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News: Diamond and Small Press Series: Major Minors
posted December 31, 2000
How's Diamond Doing? The Big-Little Publishers and the Big-Big Distributor
To conclude this series of articles regarding the working relationships between Diamond Comics Distributors, Inc., and the small-press publishing arm of North American comic books, we will survey slightly larger companies who in terms or overall market share and general publishing strategy still may be termed "small press". These are the big fish in the small pond of small press publishing -- those companies large enough to have a small to mid-sized company presence at large comics conventions like San Diego's Comic-Con International, and slightly outsized roles at small independent shows.
It is because of the size of the company -- or perhaps the sustained quality of their output -- that these publishers find themselves in a curious role in the new comics market. Because of the relative sales stability of the kind of non-superhero comics featured by these publisher in the post-speculation decline, many of these publishers have begun to look less like complete irrelevancies than stable entities driving an important niche market. In fact, with the mainstream press credibility given to individual projects from such publishers, it could be argued that the market's next best chance for expansion will be partially on the coattails of a mass of critically-acclaimed works from such publishers.
But the kind of feverish whispers one hears at 2 AM in a Small Press Expo aside, the lesson of the late 1990s is that these kinds of publishers aren't going away -- at least not with a proportional regularity eclipsing larger, genre-dominated enterprises. The options available to Diamond, therefore, are to find a way to work with these publishers, or carry on with policies some feel put the lion's share of focus elsewhere. From all reports so far, they've chosen the former -- as has this series, which will continue to survey these publishers, as long there remains interest and cooperation, until its conclusion. First up, the granddaddy of North American alternative publishing, Fantagraphics Books, and its wily, northern uncle, Drawn and Quarterly -- two very different approaches and business with a shared goal of arts-driven respectability.
Fantagraphics, a company with a 24-year publishing history including The Comics Journal, described working with Diamond Distribution in mixed terms, although decidedly positive in terms of context. In other words, while Fantagraphics has concerns about the distributor, the relationship is mostly positive when compared to working arrangements with comics distributors in the past including Steve Geppi's company. FBI's Director of Publicity and Promotions Eric Reynolds described the company's relationship with Diamond as "Flirtatious, but rarely consummated. We're a cheap date, but not an easy one." In general, Reynolds believes FBI's situation is dictated from a quantifiable measure of the publisher's increased market share in a declining market, and less quantifiable notions of quality. "Speaking strictly in terms of money, I think we're something like their eighth largest comics supplier, so I guess we're more important than most, though far less important that the top five, each of which dwarfs us in market share. I do believe that there's a prestige to the Fanta line that boosts our importance to them above base economics, but that's much harder to quantify and sounds so pompous that it's better not to get into it."
Reynolds measured the changes in Fantagraphics' with Diamond now and Diamond past in terms of generally improved attention and care to the company's specific needs. "There's better communication, and for the most part, a stronger commitment on Diamond's part to promote key front and backlist titles through Previews, Diamond Dialogue and the Star System." While Reynolds agrees that the relationship has changed for the better since the single-distributor model began to coalesce with Capital's dissolution in late 1996 [MIKE! CHECK!], he has a hard time putting his finger on exactly how. "As far as what changed it, I'm not entirely sure, although I suppose it most of it stemmed from the last days of Capital, when Capital was actively courting alternative and indy publishers with various promotional perks and other aggressive strategies. Before Capital folded, Diamond countered with similar offers, and for whatever reason, they haven't discontinued that kind of support in Capital's wake."
