Comics Distribution War

While I’m no longer beholden to the mainstream comics distribution system, the business side of the comics industry still fascinates me and is something I occasionally cover at this blog.

It’s for this reason I thought I’d weigh in on the momentous announcement by DC Comics to sever its ties with Diamond Comics Distribution and partner with two other distributors.

This move has potential serious consequences for Diamond, for comics retailers, as well as the stability of the market as a whole.

First, DC—home to the “granddaddy” of comics superheroes like Superman, Batman and Wonder Woman—commands just under less than a third of the share comics market. That essentially means Diamond will lose that percentage of their sales income, at least in new comics.

For comics retailers, this means having to sign up with new distributors if they are going to sell DC’s comics. Many retailers are upset and concerned that this will increase their shipping costs for products that already have razor thing profit margins. It’s important to note that most if not nearly all comic-book retailers (usually referred to as the “direct market”) are essentially mom-and-pop operations. Overseas retailers are also concerned because the new distributors do not appear yet to have the same system in place as Diamond to affordably ship comics overseas.

Regarding the stability of the market—DC made this announcement in the middle of a pandemic, with some stores already currently shuttered; on top of that, Diamond temporarily had suspended shipments due to the pandemic, which disrupted flow of both comics and income. Indeed, Diamond suspended payments during this time. During the closure, DC temporarily sought new distribution channels, which may have partly led to this decision.

The flip side of this issue is the feeling by many that Diamond was a “monopoly” and perhaps had stagnated the system.

While I’m not enough of an expert to comment on this, I will say that making such a surprise announcement, in the middle of a pandemic and with virtually no leadtime doesn’t seem very prudent or fair. (The announcement, which was a surprise to Diamond as well, is effective the end of this month.)

As a bit of background, the last time there was this much of a seismic shift in the distribution system was in 1994. At the time, there were several competing and regional distribution systems that served the direct market. However, under new ownership, Marvel Comics similarly made the decision to distribute exclusively with a company called Heroes World. This led to the subsequent realignment of the distribution system—anxious to ensure its financial viability, Diamond signed DC to an exclusive contract. In an effort to ensure continued competition in the direct market distribution system, many of the remaining alternative publishers signed exclusive deals with a rival, Capital City Distribution. However, these alternatives did not have enough market share to keep Capital City viable, leading to that company’s eventual collapse and the alternatives flocking to Diamond. Marvel’s experiment with Heroes World failed for similar reasons and ended up with Diamond, making the distributor the sole surviving company. While the federal government did look into whether Diamond was a monopoly it ultimately took no action—I have always thought it was because the market was relatively too small to merit such action.

So here we are, in the middle of a pandemic and a seismic change in the comics industries. It’s anyone’s guess how it will play out, but there is understandably a lot of concern, given that it’s on top of a devastating pandemic that has led to store shutdowns and curtailed sales—when the economy tanks, it is usually “luxury” non-necessity items like comics that are the first to go.

For ongoing coverage of this, see Bleeding Cool here, here and here. A good history of the distribution market to 2011 can be found at the Delusional Honesty website.