About Diamond...

By | Tuesday, March 24, 2020 2 comments
The big news in comics yesterday was the announcement from Diamond that April 1 will be their last shipment of new material in the US. (March 25 for the UK.) As effectively the only distributor of comics in the US, this puts a screeching halt to the already-drastically-reduced business comics retailers have seen in the past week or two as various cities and states go on different forms of lockdown. Technically, yeah, a shop can still reorder existing books Diamond already has in their warehouses (perennial sellers like Watchmen and Maus for examples) but from a practical perspective, that doesn't really give shops anything to work with. The bulk of their week-to-week sales are in new comics.

Retailers are upset. But not just because of the wrench this throws in their business, but because this was handled very, very badly by Diamond.

The first problem here is that this was something that Diamond could easily have seen coming. Hell, I saw this as a big potential issue last week and not only is comics distribution not my business, but I don't even think about comics retailing all that much! Offices across the nation started moving people to working remotely over a week ago. While you could argue Diamond wouldn't want to close its doors (since much of their work can't be done remotely) until/unless they got official orders to do so -- California didn't issue a stay-at-home order until March 19 -- I think the writing was pretty clearly on the wall that that was coming. Admittedly, a week isn't a lot of time to plan for completely reorganizing your business, but Diamond's announcement seems like they were caught unusually flat-footed here. As if they didn't start thinking about it until New York's stay-at-home order went into effect on Sunday. Their announcement sounds very reactionary, and like they haven't given a lot of consideration of the impact their decision will have throughout the industry.

The key phrase in the regard is, "With these changes in our distribution strategy, we will work with our publishing partners to develop programs that will address product already in the pipeline and what will happen when we resume distribution." That makes it sound like they haven't even talked with Marvel, DC, or Dark Horse yet, much less any of the smaller publishers. Whether that is the actual case or not, the impression it gives is that there is no plan beyond the books that are on trucks already en route to Diamond warehouses. By all accounts, Diamond did not discuss any of these plans with retailers, or even provide any guidance on what they might be considering. Both the timing and the execution here completely blind-sided retailers.

Second, the announcement didn't come from Diamond initially. Bleeding Cool reported on it first, with other outlets following up throughout the afternoon. Diamond didn't release their formal statement until almost the very end of their work day. So retailers are not only looking at this as significant business problem, but one in which they're not even given enough consideration to be informed directly. They have to hear the news from third party outlets. They're being insulted on top of being screwed.

Sisyphus cartoon
To further compound the insults, the statement is, frankly, pretty condescending towards retailers: "For those retailers who remain open in various forms, I encourage you let loose your own creativity... Special sales, promotions, and even eBay can help you bring in cash during this trying time. Product for which you’ve already paid may well hold some of your answers." Really? Get creative? That's your suggestion? Have a sale? Like shop owners aren't already scrambling to put together any and every plan they can think of to make sure they're able to keep their doors open? Traditionally, comic shop owners are in it because they love comics, not because they've got astounding business acumen. But the ones that stay in business more than a year or two are able to do so because they've figured out how to sell comics. They know who their particular audience is, and how to speak to them. Suggesting that maybe they should try pushing the stock they already have is kind of like suggesting Sisyphus try pushing the boulder up the hill instead of up the hill.

We have, by Brian Hibbs' estimations, roughly half of comic book shops in the US already having to close their doors thanks to various city and state lockdowns, and are entirely unable to even receive this and/or next week's shipments from Diamond. Oregon retailer Books With Pictures put it succinctly...
These are shops that now have boxes of books already waiting for them -- boxes of books that they have to pay for -- but are unable to even get a hold of, much less actually sell. It doesn't take a math whiz to realize that's a good way to lose a lot of money!

Look, this is a highly unusual set of circumstances the world is dealing with right now. The word "unprecedented" is arguably justified here in its literal definition. Based on what I'd been hearing from economists and from the numbers I was seeing, I've been saying since early last year we would have a recession by mid-2020. The coronavirus isn't causing what was already a downturn in the economy, but it is speeding it up and making it deeper. And whether every person on the planet practices social distancing to slow the spread of COVID-19 until we find a cure/vaccine, or we just say "screw it" and let millions of people die in a sort of nihilistic form of Darwinism, this will fuck up the economy. None of that is Diamond's fault. But their response here is, while absolutely necessary in its basic concept, in its execution very poorly laid out and will sadly probably speed along the demise of more than a few comics retailers.
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Matt K said...

This is not shocking, at all, though I hadn't thought about this aspect.

My thoughts, about comics, have been more along the lines of how can the major comics respond to this in their content.

Yesterday I spoke with an 80-year-old aunt, who supported my own suspicion that this is going to be the most extensive disruption of everyday American life since World War II. That's basically the entire existence of the big Marvel and DC franchises. If this goes on for many months, with social distancing and shelter-in-place, can all those superhero titles adapt to that?

But, arguably, the bigger issue may be that the 40-year-old comic shop distribution model is being shut down by any state government which isn't let by complete lunatics.

The big publishers don't have too, too much to worry about. Before Marvel and DC were bought out, they were making maybe a third of their income from comics. And that was BEFORE all the big budget, blockbuster movies of the past decade. They could stop publishing comics altogether right now, and still provide decades of movie and TV fodder just using their existing material, and those will rake in millions and millions of dollars. Dark Horse and Image aren't poised quite as well, but still have a number of properties in non-comics media as well. Shutting down comics production for months won't go unnoticed, of course, but it's not as if the company that owns Superman has to sell the rights to the character to remain in business.

Some of the smaller publishers will still do okay, I think, because they sell more heavily in the bookstore market. They'll take hits, to be sure, but folks like Oni and First Second will survive. Probably the biggest casualties will be the (for lack of a better term) "third tier" publishers: the ones who are basically indie creators who got big enough to sell other people's work besides their own. They're not as tapped into the bookstore market, don't act as IP farms and -- while their sales through Diamond probably aren't huge -- they're also losing the convention circuit. They're already on tight margins; they're probably going to be the first to feel the pain.

But retailers? Yeah, that's going to hurt. The owner of Mile High Comics just posted a bit where he thought these city/state lockdowns will -- through their duration and a lack of government support, which would force them to burn through their probably too small cash reserves -- wind up killing enough comic shops to make the direct market completely untenable financially. Diamond, as a company, wouldn't be sustainable without enough comic shops to deliver to. (I don't know what that magic number is, though.) That would kill the periodical market. TPBs and HCs could continue through bookstores, but there's effectively no other distribution channel for periodicals if the DM stops for good.

It's a game of dominoes.

I hope it doesn't go that way, of course, but you can't ignore that as a possibility at this point.

Biggest disruption since WWII? Easily.