Taking that longer view affects the way the company sees many of the complaints made by other publishers, or those offered by industry pundits as conventional wisdom barriers for companies like Fantagraphics to do more effective business. For example, Reynolds dismisses the possibility of being denied a catalog cover as a non-issue, even for FBI's best-selling titles. "I'm not sure securing a cover to PREVIEWS is any harder than it's ever been if you aren't a Big Five company -- PREVIEWS covers always went to the Marvel, DC, Dark Horse and Image's of the day. I don't think we've ever had a PREVIEWS cover in the history of Diamond, so I can't pretend to be too outraged about it in lieu of exclusivity." And other continuation of long-standing policies have worked just fine in practice for the publisher, and criticism of same is dismissed with shrugged shoulders. In terms of catalog placement, a rallying cry for many smaller publishers who feel ghettoized, Reynolds told the Journal, "Yes, Fantagraphics is listed in the back of the bus like everyone other than Marvel, DC, Image, et. al. But aside from that, the sequence of catalog listings remains about the same and I'm not sure it's any more of a hindrance than it is to have a business listing in the back of the white pages."
If Reynolds has a specific complaint about treatment, it may come from Fantagraphics' unique position as a publisher of pornographic comics. While the Eros line -- including the popular Japanese "mangerotica" titles -- inflates Fantagraphics' bottom line and therefore improves its sales position as a Diamond client considerably, it's hard to find a corresponding acknowledgment of this fact in Diamond's treatment of the publisher within the adult supplement catalog. Says Reynolds, "In the world of adult comics, we're basically Marvel and DC combined. I don't think anybody comes close to us in terms of adult comics market share, but I don't think that quite translates into the kind of promotional advantages that are afforded Marvel and DC for being the kings of the hill in the comics supplier market." For Reynolds, the key might be in the type of agreement the publishers have. "We certainly don't get, proportionally, the number of covers of their adult supplement catalog that Marvel and DC do, for example. Then again, we don't have an exclusive brokerage agreement, and donâ€™t really want one."
Drawn and Quarterly
Drawn and Quarterly's position as a smaller alternative publisher perhaps closer in scale to the boutique-model publishers like Top Shelf and Highwater is evident in publisher Chris Oliveros' reaction to questions about his relationship with the comics industry distributor. For Oliveros, there is less emotional investment in the structural aspects of the industry than there is matter-of-fact explication of the relationship in terms of its meaning to D&Q -- a place to solicit sales to a sea of comic stores, most of them uncaring. Describes Oliveros: "Drawn & Quarterly isn't Marvel Comics and accordingly has a very small section in Diamond's monthly catalogue."
However, Drawn and Quarterly does point to improved service and attention along the lines of other small publishers. "Actually, things have improved considerably since the comics implosion in 1996. Prior to 1996, we were completely ignored (we were even turned down by Diamond for Drawn & Quarterly #1 in 1990), and since then their sales reps have made minor efforts to accommodate us," Oliveros told the Journal. Like Fantagraphics, the biggest change in Oliveros' eyes was the biggest arena for potential sales, the mid-'90s move to collections and trade paperbacks as a more significant portion of comics retail business. Unlike early efforts, Drawn and Quarterly has been invited along for the ride. "The biggest constructive change has been the inclusion of many of our trade paperback titles in their Star/Tru system, which generates orders for us on a weekly basis. Prior to 1996, they carried none of our backlist."
In terms of how he might be seen by the distributor, Oliveros points to specific titles rather than the overall sales of weight of the publisher. By only soliciting a very few comics titles, and without specialty lines, Drawn and Quarterly comes nowhere near the weight of a Fantagraphics or Viz. But on a title-by-title basis, Drawn and Quarterly artists do respectably well. Oliveros was straight-forward with his numbers. "As I mentioned earlier, D&Q is much smaller in financial terms than Image or Marvel, so we're treated accordingly. On the other hand, certain titles do very well through Diamond; Optic Nerve #7, for example, had initial orders of 9,000 copies, 7,000 of which came from Diamond." Oliveros' company also receives the benefits of its proclivity towards high-end, prestige projects. "We received over $25,000.00 worth of orders from Diamond for the recent Drawn & Quarterly Volume 3," said Oliveros, "which in retail terms is well over $50,000.00 -- in dollar terms, that might be at the level of several Marvel and DC comics." Oliveros sees this as a sign titles from a small publisher can be competitive in the flattened comic book market. "So, even on a financial level, I think it would be wise for them to put more backing behind our books."
