B&N Week 41: Distribution Pt 2–Physical

Hello, and welcome back to Bolts & Nuts! [Sometimes I feel like a game show host…]

This week, we’re continuing the conversation about distribution. Last week was digital, and this week will be physical. This will mostly be about Diamond Distributors. We’re going to explore some views about Diamond and Previews, with the ultimate goal of understanding Diamond’s place in the industry. This is not about how do I get into Diamond. Think of it more as that’s why I got rejected by Diamond.

So, with that out of the way, let’s start!

Okay, so you’ve been working on The Chronicles of Pen-Man for months now. You’ve got an artist that you’ve paid out of your pocket, and you’re looking to get the rest of the money from sales in order to continue the series. A bad way to go, but hey, we all do what we have to, right? The Chronicles are going to be quarterly! That works.

You go to the Diamond website to find out about how to submit to them. (Yeah, Steven, the Diamond website!) Oh, ye of little faith…

I’m going to go over this twice. The first time is to go over the cycle, and then the second time is to go over it in more detail. Between the two, I’ll talk about their place in the industry.

Let’s say that you contact Diamond in January. This is for the initial contact for the Chronicles of Pen-Man. They tell you what you need to do, and you start working up the Submission Package.

You send it off in February, and if they accept it, you will work out the Terms of Sale with your Brand Manager, who is someone they’ll set you up with.

In March, the Chronicles of Pen-Man appears in Previews, which, as you know, goes to retailers and consumers. The technical term for this is solicitation. (Steven, I won’t even say Duh… )

In April, Diamond compiles all of the orders they receive for Pen-Man from the March catalog, generates a Purchase Order, and sends that to you.

May sees you shipping the Chronicles to Diamond, who then ships them out to the retailers. (Diamond is a middle-man?) Yes, Diamond is a middle-man, and their capricious whims can save you time and money on shipping to a few hundred different shops yourself. Stop yer whining and listen. In May [the fifth month], you follow up with Diamond by sending them an invoice for the Chronicles.

In June, Diamond sends you a beautiful check that you’re going to run out and cash immediately in order to do it all over again.

That is the cycle. It makes certain assumptions that we’ll come to later, but this is generally the way it works when you go through Diamond. From initial contact to check is about six months. Can you really afford that lag in payments?

We’ll come back to that. Now that you know something of the cycle, it’s time to talk about the way Diamond is perceived by a lot of creators, Diamond’s place in the industry, and the makeup of the Previews catalog. You’ll even get a small history lesson.

Diamond is viewed by many individuals and small indie publishers as the ultimate evil monopoly. It was so bad at one point that Diamond was even investigated at the federal level to see if they actually were. The findings were that they weren’t, but that doesn’t stop creators from grousing about it—sometimes loudly and with much vitriol. Hang around a creator community long enough and the topic will come up, and like politics and religion, it’s hard to sway a person’s mind a different way. I’m not here to persuade anyone. I’m here to lay out some basic facts. Draw your own conclusions.

History lesson time. And let me tell you, when looked at, comics history is pretty interesting. You just have to take the time to understand it.

Before what we know now as the Direct Market [DM], comics were found on spinner racks everywhere: supermarkets, gas stations, convenience stores, what have you. Most of us remember those days, and remember them fondly. Hell, they were the reason that most of us got into comics in the first place.

Now, there were a lot of distributors at this time, and tons of comic shops. As many as 10,000 at one point [and this is a rough estimate for the timeframe of 1992], and this was also around the height of the speculator market. People would go around and find copies of Detective Comics 24 in their garages, or Journey Into Mystery #2 in the attic, go to a comic shop, and walk out with what seemed like a crazy amount of money for a comic. Comics were the new it item, and there were about three hundred tri-billion new collector item number one’s to be had, with chromium, glow in the dark, die-fold, gatefold, scratch and sniff covers. And don’t forget the numerous universes and bad girls and crap that we all bought, and that we now can’t get rid of because everyone has it and no one wants it. This was the recent heyday of comics, and when the bubble burst, the decline that had started in the 80s continued. [I know I started in the 90s and went backward. Time for you to do your own research.]

It was during this time, around ’95, that Marvel went absolutely power-mad, and tried to distribute its own comics to the direct market. This launched what was basically a distributor war, which ended up with Diamond Comic Distributors being the last man standing. I was in the Marine Corps at the time, and worked part-time for a comic shop. There was a LOT of pissing and moaning going on during that time, believe me. Anyway, Diamond bought out some competitors and signed exclusive deals with the other large publishers to become the powerhouse it is today.

And powerhouse it is, able to make or break a comic all by its lonesome.

