Reposting something I posted elsewhere...

DC is asking comic shops to buy their product through the shops online competitors who have been underselling brick & mortar stores for years (Midtown & DCBS). They are asking comic shops at a time when cash flow is tight and shops have not had income in months to pay more shipping, get lesser discounts, have worse payment terms, and in essence now operate on smaller margins for their stock. Diamond now loses about 1/3 of their market share and had plans in place to help some shops survive the cash flow crisis created by the Covid shutdown (just as Geppi helped hundreds of smaller shops survive the speculator bubble burst int he 90s by offering loans, delayed payments, and other cash flow helps) but will no longer be in a position to do so, which may mean the end of several smaller shops. Retailer discounts from Diamond are based on total volume of the orders, so losing 1/3 of the volume of orders means several shops will be getting smaller discounts, i.e. paying more for remaining product, so margins will be smaller but also they may buy fewer books which means less variety on shelves for customers as only proven sellers will have shelf copies bought. Also, any shops who use the point of sale inventory software from Diamond to track sales and prepare future orders will have to find or pay for something else to track DC books as the new distributors are not going to be compatible with the Diamond software, so its additional cost and labor for retailers to track their inventory. Those costs will have to be passed on to customers or shops will have even less liquid cash flow available.

And all of this on a Friday with no notice, when final order cutoffs were due to Diamond and all the DC product in those orders was cancelled with no notice giving retailers only a small window to set up accounts with the new retailers and get orders in so as not to miss that product.

The reaction I have seen from a dozen retailers already is that they are now only ordering DC product only for subscription/pull customers and will not be stocking it in stores on the shelves moving forward. So if you are not a pull customer at these shops, and you do not preorder DC books you want, you will not be able to get DC Comics there. Several prominent and influential retailers (such as Brian Hibbs, author of the retailing column Tilting at Windmills currently on The Comics Beat and the retailer who spearheaded the filing of the class action lawsuit against Marvel about late books and won) are embracing this model and advocating more retailers do the same. One of our semi-local shops, who was an Eisner winner for best retailer has sent out notice to their customers that they will be following this model. Other local shops in the area are considering it. Other retailers I know of refuse to create accounts with their competitors, and refused to order form them when they were set up choosing to only get their DC product through Diamond, and now that DC is no longer working with Diamond these retailers will no longer carry DC product at all. DC has not made many friends among the retail community with this move and may see their market-share shrink substantially as a result.

The Diamond semi-monopoly was not a good thing, but springing this on your retailer partners with no notice at a time when they are cash-strapped and in survival mode is not the way to go about trying to change the retail landscape. Changes they make should be additive to Diamond not in place of Diamond. This won't expand your customer base, it will shrink it along with your marketshare and do substantive damage to the overall landscape of the marketplace. Diamond emerged as a monopoly because they were the only distributor with enough liquid capital to survive the chaos of the Heroes World debacle and failure. They were essentially the only one in a position to keep the market alive when the other distributors folded or sold out when Marvel unilaterally cut every distributors market share with the Heroes World move. In the wake of the shrinking direct market over the last decade and the losses coming out of the Covid shutdown, there may be no one in a position to keep the market afloat if this fails and comes crashing down on DC's ears.

The only growth market in comics over the last five years has been the young adult book trade (i.e. books distributed to bookstores not through Diamond) which saw 16% growth in 2019 while the direct market shrunk again in consecutive years. DC had been tapping into that market as an additive source of sales with their former Ink/Zoom books and I applauded those efforts. They were additive efforts that reached out to new readers and created new customers even if they did not affect periodical sales in the direct market. I also applauded their Walmart initiative with the DC Giants creating accessible stories featuring classic characters for casual readers together with reprints and marketing for trade editions in a value priced product ($5 for 100 pages), another additive attempt (which it seems they are now abandoning as the cancelled most of the already solicited direct market versions of the books, distributed the original stories in those cancelled books as digital only products and will not be renewing the deal with Walmart which ends soon). Both of those additive attempts were spearheaded and championed by Dan Didio, who is now gone form the company. This move is not additive, but subtractive, steps away from the growth market to double down on a shrinking market while at the same time taking money out of the pockets of the people in that shrinking market you depend on to sell your product. It smacks of shortsightedness and desperation by people who do not have a vision for the future of their product in the marketplace and are trying to milk a few pennies more in the short terms. Pennywise and pound foolish.

-M

We might see Bettie Pages starting a riot...his/her newsletter is rather angry.

The big question is this-if DC leaves the direct market, is the remaining market large enough for comic shops to survive? If DC or other publishers leave is there a large enough path to market to sustain a line of books? The digital release market has hovered at about 10% of direct market print. Will it grow if there is no print? Will it grow enough to make the books profitable enough to continue paying creators a living wage to produce those books? If the book trade large enough to sustain DC increasing their output there? Some of the book shave done really well there. Some have not. All have been in the young adult sector which is the fastest growing segment. Is there demand for DC characters in other segments of the book trade? Enough demand to make producing books sold only there profitable enough to pay creators enough to keep them in the field? Will the shrinking market trigger a talent flight to other media and fields as did the shrinking market that resulted from the implementation of the comics code in the 50s? Are there enough retailers left in the book market to make it worthwhile as the only market for DC products? Is DC willing to entirely restructure their creator compensation model to be in line with the book trade and compete with other book market comic publishers (like FirstSecond, Scholastic, etc.) that use an advance/royalty system rather than page rates. This often entails keeping creators on multi-book deals rather than strictly freelance.

Right now the way it usually works is that revenue from the periodical release covers creative costs so the book trade releases are mostly profit. Are sales in the book trade robust enough to cover creator costs and still be profitable without the periodical revenue stream?

I am not a huge fan of the direct market, but it provides a vital role in the market. It should not be the only market for comics, it should not be the market that is relied o to grow the business and reach out to make new customers, but it does provide a path to market for lots of products that would not be viable in the book or digital trade alone.

I get that this looks like DC trying to move away from the direct market and squeeze out every last cent of revenue they can on the way out, my question is-Should they be trying to keep all their eggs in one basket and just shift which basket they are in instead of trying to find multiple baskets to house your eggs so there can be more eggs? Is that new basket actually bigger or big enough on its own to allow for growth?

-M