Oliveros shares Reynolds' skepticism that even his best-selling title, with an additional push from its distributors, would be cover-ready for Previews anytime soon. He may even be more skeptical than Fantagraphics' director of publicity, stating, "As far as I know, the covers for Previews are open - for a very large amount of money." But he does not share the white-pages philosophy regarding the interior of the catalog. A respected designer, Oliveros sees the catalog in those terms. "I think it's been an unwritten rule since the dawn of the direct market that all distributor catalogues must be poorly designed, ugly, and unreadable." As a potential solution, he offers up the idea of a non-exclusives or even an alternative catalog along the lines of the adults-only supplement. "The ideal scenario would be to have one catalogue for the Exclusives and another for the rest." Such a scenario would have immediate benefits for Oliveros' company. "With a separate catalogue, companies like Fantagraphics and Drawn & Quarterly would in theory receive better placement, along with the occasional shot at a cover."
A Level Playing Field?
For all the publishers contacted by the Journal since the beginning of the series, certain concerns existed that had nothing to do with individual treatment, but with market realities that can be traced to the distributor's dominant position. Eric Reynolds voiced concerns over Diamond's status as a goodwill ambassador for the medium. "My largest gripe has to do with Diamond's promotional or outreach programs, all of which are for sale to the highest bidder and as such show a lack of vision," Reynolds told the Journal. "As really the only nationwide and international comics distributor, it has a certain obligation to the art form, even if only for self-preservational reasons. When Diamond attends something like the BEA, it essentially sells its display space to the highest bidder rather than racking a display that shows the diversity of the art form."
While Reynolds admits to some level of self-interest in discontinuing a promotional in which Fantagraphics does not have the resources to participate, he remains adamant that there are core financial arguments, playing completely to Diamond's self-interests, to be made for a more stringently selected outreach. "While selling its space is certainly within its rights, I would prefer to see them stock titles based upon their potential accessibility outside the direct market, displaying the range of genres and content available in contemporary comics. To not do so seems shortsighted to me, and I can't imagine the money made on charging for such display space significantly benefits Diamond, when ultimately their goal is to attract new booksellers, because the biggest obstacle in attracting these booksellers is likely their preconceptions and prejudices about the art form, and you aren't going to be very successful countering those preconceptions when you've sold all of your shelf space to 'BattleTech Elf,' 'Heroes Monthly Unlimited,' and the latest Warrior Golem cold-cast statues."
Perhaps the most significant complaint comes in the form of potential business imbalances caused by the type of information available to certain publishers under exclusive arrangements, an argument most elegantly stated by Eric Reynolds in terms of individual account information. The Fantagraphics employee was clear to make the distinction between the various types of concerns. "Diamond provides detailed sales info to exclusive suppliers like DC. Does it give them a distinct advantage in securing a hold on the retail base? Absolutely. But the fact is that those publishers are paying for that information through the terms of their brokerage deals, so I'm not necessarily sure there's anything unfair about it." Reynolds also makes a distinction between these sorts of complaints and what is believed to be at the heart of the current Justice Department investigation of the distributor. "The most common complaint about Diamond post-Capital is that they have a monopoly which prohibits other distributors from entering the market, and that is believed to be the crux of the Justice Departmentâ€™s investigation. Equally important to my mind, though, is whether the brokerage deals are unfairly prohibiting competition at the publishing level as a result of this proprietary sales information Diamond supplies brokered suppliers with."
For Reynolds, like most industry professionals isolated from the details of the various exclusives, analysis depends less on the specific points of the contract than the reasonably inferred result. Speaking to the issue of preventing publishing competition, Reynolds admits, "Honestly, I donâ€™t know enough of the details to be sure," before adding at length, "I do think that Diamond, in the interests of fair competition, has an obligation to make the same information available to non-exclusive suppliers that they make to exclusives, even if itâ€™s at a price that may well be prohibitive for smaller publishers. It bothers me that an exclusive supplier like DC, which already has so many advantages over other publishers in getting as much of their product into as many stores as possible, is granted access to specific ordering information on a store by store basis, enabling DC to call Diamondâ€™s accounts individually and say, â€œLook, I see that you ordered 50 copies of Batman but only three copies of Green Arrow. But did you realize that that particular issue of Green Arrow crosses over with that issue of Batman?â€?
