Featuring art from Hawkeye #22 by David Aja

By Brandon Schatz, with edits and contributions by Danica LeBlanc

On Friday afternoon, DC announced that they would be terminating their relationship with Diamond. We’re going to be talking about that shortly, but we have a couple of bits to cover first for my own purposes of sanity.

First: due to DC’s announcement, a lot of preparation for the future has occurred at our shop alongside the regular day-to-day of it all. That means this article isn’t going to have even the pretence of cohesion. It’s been four days, maybe I’ll have something that sits well together in a week or two.

And second: as with every entry in the Cornonavirus Journal, what I’m about to present exists as a chronicle of specific circumstance, and the experience of someone who has been working within this fine industry for over thirteen years. Much of this was scribbled into one of my journals and has been reproduced here with embellishments for the sake of context.

This is also intended to be specific to the comic book industry. There are absolutely larger problems out there and the fate of this form of entertainment is infinitesimal compared to those issues. Other people are more equipped to talk about those larger issues, and as always, I suggest you seek out The Worst Year Ever podcast, as they are doing fine work in this field (including in depth, on the ground coverage of the recent protests).

And oh yeah, listen to and believe marginalized voices, and use your privilege to protect those who haven’t been granted the same protections. And stay off hashtags when you do it so important messaging and organization can take place.

Now, let’s dig into this weekend, shall we?

My passion is graphic design.

At 9:53am Pacific (the DC office time zone), a communication from DC was blasted across all their retailer communication channels. You can find the full text of it here, minus the list of upcoming ordering deadlines. The “too long; didn’t read” version of it is this: DC had decided to terminate its relationship with Diamond, the effects of which would be taking place immediately and show in orders on product to be delivered in July. Going forward, orders for all product could be placed through Lunar Distribution and UCS, while the company continued their relationship with Penguin Random House, who would continue to distribute their graphic novels.

To many, this change was quite a shock. Even with the company having set up alternative means of distribution, the thought was that DC would be continuing to work with Diamond to ensure delivery of single issues to comic stores for the foreseeable future. Diamond certainly thought there was a long term relationship to have, despite the expiration of DC’s long term contract and working with them on a month-to-month basis.

The public reaction from retailers was immediate. Most were vitriolic. Some shared pictures of suddenly empty racks asking other publishers what they should stock on shelf. Others put forth blowout bargains, all aimed at swift and immediate response.

“Why would DC do something like this? And why now?”

Those (like myself) who were optimistic about the change had to admit that the timing and delivery of this roll out left a lot to be desired. DC spoke very briefly about this in communications by saying, “The timing of the decision to move on from Diamond was ultimately dictated by the fact that DC’s contract with Diamond has expired, but incidentally, the disruption by COVID to the market has required DC to forge ahead with its larger growth strategies that will benefit both the Direct Market and DC.”

By many whispered accounts, a version of DC exploring alternative distribution had been hatched long before COVID-19 started shutting down businesses. The many effects of the pandemic begot a situation bereft of any chance for a nuanced approach. While I wish all of this entire situation could have been handled a lot better, I can’t fault DC for choosing the option that they chose for a few reasons.

art by David Aja

To start, I believe that anyone running a business makes any and all of their decisions while thinking about the long term health of said business. Philosophy on what is “best for business” will always vary person to person, but I don’t believe intent does.

It is rare for a business to operate without other interests impacting its health either positively or negatively. Each and every comic shop is affected by the actions of various distributors, publishers, governments, and customers. All of these forces ply their ideas of what is “best” for their health in their interactions with the business. Some of these ideas line up, many of them don’t.

As a business owner, I’ve always thought it was my job to not only build the kind of experience I want people to have, but to do so in a way that ensured we could do so in the long term. That road led to a mix of pains and compromise.

Could we sell hot single issues for a premium and gain in the short term? Sure, but how would that practice pay off in the long term? A focus on squeezing every last dollar out of each release wouldn’t just lead to customers lacking money to try new and exciting stories, but it would also take our time away from connecting stories to readers. That decision made the early days pretty lean and scary, but today, we’re in a great position, because we built a client base of extremely loyal readers who got us through a split with two business partners, a change in location, a break-in, and a pandemic.

