That hopeful vision has frayed at the edges over the past few months, to say the least. And last Friday’s news that DC has severed ties with Diamond and will be distributing through two smaller companies has, to hear some people tell it, accelerated the likelihood that many, many more of us will be experiencing Desiato’s sense of loss sooner rather than later.
While I find the case that the DC-Diamond situation has made matters worse convincing, there are some who believe it might be a good thing in the long run – assuming there is a long run.
The argument for hope. At the top of "relative bright side" list is the oft-expressed sentiment that Diamond "needed a kick in the ass." Frankly, it’s hard to argue with that. While Diamond has done its best to keep comics moving through the system since it became the industry’s sole distributor in 1996, the lack of competition has not really created much incentive for innovation. It’s not even clear that Diamond has been a good financial steward of the industry, as the company halted payments to publishers in March. If Diamond was running on that thin of a cushion during the relatively good times pre-COVID, it’s by no means clear they’d make it through the crisis whether DC re-upped or not.
By this logic, if Diamond was on the way down, then at least DC did something rather than sitting on its hands. And if its choice of partners raised some eyebrows among other retailers, well, it’s not like there were a lot of companies stepping up to take on this job.
To those who say, "Fine, but why now?" I think the optimists would answer "no time like the present, when things are about as quiet as they’re ever going to get." Might as well rip the Band-Aid off while the market is already in so much pain that a little more won’t really matter, so that you’re not drawing out the adjustment for an agonizing length of time. It’s also not clear that Diamond offered or would have accepted terms for a transition period, because doing so would have given up any leverage in what is normally, for Diamond, a fairly one-sided conversation. The way I read the tick-tock of the negotiations, by the time they realized DC wasn’t bluffing, it was already too late.
Finally, the glass-half-full crowd argues, the market is clearly not ever going to be the same as it was, so let’s weed out the weak stores now to clear the field for new players and well-adapted incumbents who can serve the new audience in a new reality. This argument assumes that stores unwilling to make the commitment (and absorb the costs) of dealing with a new distribution landscape are basically not well-adapted for the future anyway, and ignored a lot of flashing warning signs over the last few years to find themselves at such a vulnerable point. If this pushes them over the edge, so be it. Something else would have sooner or later anyway.
The case for fear. I’ve tried to give the optimists the best possible spin here because I hope they are right. But unfortunately, here’s the scratchy side of the coin.
The timing is beyond awful. We’re coming off 10 weeks of depressed retail activity where some stores are down 80-90% due to local business restrictions and lack of new product. A disproportionate amount of that impact is felt by stores in big urban centers, which drive the highest volume. And while income has dried up, costs like rent haven’t. Most stores are scraping by with call-in orders, pickup and delivery, which is killing their cost-per-sale, and most have furloughed employees or let them go outright. Even if DC’s move only adds 10% to cost and time overhead (yes, stop laughing now…), no one has an extra 10% of anything lying around right now. But if you want DC books on the shelves for customers, that’s what it will take.
For owners who have already been through the ringer, DC’s move – which may have even been welcome at other times – could be the last straw. Even the ones who hate Diamond with the passion of a thousand suns and fully trust that Lunar and LCS will treat them fairly would rather muddle through the next six months with the devil they know than have to deal with some fresh new hell on top of the stale old hell that’s already consumed their business.
Realistically, how much of the retail market is well-positioned to adjust to this right now? 10%? 20%? Those both seem high to me. In that case, we’re not just talking about a danger to the marginal stores or the "dinosaurs" who haven’t kept up with the times, but to shops that are well above the median in terms of 2019-level sales and operations, who just happen to be in high-rent, high cost markets hit hardest by the pandemic. Or who might depend on conventions to supplement some of their store revenue. And oh yeah, lots and lots of regular customers are unemployed at the moment.
Assuming there are 2400-2500 retail comic stores with Diamond accounts in North America, how many of those can we afford to lose before the market itself collapses below the point where it’s cost-effective to print and sell single issues, especially if the losses are in high-population areas? How many books on the top 500 sales chart would be viable at 50% fewer sales, and how many of those books outside of the household-name characters are likely to find alternative shelf space at bookstores or big-box retailers, assuming a comics distributor could find a way to make that work?
We saw last year that the single issues are losing ground to trade books as an overall share of the market, and even Diamond itself has cautioned retailers to not be over-dependent on periodical sales as a percentage of overall business. But they’re still important – particularly as a way for creatives to get paid on a monthly basis. It’s possible that some percentage of the direct market could survive the complete collapse of single-issue publishing, but losing that channel would permanently destroy the livelihoods of the majority of comics creators, editors and support staff.
Evolution or extinction? I’m sympathetic (to a point) to the idea that all this will force the immediate adoption of changes that have been 20-25 years delayed by inertia and monopoly, giving stores a do-or-die incentive to explore new channels like Facebook Live or some comic-centric alternative to Bookshop.org to supplement their business. Publishers need to learn to drive more revenue through digital, and creators who haven’t mastered crowdfunding might want to get that figured out ASAP. But honestly, all that’s like telling passengers on the Titanic that now is a good time to develop strong swimming skills.
I’ll also stipulate that neither Diamond nor DC blundered into this situation with malign intent toward the direct market – just as none of the European countries pursuing their rational self-interest in 1914 intended to start a war that killed millions of people. Actions taken in good faith and for good reasons sometimes produce bad outcomes.
It probably doesn’t need to be said, especially here at ICv2, that retailers are an irreplaceable part of fan culture beyond their role in the marketplace. It’s possible that enough of them will survive this as they’ve survived every other catastrophe the market has thrown at them for the past quarter century, and in five years, things will be better than ever. If they don’t, their loss will be painful and far-reaching beyond their small economic footprint.
DC through the years has mastered the art of the summer crisis that pisses everyone off, shakes up the storyline, but ultimately brings everything back to where it always was. The business analyst in me is skeptical, but the fan in me is hoping against hope for a soft landing.
The opinions expressed in this column are solely those of the writer, and do not necessarily reflect the views of the editorial staff of ICv2.com.
Rob Salkowitz (@robsalk) is the author of Comic-Con and the Business of Pop Culture.