Have you ever looked at a Previews catalog? I mean, really looked at it? The thing is HUGE, and gives the air of being organized, but really isn’t. It has its Premiere Publishers in the front of the book, grouped together. Marvel is still something of a holdout, publishing their own book, but you still order the comics through Previews. (Strange.) I know.

So, you have these companies that are Premiere status: Marvel, DC, Image, and Dark Horse. There are a couple of others that have large sections, such as TokyoPop, but they’re not considered premiere. Everything else in the book is considered non-premiere, and thus, really, not important. The thickness of the book reminds one of a phonebook, and on the surface, it’s arranged as such, because it’s generally alphabetical by company name. (Generally?)

Yup. You have some companies that have changed their name to get near the front of the book, the though being that after customers get through the Premiere section, they’re only going to have a limited amount of money left to buy comics. So, you have a company such as Slave Labor Graphics changing their name in the catalog to Amaze Ink in order to be near the front. (Dirty pool!) Oh, it gets better. Because of this telephone book effect, you have more and more comic companies coming out with names that start with letters at the front of the alphabet. It may be getting a little better now, but not by much.

Now, with the shrinkage of the direct market to something a little over 2000 shops (That’s it?!) [Yup. No more than 2500, though], Diamond is no longer making money by the bushel. It’s only making money hand over fist, now.

More numbers.

It costs Diamond about $1 per copy to make their catalog. And since this is only a catalog, it’s printed on newsprint, or maybe something slightly better, but not by much. The point is, it’s cheap to produce. Now, they sell the book for $5 each [really $4.50, but I’m rounding up], and make an average of $5000 per display ad, and have over 150 pages of them per issue.

So, let’s make some assumptions. Let’s assume there are 2500 shops. These shops have to order at least one copy of Previews apiece. However, let’s assume they order 2 copies. For those two copies, it costs Diamond $5000 to make them. However, they’ve made $25,000 from the shops alone. Now, let’s make it really easy, and say there are an average of 2 display ads per page [because 1 ad per page isn’t realistic, and doesn’t prove the point]. That’s $10,000 per page for display ads, and at 150 pages, that’s $1,500,000 per issue that’s made. For twelve issues, that’s $18 million dollars. That’s almost pure profit, because the printing cost is almost negligible.

Don’t forget that they’re a business, okay? There’s operating costs and so on, but don’t forget that their main business is to turn large boxes into little boxes, and then ship them. They ship them UPS, and I’m sure they have a contract or agreement with them so it costs them the least amount of money possible. [As a side note, I used to work for UPS as a loader, and Tuesday night, I made sure to eat my Wheaties, because those Diamond boxes are little and HEAVY.]

This gigantic monolith called the Direct Market, which is serviced really only by Diamond Comics Distributors, is the reason why Steve Geppi, owner of Diamond, is able to also own and operate a hard to find comics museum, almost at a loss.

Now, the views about Diamond being a monopoly possibly don’t go back far enough. I’m talking first causes. If you notice, most of the larger, color ads are from the Premiere publishers, and mostly Marvel/DC at that. Taking a logical approach to it, this means that Marvel and DC basically pay the bills. Sure, the little guys help, but the book is basically paid for by those two companies. So, if there’s a monopoly, Diamond may be the face of it, but its truly created and owned by the premiere publishers.

Time for you to go do some research on your own to see if I’m full of it or not.

Now, basically, if you’re not with Diamond, you won’t get seen [You may not get seen anyway, but that’s a conversation for a little later.] There are other distributors, such as Enemi/Haven, which used to be Cold Cut, but they don’t have the merchandise or the reach that Diamond has, pure and simple.

Diamond is a business, and that business is to make money. Most people don’t have a problem with making money, it’s how the money is made that they have a problem with.

The first thing you have to look at when you look at Diamond is the fact that they’re human. That means you’re subject to the whims and tastes of the likes of someone who’s not you. Ostensibly, they know more about the market than you do. It’s their job to watch it, as part of their money-making. If your product doesn’t sell, they won’t make money, so they’re relatively picky about who and what they carry.

And this is where indie companies and creators get pissed off. Diamond is the only viable game in the industry, and because of that, they have the [secretly] enviable position of being choosy of who and what they carry. Because they want to make money, unless you’ve got something that’s just totally unique and out there that everyone will want it, you’re not going to be able to get away with sending in rushed crap. And I know you have set up Pen-Man in their own universe, but unless you have something magnificent set up, chances are that you won’t be getting in at Diamond.

(Steven, so what’s the use?) The use is simple. If you get in, you save time and money in shipping, which affects your bottom line. You’ve already paid all kinds of money out of your pocket, so why add to it when it comes to shipping? The more you have to pay out of your pocket, the more you have to sell in order to make up the difference. Paying money out of your pocket is easy. You can give money to the Hero Initiative, you could give to the Comic Book Legal Defense Fund, you can do anything with it. You could burn money, so getting rid of money isn’t hard. Getting money to cover the sum you got rid of is harder, especially when it comes to gaining sales. If you can keep money in your pocket by going a different route, more power to you.