We began the shop during a recession in our province. The timing was terrible, but we felt as though our views on what a comic shop could be and mean to people might work out. All around us, we saw larger shops in all industries struggling. At her part-time job as administrative support at an insolvency firm, Danica learned a bit about forecasting for big box stores and various entities that were resistant to providing good online shopping experiences. In part because of this, we honed our business philosophy down to “grow big by thinking small”. Our entire way forward became focused around that phrase.

When we looked around at the industry, we saw many worrying signs. From the moment we opened in 2015 (and even long before then!) comic retailers were complaining about the quality of product and the massive glut of ideas that didn’t seem to catch. When we applied our business philosophy to what we were seeing, we knew that we had to focus.

Gone were the days where you could order everything Diamond had to offer and let the money roll in. Big companies needed to make their quotas each quarter, so more content was produced. Ordering from bigger entities became harder to finesse with the increase in product SKUs formed from new series and variants. Our philosophy told us this was a sucker’s game, so we started thinking small. If “being big” meant overproducing in an attempt to hit everyone with everything, “thinking small” meant identifying series that had answers to “why” questions.

Why does this book exist? Why is it about this character? Why do I care?

We focused on stories that had purpose, and let the ones that didn’t have compelling answers to “why” fend for themselves. This tactic worked out wonderfully for us. We often tried to communicate this to others in the industry, only to be met with “shut up, kids”. Eventually, some of those folks started to figure it out on their own. True to the direct market, an idea or philosophy isn’t valid unless you lived the history others are learning from.

But what do I know.

The Joker 80

I know our business philosophy isn’t shared by everyone — and it shouldn’t be. What works well for us, might not work out well for someone else. What I can communicate to you today is this: with all of the changes that have happened to this industry in the past (checks notes) wow, um, two and a half months, our business is currently in the best shape it has ever been in.

Part of that came from our outlook on Diamond. When we started the company, we began with the premise that Diamond wouldn’t be around forever. Respected retailers have long talked about how precarious the industry was and how every year was a struggle to survive. I can’t recall how many times I’ve read or heard Brian Hibbs talk about how precarious the structure of the direct market was in various posts or in podcast interviews. We took that messaging to heart and decided to build a business that didn’t need Diamond. We sought out alternatives wherever we could find them, and when they proved advantageous, we shed bits of dependence.

For years, Diamond has been the worst option to obtain graphic novels for almost any company that has book distribution deals elsewhere. While Diamond charges for shipping, and can take anywhere from 2-4+ weeks to get reorders up to Canada, other book distributors offer free, faster shipping (some take a scant two days to get us product), as well as, more often than not, better discounts on said product. The choice to move our money towards more advantageous situations was a decision easily made — one that I know many other long-term retailers have made themselves.

Which finally brings us to the main event.

Friday was the culmination of DC taking a look at their options, and choosing a path that they believed would be the most advantageous for their business.

Publicly, this started back in April when the company announced the utilization of two new distribution entities to get products into comic shops. In incredibly short order, it was discovered that these two new entities, Lunar and USC, were companies associated with the two biggest comic retailers within the direct market, Discount Comic Book Service and Midtown Comics respectively.

Not a lot is known about how the creation of these entities came about, but an interview with DCBS co-owner Christina Merkler — conducted by the podcast Around Comics — shed some light on this situation. I highly suggest you listen to the episode in question if you have the time, but if you don’t, we’ve transcribed a few interesting passages from the show itself.

(A note: this interview was released on May 25th, and recorded before then, so all of this information is from before DC’s most recent announcement.)

All of these quotes are from Merkler, and the contents have been edited for clarity, while maintaining the substance of her answers.

On how becoming a new single issue distributor happened:

“It was actually a very quick thing that happened. Obviously everything with COVID has been happening very quick, right? So you just kinda have to make these decisions. I can tell you that DC’s made comments about distribution, and have just been asking questions about the challenges in distribution

“I can tell you that we’re one of the largest accounts, so we really don’t have much of an issue with Diamond. I mean, everyone receives damages here and shortages there, but we receive excellent service from Diamond. So it wasn’t initially that. When COVID happened, we have been running ever since. So there’s never been a dip. I’ve been giving my people three day weekends because there wasn’t enough product.”

“[The start] was really a very simple, us reaching out to publishers and saying ‘hey we really need new product as soon as you can get it,’ and them coming back to us and saying ‘well, without Diamond being able to ship those items to you, we’re at a standstill until they can get back’.

