Direct market

Not to be confused with Direct marketing.
Jay and Silent Bob's Secret Stash comic book store in Red Bank, New Jersey.

The direct market is the dominant distribution and retail network for American comic books. The concept of the direct market was created in the 1970s by Phil Seuling. It currently consists of one dominant distributor (Diamond Comic Distributors) and the majority of comics specialty stores, as well as other retailers of comic books and related merchandise.

The name is no longer a fully accurate description of the model by which it operates, but derives from its original implementation: retailers bypassing existing distributors to make "direct" purchases from publishers. The defining characteristic of the direct market however is non-returnability: unlike book store and news stand distribution, which operate on a sale-or-return model, direct market distribution prohibits distributors and retailers from returning their unsold merchandise for refunds. In exchange for more favorable ordering terms, retailers and distributors must gamble that they can accurately predict their customers' demand for products. Each month's surplus inventory, meanwhile, could be archived and sold later, driving the development of an organized market for "back issues."

The emergence of this lower-risk distribution system is also credited with providing an opportunity for new comics publishers to enter the business, despite the two bigger publishers Marvel and DC Comics still having the largest share. The establishment and growth of independent publishers and self-publishers, beginning in the late 1970s and continuing to the present, was made economically possible by the existence of a system that targets its retail audience, rather than relying on the scattershot approach embodied in the returnable newsstand system.

Comic book specialty shops

Prior to the 1970s, most comics were found in newsstands, grocery, drug, convenience, and toy stores. A handful of early comic book specialty shops first appeared in the late 1960s, stocking back issues as well as sourcing new releases from newsstand distributors and the new counterculture underground comix. In the 1970s, the development of the direct market allowed a widespread network of comic shops to flourish. The specialty shop presented a number of competitive advantages:

Impact

The Direct Market has been criticized for fostering a closed "ghetto" or elite for comics, arguing that most Direct Market retailers are specialty shops patronized primarily by existing readers and highly motivated fans, without the broader exposure of the merchandise that newsstands and other retailers once provided. Some claim that the current incapability of Direct Market to reach new readers and customers, might be cannibalizing the existing market out of existence.

The Direct Market was neither intended nor designed to be the primary vehicle for the distribution of comic books, but rather as a supplementary system servicing specialty outlets. The failure of the former primary system of distribution (the network of local IDs), which had itself been declining for many years by the time the Direct Market had any significant impact, left the direct sales distributors as the industry's principal system of circulation, not from design but by accident.

History

Background

Before the direct market, most comic books were distributed through newsstands, pharmacies, and candy stores. The major distributors during this period included American News Company and the DC Comics property Independent News. This practice lasted from the 1930s through the 1960s.

1970s

The direct market was created in the early 1970s in response to the declining market for comic books on newsstands. Fan convention organizer and comic dealer Phil Seuling approached publishers in 1972 to purchase comics directly from them, rather than going through traditional periodical distribution companies. Unlike the newsstand, or ID (for independent distributor) market, which included drugstores, groceries, toy stores, convenience stores, and other magazine vendors, in which unsold units could be returned for credit, these purchases were non-returnable. In return, comics specialty retailers received larger discounts on the books they ordered, since the publisher did not carry the risk of giving credit for unsold units. Instead, distributors and retailers shouldered the risk, in exchange for greater profits.

Additionally, retailers ordering comics through Seuling's Sea Gate Distributors (and within two years, through other companies) were able to set their own orders for each issue of each title, something which many local IDs did not allow. This ability to fine-tune an order was crucial to the establishment of a non-returnable system.[2]

Direct distributors typically were much faster at getting the product into the hands of their customers than were IDs: a direct distribution warehouse generally had re-shipped a weekly batch of comics or delivered it to local customers within a day or two (sometimes within hours) of receiving the books from the printer. By contrast, most IDs would usually take two or even three weeks to do so, though some moved more quickly. This factor was a strong drawing card for retailers whose customer base consisted principally of fans eager to see the new issues each week.

Finally, another factor in creating demand for direct sales distribution was that many IDs refused to deal with comics specialty shops or with any retailer who dealt in back issues on any terms at all, fearing that used comics could be purchased by these shops from readers for pennies, and then cycled back through the system as returns for full credit at a profit.

By the mid-1970s, other direct sales distribution concerns had sprung up, mostly regionally based (Donahoe Brothers in the Great Lakes region, Pacific Comics Distributors in Southern California, and New Media Distribution/Irjax in the Southeast were all operating by early 1974), essentially replacing the order-taking and fulfillment functions of newsstand distributors for the infant comic shop specialty market. For several years, Seagate retained an edge over its competitors in that it was able to provide "drop shipping" (the shipment of an order directly from the printer to the retailer) to its customers for quantities of 25 or multiples thereof per issue, while the newer distributors had to use more conventional methods, putting together customer orders and re-shipping or delivering them from their own warehouses. Threats of legal action[3] and the need for retailers to order very precise (and sometimes very small) quantities of items ended this practice for all but the largest customers by the end of the 1970s, and extended the ability to provide drop shipping to those large customers to all the direct distributors — by which time several of the newer distributors had multiple warehouses.

