thought I’d do some research and see what I’d find.
First of all Diamond Comic Distributors is essentially the only way to get your comics into brick and mortar comic book speciality stores. You might be thinking that statement can’t be right, surely there has to be some competition. No. In fact, Diamond has exclusive distribution deals with comic publishers Marvel, DC, Image, IDW and Dark Horse.
That accounts for more than 75% of the market, and they are the top 5 publishers regarding sales. Now whether you think it’s right or not, that is clearly a monopoly. If you’re a comic book retailer, you are forced to have an account with Diamond because they have control of the most popular titles your customers want.
If you remember In 1998 the first time, the US government was investigating Bill Gates, the former Chairman and Co-Creator of Microsoft for Manopaniolization and engaging in abusive practices it was big news and a serious issue at the time. The only one who can step in and say hey you’re creating a monopoly were going to investigate you is the government.
I get that the comic book industry is not even a concern to the US government and that the tech industry has a bigger effect on the economy, but the comic book industry is a billion dollar industry and it affects the lives of people. Are there more pressing issues at the moment? Absolutely, but isn’t breaking the law or the likely hood that it has been broken worth being looked into? At the end of the day, it affects the arts, creatives, and small business owners, which economies desperately need right now.
The next question that arises is, was it unfair of diamond to secure over 75% of the market with exclusive distribution contracts? Yes and no. On the one hand, Diamond came into the game in the early 80’s as a start-up that was the competition to marvels recently bought distributor Heros World in the early 90’s. At the time comic shops had to have two accounts which became confusing due to the different policies and discounts of each company. Once Diamond landed the exclusive contracts with DC, Image and Dark Horse, Marvel realised there was no point haveing their distribution company and would eventually sign an exclusive deal with Diamond. In a capitalistic market, you can’t blame them (even though it’s a prick move) for going from startup to full-fledged powerhouse in the industry.
On the other hand your the king of the mountain, you have no reason to change when there is no threat. I’m going to use the pro wrestling industry as an example. When WWE Chairman Vince Mcmahon bought the WCW and ECW in the early 2000’s his mainstream competition was eliminated. Only a few years prior there was an explosive era in wrestling (referred to as the Attitude Era in WWE) WWE and WCW were in a rating war. Each week the promotions would try to top each other which made for some of the best entertainment and storylines in pro wrestling history. Once Vince bought out WCW, the excitement and creativity slowly began to die and after only a couple years it was a joke. They resorted to competing with themselves by having a draft for wrestlers to join one of there two tv shows Raw and Smackdown. They then went to PG for their content which also hurt, and they were never the same. With no legitimate competition and no other perspective to the industry to challenge him, Vince, effectively damaged his own business.
Competition is always good, for industries, right? Is it okay for comic book distribution? It’s complicated. With the profit margins so tight for everyone involved the addition of competition, in this case, might raise the already inflated prices of comic books. Printing a comic is not cheap, and is what eats the majority of your profits. I have heard of some mainstream creators on Twitter say that single issues aren’t viable anymore and that we should just produce trades. This idea makes sense to me; it would reduce costs and save space for purchasers, but the single issues especially the variant covers would be missed, though.
I’m not sure how accurate the numbers are regarding 2016, but these were from a few years ago and should give you an idea how the profit of the comic is divided between the retailer, diamond and the creator.
So the average comic is about $3.99. About $1.59 goes to the creator; $1.99 goes to the retailer, and the remainder goes to Diamond. Keep in mind especially for indie creators that diamond does not pay you in advance. So you have to have the money either saved up or borrowed to pay for your print run. Once the creator gets paid (30 days later) the majority of the profit made off the comic goes to recovering your printing cost leaving little to pay yourself and any of your team that you may owe money. Retailers also have the risk of ordering too much of a particular book and are stuck sitting on product that isn’t moving, as diamond rarely accepts over order returns, which can hurt the retailer’s profits a lot. Diamond makes a profit with no risk to the company at all.
There have been mixed reports on the customer service quality of Diamond, as is the case with every companies customer service. There are always good, and bad experiences told in person, and online, deciphering which are accurate and which are exaggerated or flat out wrong is tough. I have read and heard from retailers books being delivered in a horrible condition to stores. Diamond states on their site that their comics will be delivered in “mint condition.” I’m sure now and then that’s unavoidable, but the health of comics is important the retailer and the customer. It’s hard to sell a comic with bent corners or edges; it also makes the rest of the rack look bad. Collectors are also particular about the condition of comics for grading and resale purposes.
If you’re fortunate enough to get your comic into one of the top 5 publishers, the Diamond process is a little easier with publishing staff taking care of things or guiding you through the process. If you are an indie creator, it’s a challenge to get a deal with Diamond. You have already either pitched to an indie publisher or have created your publishing company and now you’re looking to test the direct market and play alongside the big dogs. You now have to convince a team at Diamond that your book is going to be worth them putting you in there all extensive Previews catalogue. If they like, you then have to sell your comic to them at a 60% discount off the cover price, and you are usually responsible for shipping costs from their distribution centre.
The sales statistics provided on Diamonds website I’m not inclined to trust 100% again they are the only player in the game, and I wasn’t impressed with the old look of their site. I also noticed the lack of conversation about whether Diamond is good or not by both indie and mainstream creators. I assume talking about this issue could hurt your relationship with the only major distributor available. So I understand wanting to be silent or biting your tongue. It’s a tough game and creators and employees in the industry all have responsibilities and loved ones to look after. It’s still somewhat surprising; not much is being said, and It undoubtedly affects everyone.
So is Diamond right for the future of the comic book industry? I don’t personally think it is. I also don’t know what the solution is. Thanks to Kickstarter it’s shown the industry you don’t need Diamond to reach a broad audience. Some Kickstarter campaigns have outsold Marvel and DC titles by 10’s and even 100’s of thousands. So perhaps the future is crowd funding and the direct market will eventually implode over time?
I’m no expert on this issue; I just thought it’s worth talking about. With all the information available in the information age, we have so much that it’s nearly impossible to decipher what’s legitimate and what’s not. There always seems to be substantial information to prove any viewpoint. It used to be you just had to check the date of the study or statistics, not so much these days; there is no regulation what so ever on the internet regarding the accuracy of posted information.
I don’t see there being a simple solution to this problem. The fact that it’s not a big issue in the industry today is quite disturbing. I get the mentality that it’s been this way for years, and it’s worked for the past few decades. Like the music and film industry though is Diamond going to have a rude awakening when sales start to dwindle and comics released outside of the direct market start to be more viable and frankly the better option for quality? Something needs to change, but determining that requires the veterans of the industry to come together and discuss that.
Questions? Opinions? Post in the comments below.
I have been a retailer with with Diamond for over 20 years. I agree with you that Diamond Comics Distributions are a monopoly. For 6 weeks in a row I have had considerable amounts of merchandise missing or damaged. And regardless of their reassurance that they will look into the problem week after week I’m having the same problems. In some cases the Replacements are in worse condition the damage Comics are received in the first place. As a retailer I am not allowed to talk with the shipping Department and I am only allowed to talk with my sales representative in most cases why this is happening. We need to go back to the days when we had Capital comics as competition.
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That’s unfortunate to hear! Ya competition is really needed again.
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