Most of you folks reading this, being more than casual comic book fans, have at least heard of Diamond Distributors. They're the ones that publish that Previews magazine you see at your store every month; it's where your local comic shop (LCS) finds and orders the comics that end up on their shelves. And some of you, myself included, have heard of the term "direct market" in relation to comics distribution as well. Now, depending on your exposure, your knowledge of such things is likely slim to none, unless you own your own store. You've probably only heard references to all of these things through various negative connotations, i.e. "Diamond sucks" or "comic book distribution sucks." That's about as far as I've ever gotten until now, so I would assume the same for others.
Recently, in doing some personal research for projects unnamed, I've taken an interest in the comic book distribution market. Now, I'm not an economics guy, so it has taken a little research to make complete sense of it all, but there are some great resources online to check out if you're interested. First of all, Chuck Rozanski, owner of Mile High Comics based out of Colorado, has written a series of articles recalling his own experiences in the development of the current direct market system, which were significant. You can also Wikipedia Diamond and the direct market to get a basic idea as well as some links to other articles. But below, I'm going to take you through a tour of the inner workings as I've found them. And in future parts, I'm hoping to talk a little more about the pros and cons of the system as it is, as well as some introspection into the state of the comic book industry. Sounds dry? Maybe, but I'll keep it short and sweet, and because I'm not an expert, I'll try and keep out any really technical stuff. Also, I welcome all input. So here we go:
The term "direct market" is pretty deceiving, since it no longer means what it was intended. To learn about it, you have to understand the difference between it and regular old magazine sales. I used to work at Tower Records, and every month we'd get a new shipment of magazines in. We would pull all the old, unsold copies to make room for the new ones, and we'd pack those old issues in boxes and ship them back to their distributor. Now, some places would want the whole issues and some would just have you tear off the cover and send that back as proof so you could just keep the rest of the issue (which was a cool little side-benefit to working there), but the basic idea was the same: a store gets a whole bunch of copies every month, and any unsold copies could be sent back for a refund, either partial or total. This is a great system since it reduces risk on the store's part; if you had a new magazine that stores were unsure about stocking and you told them, "If it doesn't sell, you get your money back," they're much more likely to order it. This is good for you, too, since the only way you sell copies is if the store actually puts them out there for people to pick up. Simple, no?
Well, here's where we complicate things. The companies that produce those magazines aren't the ones selling them to the stores. Rather, there are a whole crew of middle men involved, from printers to distributors, and everyone's getting a cut for their work. Furthermore, if you've got a magazine that's been out there for a while and sales are steadily dropping, you as a store aren't going to order as many copies; it's a known variable, so you're just returning an increasing number of copies per month or cutting down on your order amount.
Now go back in time over 30 years ago and check out the comic book market then. The primary sales device is the newsstand, or drug store or whatever, and so your sales model looks something like the one above. Newsstand sales are lagging, and the idea is floating around that maybe the future for comics lies in specialty stores that cater to the existing comic reading community. A guy named Phil Seuling saw potential in this, but he wanted a cut of the profits involved. So he went to the comic book companies, like Marvel and DC, and made deals with them to sell directly to him instead of through normal means, cutting out the middle men, in return for a larger discount. They may have initially been unsure, but Phil hit them with a whammy of a condition: he would buy with no possibility of returning unsold copies. This turned out to be pretty huge in terms of the preexisting newsstand market, and it's something that persists today and accounts for all those long boxes in your comic stores full of back issues. Don't see many of those around for other magazines? Now you know.
There were other conditions that persist today in the distribution system; Phil required people that ordered from him to pay two months in advance for issues, while today Diamond requires orders 3 months in advance. If you're unsure of the effect this can have, ask your LCS owner how he or she crunches the numbers for comics that far ahead; it's understandably tricky and infuriating, especially when coupled with the fact that you can't return unsold copies. And, as you've no doubt noticed, it doesn't exactly cut out the middle man; in doing so, Chuck and any other comic book distribution that came along afterwards simply replaced the existing middle men. Initially, other agreements were forged between stores and companies to be sold to directly, hence the phrasing of the term "direct market". But these have since petered out through a whole slew of business and political wheeling and dealing that you can read about in Chuck Rozanski's series. But as of the late 90s, Diamond stands as the only large comic book distributor, and the only distributor of Marvel, DC, and Image, the biggest comic book producers in both volume and, more noticeably, sales.
Now, I'm trying hard not to color Diamond in a bad light; they didn't create a lot of the conditions inherent to the direct market, and they just took advantage of a good situation when they saw it. But the fact remains that they are the sole comic book distributor in the US. In game terms, they own everything except Baltic and maybe Vermont. That's Monopoly, kids, plain and simple. What does that leave us with? Well, here's the life cycle of your comic book: a creator/team of creators produces a book for a company, more likely than not Marvel or DC, who in turn send it off to a printer. From the printer, Diamond procures the book and ships it out to your LCS, where it's shelved for customers. You either buy it, or it gets bagged and boarded as a back issue. That's the story for at least 90% of all the books produced, and for every store, and for pretty much every customer. For better or worse.
Now that we have the how, my next installment will be about what this actually means. Please drop me a line and let me know what you're thinking!
~Erick
Links:
Chuck Rozanski and the Evolution of the Direct Market
Wikipedia's Direct Market entry
Diamond's website
Comic Book Distribution: A Modest Proposal