Fiven the nature of the market and the number of comics sold per account, such information could greatly helpful in targeting promotional efforts. Says the Fantagraphics publicity and promotion director, "The benefit this information has in improving your ability to sell to retailers cannot be overestimated. The way it stands now, the nearest a non-brokered publisher like Fanta can get to that information is through something called a 'Discount Group Average Report.' The most important difference is that these reports supply absolutely no specific account information. Every retailer is protected anonymously and only identified by its plateau discount. As such, it's impossible for a publisher to directly capitalize on the data Diamond provides in these reports in a way that DC can with its info.
"Any direct outreach must be done in conjunction with Diamond, because they're the only people who know exactly which retailer is ordering what and can make sales suggestions accordingly. Because any outreach that that a publisher wants to undertake is almost inherently reliant upon Diamond to implement it, this poses a few problems for the publisher. For one thing, it strikes me as a sort of racket. On the other hand, I can understand why they donâ€™t want to give us that information, because we sell our books directly to retailers and with that information we could effectively cut out Diamond as the middleman (although I don't think this would happen to the degree that Diamond uses it as a shield for not sharing it), something the exclusive suppliers are prohibited from doing. Whatâ€™s really distressing, though, is the simple truth that the way DGARs are set up vis a vis the exclusives' access to direct sales info, follow-up promotion is invariably impotent compared to what a DC is able to do. Whoâ€™s going to be more effective: DC selling DC's books or Diamond selling Fantagraphics? I know the people at Diamond that I deal with understand our books fairly well, even if it isn't a completely natural and synergistic relationship. They try, which I'm satisfied with. But the fact is, the customer service reps and at Diamond, for example, simply don't have the deep commitment to our books that we at Fanta do, even if my brand manager personally goes out of his way to stay on top of everything we put out. As such, their ability to serve as ambassadors and salesmen for our line is likely to be inferior than if we were able to do it ourselves."
Reynolds does admit that the severity of his criticism depends on certain unknown factors. "What I donâ€™t understand is whether the costs that non-exclusive publishers pay to promote through Diamond in the form of DGARs and other tools are fairly scaled in relation to what the exclusives pay for their benefits. I donâ€™t have as big a problem with DC having a system in place that is 100 times more effective than ours, as long as theyâ€™re paying somewhere in the neighborhood of 100 times what we are for the luxury and we had the option to implement a similar relationship if we wanted to. Does that make sense? From what I understand, all of the exclusives have had second thoughts about the brokerage deals, so maybe I am overestimating their effectiveness. But you could posit the theory that a company like DC, with this direct sales info that comes with exclusivity, is able to hinder access for other publishers because the info enables them to swallow up increasing rack space in stores, which is always limited. And unless other publishers are given the opportunity, at a cost, to obtain that same information, there is something inherently unfair about it"
Diamond was given an opportunity to respond to the issues at hand, and chose to do so through Director of Purchasing Mark Herr. Herr was happy to learn that the publisher reported a beneficial upswing in their general relationship with the publisher since 1996, and reminded the Journal of the context of that improvement. "This is very gratifying to hear since the time period basically coincides with the advent of exclusivity, when some questioned how responsible we'd be to independent publishers. But we promised open access to the marketplace, and that's remained a conscious goal." He also confirmed the importance of all vendors, given the current status of comic book sales. "We continue to get the most we can out of all of the vendors we deal with. And in today's marketplace, it is in Diamond's best interest to foster growth at whatever level we can find it. Dark Horse, DC, Image and Marvel are all producing quality books. These items continue to drive consumers into comic book retailers' stores each week. So, we continue to support our Premiere publishers, alongside the small press and every size vendor in between."