“I think that DC was incredibly concerned for all of the retailers who were basically saying ‘if you don’t get us product soon, we’re going out of business’. And I think for every one person who was being very loud and saying ‘no, just stop everything’, there were three more people saying ‘give me new product’. And so I think that DC was genuinely concerned about – I mean, I KNOW they were – about the health of the industry and what it was going to look like without having that new product – so they approached us and Midtown and I’m sure other people, and they just asked what our capacity for that was. And then we kind of went from there and determined whether we would be able to do what they wanted us or needed us to do in the interim of Diamond being fully up and running.

“So it was a bit of a whirlwind and we learned a lot in two or three weeks. It was not… it wasn’t fun. And then of course, we got the backlash of being a retailer, and people saying really horrendous things about us and how unethical it was, and ‘oh, they’re gonna try to to target all of our customers, and they’re going to use our data,’ which all is utterly preposterous.”

On the experience of being a distributor:

“To be honest, it’s a lot of work for very little payoff. And we were just trying to keep people in business. I mean that genuinely, we were worried and we want the comic industry to be healthy. If it’s not healthy, then we’re not healthy either, like publishers aren’t healthy. Publishers can turn around and say, ‘okay, maybe we just shouldn’t print comics anymore.’ That was our main concern was, how long can we not have new print comics out in the marketplace before a Marvel and a DC say, ‘let’s just do it all digitally’, and that that was a genuine concern for us. So we were willing to help in any way shape or form.”

On the idea of continuing as a distribution entity:

“Let’s be honest, who wants to order [comics] separately? When they can get them all in one place, and they pay one shipping charge? So I mean, [the situation] could change.”

“Yeah, we’re not sure the future. We don’t even know how long [DC] will want to do it or how that’s going to go from here. Obviously we have to be under contract. So we’re under a short, very short term contract. And ‘let’s figure it out. Let’s see what we can do’.

On feedback from retailers:

“Generally speaking, we’ve had a lot of good feedback. People have been incredibly gracious and retailers expect a lot. They always have, we always will. We want it in the best condition possible for the least amount of money for the least amount of shipping and the fastest time, right? So it’s actually been a good learning experience. But it’s very similar to our own customers. So it’s not that far afield of what we’re used to.

“95% of the people we’ve dealt with have been incredible, really. I talked to somebody the other day in California, who was super gracious. They told me, ‘I love what you’re doing. I love your packaging. I’ve had no shortages, no damages, no issues. And I love it, and I want to keep using you.’ And I’m like, ‘Well, if DC wants you to, it is going to ultimately be up to them.”

Granted, all of this comes from a biased source, but there’s a lot in there to appreciate. While she frames the foray into distribution as her way to help the industry, she also makes it clear that her reasons for doing so are to ensure she stays in business. When you’re confronted with a situation like this that ensures the health of your industry and your business — and you believe you can take on the stress — you would be silly to turn that down.

Merkler goes on to talk more in depth on all of these topics, including the idea that they had to really contemplate whether or not her business could handle what was being asked of them. There was a clear indication that the company would have said “no” if there was any question about being able to properly serve in their capacity as a distributor, and that DC’s initial slate and scale was meant to test both new distribution options.

On these counts, DC seemed to be quite happy with their new partners.

On the other side, you have the way Diamond Comics handled their “comeback”. With messaging that included pushing the idea of “pandemic era collectibles”, a return of product from them was pegged for Wednesday, May 20th. While they did manage to make this happen, they didn’t make it happen without great pains.

In addition to the usual damages and shortages received in every Diamond shipment, there were several retailers who complained about entire missing orders, many of which were DC titles. While a few were the result of retailers not reading messages from Diamond telling them to check their upcoming DC orders, the vast majority were the result of a company that truly wasn’t ready to come back. Our store received zero copies of John Constantine, Hellblazer #6 from this past week’s shipment due to negligence on their end, and there’ve been reports of entire runs missing their ship dates to stores due to a lack of resources on Diamond’s end.

The problems were so bad that DC felt the need to send this missive directly to retailers on Saturday, May 23rd, alongside a list of late-shipping product:

“DC has made every effort to support Diamond’s return to operations and to ensure that our products are received at their warehouses on time for their scheduled on sale dates.