Newsstand distribution through the IDs continued at the same time (and indeed remained dominant for years afterward, on its conventional returnable, low-discount terms).

1980s

In the early 1980s, a trade organization, the International Association of Direct Distributors (IADD) was formed, consisting of all the distributors who purchased product directly from either DC, Marvel, or both. The IADD had annual conferences, issuing obscenity guidelines in 1987,[4] and electing Diamond Comic Distributors' Steve Geppi as IADD Vice President in 1988.[5]

As early as 1980, Marvel Comics saw the growth potential of the direct market,[6] and by 1981 was putting out a number of titles geared specifically to that market (including Dazzler). By the early 1980s, all the major publishers were producing material specifically for the new market, series that would probably not sell well enough on the newsstand, but sold well enough on a non-returnable basis to the more dedicated readers of the direct market to be profitable.[7]

Several of the new distributors lasted a relatively short time, and were succeeded by more competitive organizations; with no continuity of ownership and only limited continuity of personnel, it would nonetheless be fair to say that Diamond Comic Distributors replaced New Media/Irjax and Capital City Distribution largely replaced Big Rapids Distribution in the marketplace.

By 1985, the number of direct distributors in North America peaked with approximately twenty companies, many of them multi-warehouse operations, purchasing product for resale to retailers directly from either DC Comics, Marvel Comics, or both. There were also an unknown number, probably in the dozens, of sub-distributors who bought DC and Marvel product from these larger companies (and often the products of other, smaller publishers direct from those publishers), and re-sold to retailers. Most of these sub-distributors were in cities in which the direct distributors themselves did not (at least as yet) have warehouses, including Philadelphia, Boston, Columbus (Ohio), Madison (Wisconsin), Lansing (Michigan), Indianapolis, and Berkeley (California). Many of them were eventually absorbed by the companies which had been their principal suppliers.

From the mid-80s to the mid-90s, nearly every major urban area in the United States had at least one (and sometimes two or three) local direct distribution warehouses that functioned not only as distribution points for pre-ordered weekly shipments, but also as what could be described as "supermarkets for retailers", where store owners could shop for reorders and examine and purchase product that they might not have ordered in advance.

1990s

As newsstand sales continued to decline, the Direct Market became the primary market of the two major comics publishers (DC Comics and Marvel Comics).[2] In the late 1980s and early 1990s, as the popularity of comics collecting grew, many new comics shops opened, and existing retailers (such as sports card shops) joined the Direct Market, carrying comics as a side business. By this time, Diamond and Capital City each had approximately twenty warehouses from coast to coast, and both were functioning as fully national distributors. Several of their larger remaining competitors, notably Glenwood, Longhorn, and Bud Plant, had either sold out or gone out of business.

Such rapid growth (due partially to speculation) was unsustainable, however. The market contracted in the mid-1990s, leading to the closure of many Direct Market shops.[8] Diamond and Capital City began closing local warehouses, moving from a decentralized model in which many local warehouses provided full service to a given area to a centralized one with a few shipping hubs and no local walk-in service at all. In 1994, Capital City created controversy by announcing penalties for publishers who didn't deliver their products within promised deadlines; this move followed an industry-wide push for 30-day returnability, a practice formerly in use when comics were primarily distributed in newsstands.[9]

Marvel Comics purchased Heroes World, by that time the third largest distributor behind Diamond and Capital City,[10][11] with the intention of self-distributing their products; Heroes World also stopped carrying other publishers' books. Other distributors sought exclusive deals with other major publishers to compensate for the substantial loss of Marvel's business. DC Comics, Image Comics, Dark Horse Comics, and several smaller publishers made exclusive deals with Diamond Comic Distributors.[12] Most other distributors, including Capital City Distribution, Diamond's main competitor at the time, either went out of business or were acquired by Diamond.[13] Others established niches — such as re-orders — in which they could compete. When self-distribution failed to meet Marvel's objectives, they also signed an exclusive distribution deal with Diamond, which had by then become the primary supplier for the Direct Market.