The second reason you want to get in is another no-brainer. You [hopefully] get to be seen in the catalog. Your comic will be seen by people who’re already looking for something to buy. You do enough hawking, enough reminding, enough staying in people’s faces, and thus, staying on their minds, and that might result in a sale, which is what you want to happen in the first place.

Ultimately, that’s what you’re doing, anyway. You create the book, and you’re selling that book to Diamond at a steeply discounted price [61% or so], and then you don’t get paid until after they’ve made their money. You sell to Diamond, who sells to the retailer, who sells to the customer. The customer gives their money to the retailer, who takes their cut and gives it to Diamond, who takes their cut and gives you the rest. That’s how it works.

Now, like I said, from initial contact to first check, we’re talking six months. In order to keep the money flowing from there, for your quarterly book, you only have time to skip two months before having to do this all over again. After the initial contact, the timeframe cuts in half, so it’s only three months from solicitation to receiving a check. It’s a cycle that feeds itself by always being paid forward, and part of that is the break in the system that many people see.

Another break in the system that other people see is the fact that Diamond is also calling the shots on the number of sales needed to get into Previews. You have to sell $2500 retail, per issue, in order to stay in the book. That’s roughly 3k copies. It’s harder to do than you think.

But these are all barriers to entry, made by people who know better than you about what will and will not sell. And believe me, it has to sell, because the great thing [and private bane] of the direct market is that the books aren’t returnable. These sales are all guaranteed. This isn’t the trade book market, where they can return unsold copies to the publisher/creator, who then has to return the difference of the money back to the bookstore. This is seen as easy money, because the sales have already been made. These books have been ordered, and being ordered, the sale is already made.

This is why retailers both love and hate pull lists. They have to order for the list, their guaranteed sales, and then order copies for display in the shop. That shop is going to be dominated by Marvel, DC, and Image, shelf-space wise, even though Dark Horse somehow manages consistently to have a bigger market share than Image. But all of the so-called independents [so-called because, technically, all comic companies that aren’t Marvel/DC are independent] are clumped together on the rack in haphazard order.

It’s a 3-D representation of the Previews catalog.

This is where you’re going to be. This will be your home. Learn to love it.

And honestly speaking, for physical comics, Diamond is necessary. A necessary evil if you must. How else are you going to get your comic easily seen? (Web-) [Shhhh! It was a rhetorical question. We’ll talk about that later.] The only thing you have to do is create something salable. Go through the process, and you’ll see that it’s easier said than done. It IS possible to make it without Diamond, never mistake that, but then we’re no longer talking about the direct market. If your goal is to be the next Brian Bendis [that is, known throughout the comics world], then you have no choice but to go through the direct market. For all intents and purposes, that means Diamond.

There is another way to get your physical comic to the masses. It will take hard work and dedication on your part, though.

You can sell directly from your website. Here’s an example of what you can do:

You could build a buffer of two to three issues. Let’s call it 22 pages apiece, okay? Now, with each issue, you could create a webcomic, giving the book away for free. You could update a single page, three days a week. Rounding down, that’s 7 weeks worth of content. Now, for those that don’t want to wait, you could offer the book for sale through your website’s store. Whether or not you include shipping is your call, but not to do it will eat into your profits.

So you have the book for sale in your store, you have the book online so that people can read it if they want, and you’re giving the best of both worlds. You would just need to warehouse the books and whatever other merchandise you decide to sell at your home. Depending on your living conditions, this is easier said than done.

Why the buffer? Because you’ll be able to go almost two months without having to post another issue. The more of a buffer, the better you are. If you build a readership, then you may be able to recoup your investment.

And that’s all I have. Your homework is simple. Go to the Diamond website and print out just about the entire thing. You are a Vendor, so that’s where you start. Print it out, read it, study it, and understand what’s going on with it. There’s going to be a test, and strangely enough, it’s not going to be on how much you’ve retained or how well you’ve followed orders. The test is simply, did you create a comic that Diamond thinks will sell $2500 retail?

See you next week.

Related Posts:

• B&N Week 74: Numbers Game
• The Creator & Small Publisher’s Guide to the Diamond Distribution Cycle
• ComixTribe Street Team hits the ground running this June!
• ComixTribe Signs Deal with Diamond, Keeps Micro-Distribution Network Intact
• The Un-Saving of Comics

Tags: barriers to entry, Diamond, direct market, direct sales, distribution, DM, Previews, Retailers, solicitaion

Category: Bolts & Nuts