As to the reasons for this improved relationships with the two publishers, and others like them, Herr points to a restructuring of the department since the exclusives era as a big factor, rather than one or two conscious decisions to improve those relationships. "We feel that there are many factors that go into our positive performance, and not just one event or decision. One big factor is that our Comics Team staff has grown over the years. Where we were once just one person dealing with the day-to-day concerns of all publishers, we now have four Brand Managers who deal with comic book vendors on a day-to-day basis. The Purchasing Department as a whole has more infrastructure, more support staff, more people in management positions."
Herr told the Journal he might have a slight disagreement with the notion that conscious improvements with accounts like Fantagraphics and Drawn and Quarterly were a result of the market shake-ups in 1996, pointing towards the initial events on the road to their market primacy in 1994. I think we were already on this road before the Capital implosion. In a nutshell, Diamond lost 35% of its volume when Marvel went to Heroes World. This put us in a mode of regaining all the volume we could." Under this scenario, it was the idea of moving towards exclusive arrangements that actually resulted in improvements in relationships with all publishers, if for the very fact that it put Diamond's account-to-account services in some sort of perspective. "We put together a summary of the services we could offer to publishers, and explained how we could perform some of the services better if we were distributing their books on an exclusive basis. Then it was up to each publisher to decide what they were most comfortable with."
We See History Differently
In some areas of agreed-upon improvement, Herr offered up slightly different interpretations of why this was the case. In regards to both publishers citing improvement in the Star System, Herr points out that progress in Diamond policies were not so much conscious choices to better serve specific types of clients but the natural result of the institution's growth within Diamond's overall policy. "The marketplace continues to shift and evolve. Many of the retailers that we have talked to said that while periodical sales are flat that they are experiencing a rapid growth in the backlist graphic novels and trade paperbacks. We have always geared the Star System to stock in-demand titles, so as the category expands, it is only natural that we include a wider range of titles and publishers."
In the case of the sales success of individual titles, Herr points out that this is less a case where Diamond might start looking at specific titles as sales opportunities but as a way of gauging their relationships with publishers in a more positive way. "Yes, there are some publishers whose output is a bit uneven, the director of purchasing told the Journal, "they have some very strong titles and some not so strong offerings. We try to look at the publisher as a whole, and also look at long term plans. No, Berlin doesn't come out as often as we would like, but all of the issues of Berlin continue to sell." Herr also cited the presence of strong-selling titles as an inducement for Diamond to provide lesser-selling titles from the same publisher with longer exposure to the marketplace in some cases.
Herr seems as reluctant as Fantagraphics' Reynolds to try and make qualitative distinctions when it comes to his company's sales decisions. Asked about award-winning books form these and other companies, Herr responded, "The best thing about awards is that it makes these titles more recognizable to a larger audience." The end result is a kind of groundswell of support. "Part of winning awards, or even being nominated, is getting more coverage for your work and making your title something that more retailers feel they should carry."
Previews in Review
Herr spoke extensively to the general concerns about attractiveness and suitability of the current Previews ordering catalog, as elucidated by Chris Oliveros at D&Q. Herr's view of the current basic organization of the catalog basically supports Reynolds' "white pages" comparison. "Previews is a big catalogue, and is a major undertaking to put together on a regular basis. We do continue to list titles by publisher, as the feedback we have received from both retailers and consumers is that is the easiest way for everyone to find what they are looking for. Sorting alphabetically also prevents us from having to make more subjective assessments of product. If we solicited by genre, for example, some publishers would contend that we market them incorrectly, or that their title does not fit into any of our genres easily. Retailers using Previews On Disk do have access to our genre fields, and can sort that way if they so desire. That seems to be the most common suggestion I have heard over better ways to sort Previews."
On the other hand, Diamond believes its past publishing history stands in direct refutation to Oliveros' notion that a separate catalog may be helpful. "We have done specialty catalogues over the years that have focused on different items, be it alternative publishers, kid friendly titles, adult titles or manga titles. While these catalogues have generated some sales the overall circulation has been significantly lower than Previews." Like the alternative publishers at the convention who wished their tables be place near Marvel, Herr subscribes to the theory of exposure and education. "We feel that Previews is still the best tool for exposing the widest possible audience to all titles. If we sub-sectioned off into separate categories, it would be easier for retailers to ignore items that they feel doesn't fit their core business, and super-hero readers might never get exposed or 'graduate' to other comics."