2000s

In the early 2000s, the bookstore market began to challenge the Direct Market as a channel for sales of increasingly popular graphic novels. Meanwhile, Diamond has continued to dominate direct-market distribution, with the 2006 collapse of FM International leaving even less competition than ever. However, the growth of interest in comics among mainstream booksellers and book publishers has led to several publishers arranging for bookstore distribution outside of Diamond (for example, Tokyopop through HarperCollins,[14] or Fantagraphics through W. W. Norton),[15] while Diamond has created Diamond Book Distributors.[16]

Direct market distributors

The list below includes sub-distributors, who bought their mainstream comics from one of the companies below but many of whom were on direct terms with one or more of the smaller or underground publishers.[17]

United States

Distributor name Headquarters Founded Closed Fate Notes
Diamond Comic Distributors Baltimore, Maryland 1982 — Active Inherited New Media/Irjax distribution centers and warehouses
Fat Jack's Comicrypt Philadelphia, Pennsylvania 1976 — Defunct as distributor Still active retailer that once acted as a sub-distributor
Last Gasp San Francisco, California 1970 — Active Founded as a publisher; began distributing soon after
Westfield Comics Subscription Service Madison, Wisconsin 1979 — Active Mail order retailer/distributor founded by Sherill Anthony and now run by her and her husband Bruce Ayers[18]
Action Direct Kansas City, Missouri Defunct Formerly known as Cavco
Alternate Realities Distributing, Inc. Denver, Colorado 1979 1987 Acquired by Bud Plant Wholesale distributor operated by Mile High Comics and run by Nanette Rozanski[19]
Big Rapids Distribution Detroit, Michigan 1975 1980 Bankruptcy Originally underground press and underground comix distributor founded in 1970; began mainstream comics distribution in early 1975, when Donahoe Brothers Inc. of nearby Ann Arbor went under. Two former employees went on to form Capital City Distribution.
Bud Plant Inc. Grass Valley, California 1970 1988 Acquired by Diamond[20] Wholesale distribution operation
Capital City Distribution Madison, Wisconsin 1980 1996 Acquired by Diamond
Charles Abar Distribution Belmont, California 1982 Acquired by Bud Plant[21]
The Comic Distributor Lansing, Michigan 1975 1979 Acquired by Big Rapids Distribution Sub-distributor started by former Donahoe Brothers employee Jim Friel. (The name "The Comic Distributor" was later taken by Mark Hylton of Comic Carnival.)
Comic Kingdom Detroit, Michigan 1981 early 1980s Acquired by Glenwood Distributors Started by retailer Bob Hellems
Comics Hawaii Honolulu, Hawaii Defunct
Comics Unlimited Staten Island, New York 1994[22][23] Acquired by Diamond Also a retailer; retailer business acquired by Fantasy Books & Games in mid-1995[24]
Common Ground Distributors Berkeley, California 1978 1982 Acquired by Capital City Sub-distributor started by Robert Beerbohm and initially supplied by Big Rapids Distribution
Destiny Distributors Seattle, Washington early 1980s 1990 Acquired by Diamond.[25] Sub-distributor started by Phil Pankow and initially supplied by Bud Plant
Donahoe Brothers Inc. Ann Arbor, Michigan c. 1970 1975 Bankrupty; accounts acquired by Big Rapids Distribution The second direct distributor (pre-dating both Pacific Comics and New Media Distribution by a month or two). The Donahoes had been in business for about a year, dealing first with Marvel Comics, then Warren Publishing, Atlas/Seaboard Comics, Charlton Comics, and Archie Comics, and finally (and only for about two or three months) with DC Comics when they went out of business. Also known as Comic Center Enterprises
FM International Wisconsin 1996 2006 Defunct; assets acquired by Westfield Comics Primarily supplied back-stock
Friendly Frank's Gary, Indiana[26] 1995 Acquired by Capital City[27] Their catalog was called Future Comics
Glenwood Distributors St. Louis, Missouri c. 1980 1987 Bankruptcy Sold in 1986,[28] they went through a financial crunch in the spring of 1987,[29] were sued by four publishers that summer,[30] and declared bankruptcy in the fall of 1987[31]
Global Hobo Distro San Francisco, California 2003 c. 2012 Defunct Distributor of hand-made and hard-to-find comics co-founded by Andy Hartzell and Jesse Reklaw; was partnered with Last Gasp
Haven Distributors 2011 Defunct Primarily focuses on non-exclusive independent publishers; formerly known as Cold Cut Distribution.[32] Out of business as of October 31, 2011.[33]
Heroes World Distribution Morristown, New Jersey 1975 1997 Acquired by Marvel Comics in 1995 The third largest distributor (behind Diamond and Capital City) at the time of its acquisition and out of business soon thereafter
Isis News Minneapolis, Minnesota mid-1970s Acquired by Big Rapids Distribution Sub-distributor
Longhorn Books Texas 1985[34] Accounts acquired by Action Direct
New Media Distribution/Irjax Rockville, Maryland c. 1974 1982 Assets sold to Diamond Irjax had been run by Hal Shuster since the 1970s.[35] In late 1981, the company filed for Chapter 11,[36] and in 1982 it sold the distribution end of the business to Steve Geppi (who immediately founded Diamond Comic Distributors).[37][38]
Nova Los Angeles, California mid-1970s Acquired by Big Rapids Distribution Sub-distributor
Pacific Comics Distributors San Diego, California c. 1974 1985 Bankruptcy; distribution centers and warehouses acquired by Bud Plant Inc. and Capital City Distribution Retailer, publisher, and distributor; went bankrupt in 1984
Print Mint Berkeley, California c. 1969 c. 1975 Defunct Also a publisher and retailer; mostly focused on underground comix, posters, and other products of the counterculture
Sea Gate Distributors Brooklyn, New York 1972 1985 Bankruptcy[39] Essentially the first direct market distributor
Second Genesis Distribution Portland, Oregon 1991[40] Acquired by Diamond in 1990
Solar Spice and Liquors Cambridge, Massachusetts c. 1981 1982 Acquired by Diamond Originally owned by Hal Shuster of New Media/Irjax
Southern Fantasies/C.I.B. Atlanta, Georgia 1986 c. 1994 Defunct
Sunrise Distributors Commerce, California early 1980s c. 1988 Bankruptcy[41] Run by Scott Mitchell Rosenberg
Well News Co. Columbus, Ohio mid-1970s Acquired by Big Rapids Distribution (?) Sub-distributor; their personnel later became the nucleus of an early Capital City Distribution branch
Wisconsin Independent News Distributors (WIND) Madison, Wisconsin 1971 late 1970s Acquired by Big Rapids Distribution Eventually run by Milton Griepp and John Davis, who later went on to co-found Capital City Distribution