“Unfortunately, once DC product is received by our distributors for a specific in-store date, they are responsible for how and when they are delivered to comics shops. If you experience shipping delays, we encourage you to work with your distributor to resolve these issues. 

“We have communicated with your distributor regarding these problems. Our expectation is that they will address these problems in a timely manner with you.”

The need for such a communication in and of itself says that things weren’t okay. Add to that the fact that on April 1st, Diamond announced that it could not, and would not be paying money owed to publishers and vendors — followed on April 6th by a long term repayment schedule that they are currently in the midst of.

As a business, if I am in the position where a “partner” in my well being has proven to be unreliable during a crisis, necessitating a complete shutdown of operations and payment, I would pursue those other options. Upon stress-testing those options and discovering them to be viable, I would continue to work with those entities, given the fact that they remained in operation during the same crisis.

Then, upon a promised “comeback” where the old partner promised bigger and better things than ever before, I would be upset by reports that the services rendered were somehow far worse than before. Faced with an option to either renew a long-term contract with such a company or jump ship towards better service, I would choose the better service. In fact, I already did so by getting most of our graphic novels from book channel distributors — a decision that kept the store in fresh product and restocks every single week during Diamond’s shut down.

One of several titles from Dark Horse, available through other channels, early.

What’s more: DC isn’t the only company that seems to be concerned with the state of Diamond today. Dark Horse has effectively cancelled all but one single issue they had planned to come out in the foreseeable future. All of the comic companies served by Penguin Random House have also been adjusting their shipping dates on their graphic novels. Companies like IDW and DC have done away with the early direct market shipping Diamond provided, and now list graphic novels with Tuesday on-sale dates that beat Diamond by a hair. This past week, Dark Horse’s list of graphic novels all contained July 15th shipping dates from Diamond, and had dates that ranged from one to three weeks earlier from Penguin Random House. One of the books listed for the July 15th date (a graphic novel tie-in to Disney/Pixar’s Onward), I’ve had on our shelves for weeks already.

Companies that have a smaller direct market footprint have seen an even larger discrepancy — not due to a moving of dates on their part, but to a refusal or inability on Diamond’s part to match the delivery dates of their book market counterparts. Lucy Knisley’s latest book Stepping Stones made it to our shelves on May 5th, and it doesn’t look like Diamond will get it to shops until June 24th.

Also, as of the writing of this article, Diamond is not accepting restocks on any items from publishers — meaning hot titles like Once and Future can only be obtained through Simon & Shuster at the moment. And of course, in the distance, you can hear Marvel looking into their options for the coming days. Nothing on the record of course, but it didn’t shock me to hear the tiniest of snippets that I heard.

Hell, the first wave in this pandemic cause Diamond to stop shipping product and making payments entirely. They’ve clawed themselves to a position of base-level functionality, and the historical records of every pandemic ever says the first wave is never the last.

I do not trust Diamond.

Meanwhile, you have certain retailers salivating at the idea of Diamond potentially cutting DCBS and Midtown Comics off from receiving products as though that is in any way a good idea. Not only would Diamond be dealing with the loss of DC (who regularly accounted for roughly 30% of their business on sales charts), but they’d toss another 8-10% onto the bonfire (thanks, leaked Marvel sales!) while they still can’t manage to get product out the door to their customers. And with Midtown being the outfit that Marvel uses to distribute comps and manage direct subscription orders, do you think the company would let that stand, even for a second?

Hell no.

Former DC President Diane Nelson said it best when she posted this in response to a Hibbs post on Facebook (emphasis mine):

“I’m afraid I’ve not been privy to this recent decision. I can say purely as a private individual that Diamond has, for a long time, been unwilling or unable to modernize and support and grow the biz as needed for a healthy direct channel. And may not even be solvent. It would be imprudent for any publisher to not have a distribution contingency plan. I am disappointed by the communications roll out if the decision, as it seems (from my admittedly removed and limited POV) not nearly robust enough and to not have offered retailers sufficient notice and explanation as to what I’m sure is a reasonable and probably even advantageous decision for them. It’s never good for any company to have a monopoly on a business and Diamond has for too long. I’m optimistic DC will help retailers understand how to navigate the transition. And I’d almost guarantee (I would guarantee but as I say, I’m not privy to this) that there’s no way DC or WB have a financial stake in these distributors.”

