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May 14, 2008

Fantagraphics Signs Exclusive With Diamond For Direct Market, DBD For Canadian Book Distribution

By Tom Spurgeon

imageFantagraphics has signed a deal with Diamond Comic Distributors, Inc. for that company to be its exclusive distributor to the comics direct market (DM). According to Diamond's announcement today, the distributor "has cemented an exclusive distribution deal... to exclusively distribute their products to comic book, game, and specialty store market outlets worldwide."

In addition to the company's high-profile both within the industry as its largest art comics publisher, Fantagraphics was the most visible non-exclusive publisher to be directly involved in the mid-1990s maneuvering that led to the current, Diamond-dominant marketplace. As such, their decision to go with Diamond should raise eyebrows and invite scrutiny as to the state of the market that led them to this decision.

Some of the more pertinent points of the deal as best as CR has been able to ascertain from the two agents include:
* exclusivity to the North American direct market marketplace.

* as such, the deal will have no effect on the company's book distribution partnership with WW Norton, a company-saving arrangement when it was made with which Fantagraphics continues to be happy.

* it's through Norton that Fantagraphics is able to supply retailers with books through Ingram or Baker and Taylor, so those options remain available to comics retailers, as will starting an account with WW Norton.

* the company will no longer sell direct to comics shops but will ask those accounts to go through Diamond on what has long been a healthy re-order business. This will correspond with an upgrade on the material the company has Diamond keep on hand, going from about 1/6 of their available titles to, apparently, all of them.

* they have grandfathered in their relationships with Last Gasp and Bud Plant, both of whom do business with DM retailers. Eric Reynolds of Fantagraphics told CR that these were the last two DM distributors with whom Fantagraphics had a relationship that wasn't Diamond.

* the individual sales agent Tony Shenton will no longer be able to sell Fantagraphics products to stores.

* Fantagraphics will get a better percentage from Diamond. Retailers ordering Fantagraphics material through Diamond will receive a better discount (moving from the F discount, described as "lower of 45 percent or Standard Discount, to the E discount, described as "lower of 50 percent or Standard Discount"), and, Reynolds says, better shipping rates. The deal is designed to allow for quicker verification on availability.

* Fantagraphics will now be able to design its own Previews section.

* in what some may see as a surprising move and a development that was not part of the initial rumor, Diamond Book Distributors will take over Fantagraphics' Canadian market book distribution from Raincoast. Reynolds estimates that the company's current business north of the US border accounts for less than five percent of their total sales. DBD has been the Eros imprint's distributor for a while now.
As for why Fantagraphics made this move, the fundamental reason is likely to be found in what they describe as the declining fortunes of the DM side of their overall business and what they as a small company with limited resources is able to invest in that side of their business in order to give it the best chance running smoothly and perhaps enabling it to grow. While that department at the comics publisher saw a slight boost in cost-efficiency moving from Greg Zura to Jason Miles -- at least one would assume this, given Zura's long-time tenure at the company -- the new deal frees Miles from physically taking retailer orders and accounting for them in favor of the salesmanship and support aspects of his position. Designing their own catalog section has to have some appeal given the nature of their books compared to most of what's available in the DM and the relative skill of their design staff as currently constituted Both should aid Miles in his attempts to drive retailers to the company's books.

Assuming a number of aspects about the deal that have since been announced, Brian Hibbs of Comix Experience feels the deal will be an overall positive. "... the impact on retailers should be minimal, and probably positive; the impact on FBI, depending on what they're giving up to Diamond, should be neutral to slightly positive," he wrote to CR.

Negative reaction to the deal seems likely to arise from both a general antipathy towards Diamond and a belief that Diamond's inability to restock Fantagraphics' titles over the last decade or so will continue despite the new arrangement. Past history dictates that there are real fears regarding the ability to restock books from a company like Fantagraphics, a vital part of the equation in these days of conservative initial orders, particularly from companies not the two big mainstream publishers. While it's hard to track the veracity of such claims on a case by case basis, Diamond has less than a stellar reputation in many circles in terms of always and reliably stocking its suppliers, including some of the exclusive ones.

image"We really wish that Fantagraphics had consulted us as their retail partners before they made this move, because we would have said 'Good God No, Don't Do It,'" Chris Butcher of The Beguiling told CR. "We're very sympathetic to the general indifference of the Direct Market to good comics, including those that Fantagraphics publishes, and we understand the reasons they made their decision." Butcher points towards being able to order directly from the publisher as a key concern. "Speaking from our point of view though, we like the opportunity to deal directly with Fantagraphics, because if Fanta has a book in print, then they will have it in stock. That is not the case with Diamond. Even on the largest publishers that have moved their Direct Market business exclusive with Diamond, publishers like Viz and Tokyopop, our fill rates on in-print books are less than adequate. We hope that Fanta knows what they're in for on that front."

Fantagraphics staked out a significant position against Diamond back when most companies were signing exclusives with the distributor, a position in which some took heart because of what many felt was an outright unfortunate outcome to the mid-1990s distribution battles -- a virtual monopoly held by a company with unpopular policies and operating philosophies. Butcher went on to claim that companies holding exclusives has been bad for holding Diamond responsible for change.

"Not to put too fine a point on it, but as The Beguiling we're fortunate enough talk to reps from a large number of publishers, great and small, and many of them really aren't happy with their exclusivity deals with Diamond. No one will go on the record about it of course, because regardless of exclusivity or not they're still going to be working with Diamond going forward and being openly critical of Diamond is not the best way to get good service from them. So, no one talks about how things are not going the way they had hoped, and everyone re-ups for another few years hoping things will change because hey, everyone else is doing it. Worse still, we're worried about the sort of 'chilling effect' that goes on whenever a publisher signs an exclusivity deal. Fantagraphics better than anyone (thanks to reportage in The Comics Journal) the havoc that exclusivity agreements caused direct market retailers, particularly with regards to Image and Dark Horse deciding on Diamond after DC had made their deal. Has the consolidation of the direct market to, effectively, Diamond Comics Distributors, shown a noted increase in stores, sales, or market strength over the past 10 years? Particularly for any company that isn't Marvel or DC? Not at all, and yet the consolidation continues, leading many publishers to believe that there's no other way to do business and succeed -- or at least stay afloat -- in the market."

Hibbs points out another potential outcome. "This makes it, in my estimation, less likely that another viable distribution choice can come into being to challenge Diamond in the DM."

imageEric Reynolds summarized his company's position in an e-mail early today. "One of the areas we've struggled in the last few years despite overall growth has been in the Direct Market, and this new relationship will invariably strengthen our relationship with the Direct Market and allow us to serve it better. It will result for retailers in a better discount on average, better shipping rates, and better availability / information / fulfillment on all titles. We will have better information at our disposal all the way around. It also means lower overhead for us, and enables us to devote less time to accounting and order-taking and more time to actually focus on providing useful sales and marketing tools to retailers," he wrote.

"These are good things."
posted 12:00 pm PST | Permalink

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