Outreach and Acronyms
When it came to the core complaints emanating from Fantagraphics, Herr stressed the wisdom of Diamond policy orthodoxy, and the checks and balances contained therein. For instance, the lack of proportional representation in the Adult Supplement based on Eros market share perceived was explained in terms of the sales goals of that catalog with the context of overall Diamond sales, and the option of other sales boosts. "Previews Adult is a supplemental catalogue that targets approximately 10% of our buying customers. While Eros is clearly a major player of this portion of our business, the revenue that this catalogue generates does not compare to the revenue Previews generates. I do feel that Eros is given strong treatment in this catalogue, often getting Featured Items and editorial pages. Proportionately, I feel that Eros does get the equivalent of what Marvel and DC get." Herr also pointed out, "And like the Premieres, there are always advertising options in our specific publications that they are welcome to purchase."
On the other hand, Herr disagrees with the characterizations made by Reynolds of their outreach policies, stressing that the distributor does make choices to reflect the needs of the particular show. "In general, we fill our booth with product we feel is appropriate for that given show. Publishers have the opportunity to guarantee that their product will be presented, but just as often as not, we fill the space with titles that we feel are worthy of pushing. We try to feature a few key items most prominently to get the attention of attendees so we can show them on the full range of products Diamond carries," Herr said.
DGAR = WAR?
On the slightly more difficult issues of a level playing field given the advantages of brokerage arrangements with Diamond, Herr provided a slightly more complicated response. For Herr, the key difference isn't brokerage/non-brokerage but exclusive/non-exclusive when it comes to advantages in targeted marketing. As Reynolds suggested, Diamond feels these advantages are paid for as terms of those deals. "Suppliers
who chose to distribute their titles exclusively through Diamond gain advantages in terms of cost savings and being able to measure market penetration and perform more targeted marketing." Also, as predicted, Herr places a premium on protecting its important business information. "Diamond has worked hard to assemble our customer list and it is something that we have been very protective of over the years," Herr told the Journal. "At the same time, we have never tried to prevent a publisher from selling directly to retailers. As a distributor, it's our job to add value to the equation for retailers and suppliers alike. "
For the notion of a specific liability caused by not having access to account-by-account information, Herr admitted that such information is made available to that publisher. "Those publishers we represent as a sales agent are selling directly to retailers, and therefore have access to individual retailer's orders for just their products," Herr said. But Diamond sees this different way of doing business as balanced by the option for data and marketing services made available to all clients. "However, other publishers also have access to a wealth of data and marketing services, and if they tell us what type of marketing they want to accomplish, we can help them do it affordably. Some examples: send a sample copy to 500 largest retailers not ordering your title; send a mass email to 'indy friendly' retailers; Make sales calls to those ordering less of issue #4 than of issue #3."
For Reynolds and Fantagraphics, Herr's reponse is met with mixed feelings. "Those policies Mark cites all have their potential benefits and I'm glad that Diamond offers them (we utilize them from time to time ourselves and Diamond -- and Mark himself -- is great about tailoring them to suit your individual needs), but I don't think anybody would argue that they're as valuable as knowing exactly which stores are ordering what and being able to communicate with them directly, publisher to retailer, as DC does. There's still an unquestionable disparity in the degree of 'access' afforded exclusives versus non-exclusives. I'm not saying it's wrong, though; I couldn't really claim that unless I better understood the scale of economy involved in both paradigms."
Overall, if these high-profile arts-conscious publishers enjoy a better relationship with Diamond than they did in the days when more major distributors graced their rolodexes, that's not to say that everything works to their advantage. By surviving in the margin-light arena of arts comic publishing, industry veterans like Oliveros and Reynolds have learned that every benefit means something, every change in policy has a potential impact, and that to survive means exploring every option. These publishers will no doubt remain active at the point of any key changes the distributor makes in the next five years as well.