This is not a good time for a change like this, without a doubt — and of course, there were probably ways this could have been better handled by many parties. But I, for one, will not fault a company for choosing an option that is the best option for the comic book industry as a whole, even if it comes at the expense of what we perceive to be the direct market.

Other companies are doing the same, in ways in which their contracts with Diamond will allow. In the end, I believe many have misinterpreted the cause-and-effect in DC’s decision. The decision itself won’t cause the destruction of the direct market. The practices Diamond has participated in for decades, and the lack of will or resources to become a viable distributor of graphic novels, has caused irreparable damage to what once was a strong core of retailers. The effect has resulted in DC finding better partners.

If publishers and retailers are smart, they will do the same.

Once again, we’ll end this entry just like the ones that came before, with a note: 

I will not be reading any comments on this article, nor will I be responding to any social media contact regarding it outside of “thanks for reading”, if that response suits. This is more for personal time and sanity reasons. Danica, however, will be free to answer and respond as time allows.

(And that said, folks who have my proper contact info are always welcome to drop a line. I may or may not respond with anything beyond “thanks for reading”, but you can try.)

Rest assured, there’s a lot more to talk about regarding this situation – including the fact that DC and these new distributors have to supply retailers with better resources and proper contracting regarding discount levels if we really are in this for the long haul. That, and I want to tell you all about how we’re working behind the scenes to provide more resources and tools for local stores during this change. More on that when we’re deeper into this.

We’ll talk with you all soon.

9 COMMENTS

  1. Thanks for an interesting well written article. Now how about a thought to us retailers in the UK, or Europe, or Australia. Contacting the new suppliers and arranging delivery of new stock and back-issues every week will with shipping costs kill any profit we make on our comics. Unless DC have a plan for the UK, Europe and further afield (which I don’t believe they have) I cannot see this future DC working!

  2. Wow. As the owner of a comic shop celebrating it’s 40th anniversary this year, all I can say is that I live in an entirely different universe than the one described here. I would suggest readers not believe that all comic retailers think this way.

  3. Thank you for your comments!

    Kerry – This is absolutely needed, but since it is not our experience, we will not be writing an article on that topic. I do look forward to seeing more content in regards to non-North American distribution.

    Duncan – Please note, we specifically wrote “what I’m about to present exists as a chronicle of specific circumstance”. Of course this will not be everyone’s experience. Congratulations on 40 years! That’s a milestone, and you should be proud.

    Patrick – There are many problems with UCS and Lunar, but this was not the article for that. There will likely be another article, possibly just as long. Brandon and myself chose to focus on Diamond for this one.

  4. This article does not address the fact that DC was able to pursue and grow alternative distribution in addition to continue using Diamond, but chose not to. During all of May retailers were free to continue to order from either Diamond, UCS or Lunar. Why not just continue this practice? Purposefully excluding Diamond during this economic crisis is very dangerous for all levels of this industry, including creators, publishers, retailers, and customers. You may prefer graphic novel sales to the periodical format, but the two market segments are incredibly interrelated and symbiotic regardless of how one store’s model is designed. If the direct comic market is a stool DC just kicked one of the legs off during a roiling economic crisis.

  5. If DC had done this a year ago or a year from now, I’d be all okay with it. It’s their business and they can make those changes. What I’m not seeing addressed is that this is seemingly coming out of a worldwide virus pandemic that has killed hundred of thousands of people and will continue to do so for the foreseeable future. Diamond shut down to protect their employees and their families, just like a ton of other businesses. Good move Diamond. DC and these other two distributors are coming across like the money matters more than lives. I’d rather go read some of my old comics from the basement than expose a warehouse full of people to a deadly virus.

  6. Outstanding article. Seeing the DC/Diamond relationship from this perspective is appreciated. As a reader and collector I’m not taking sides; I’m only interested in the health of my LCSs.

  7. @CJ It was just crappy timing. DC’s contract with Diamond was already up and they were going month to month while they were attempting to renegotiate. I guess they finally decided Diamond wasn’t going to change. Diane Nelson’s take on it painted Diamond like a relic refusing to adapt to modern sales markets.

  8. “To start, I believe that anyone running a business makes any and all of their decisions while thinking about the long term health of said business.” who follows business and thinks this is true? look at how private equity strips companies for profit, look at how companies mess with products in the interest of attracting buyers, even when changes could have detrimental effects.

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