Canada

United Kingdom

See also

Notes

  1. ↑ Rozanski, Chuck. "Tales From the Database: Destroying the Entry Point of Most New Readers." Mile High Comics, March 2004.
  2. 1 2 Evanier, Mark. "Notes From Me," POV Online (Dec. 31, 2004). Accessed Oct. 14, 2014.
  3. ↑ "Direct Distribution" in Duin, Steve and Richardson, Mike (ed.s). Comics Between the Panels (Dark Horse Publishing, 1998), pp. 126-130.
  4. ↑ "Newswatch: Distributor Organization Issues Guidelines About Obscenity," The Comics Journal #117 (September 1987), p. 14.
  5. ↑ "Newswatch: Diamond's Steve Geppi Elected IADD VP," The Comics Journal #125 (October 1988), p. 25.
  6. ↑ "Marvel Focuses On Direct Sales," The Comics Journal #59 (October 1980), pp. 11-12.
  7. ↑ "The Direct Sales Boom," The Comics Journal #64 (July 1981), p. 7.
  8. ↑ Miller, John Jackson. "Nov. 17, 1992: A $30 Million Day — and the Days After," "The 1900s: 10 biggest events from 100 years in comics," CBGXtra.com (Dec. 12, 2005).
  9. ↑ "Newswatch: Capital Announces Controversial Penalty Fees for Publishers: Move Follows Industry-wide Push for 30-day Returnability," The Comics Journal #166 (February 1994), pp. 17–26.
  10. ↑ Gray, Bob. "Newswatch: Marvel Buys 3rd Largest Distributor: Heroes World Purchase Signals Fundamental Changes in the Direct Market," The Comics Journal #174 (February 1995), p. 15-22.
  11. ↑ Gertler, Nat. "Marvel Buys Heroes World," Hogan's Alley, v. 1, no. 2 (1995), p. 17.
  12. ↑ "Newswatch: Tip 11: Go Exclusive with Diamond" The Comics Journal #185 (Mar. 1996), p. 27.
  13. ↑ "Diamond Comic Distributors acquires Capital City Distribution; Comic distribution industry stabilized by purchase," bNet: Business Wire (July 26, 1996).
  14. ↑ "Tokyopop Signs Alliance with HarperCollins: For Co-Publishing and Distribution," ICv2 (Mar. 28, 2006.
  15. ↑ "W.W. Norton To Distribute Fantagraphics: Another Change in Comics Bookstore Distribution," ICv2 ( May 14, 2001).
  16. ↑ "Diamond Moves into Bookstore Distribution: Marvel Switches from LPC," (Apr. 25, 2001).
  17. ↑ At least two other direct distribution companies existed, in addition to than those listed below: one in Georgia, and one in New York following the demise of East Coast Seagate Distribution.
  18. ↑ Bruce & Sherill Ayers interview, David Anthony Kraft's Comics Interview #35 (1986) (8 p.)
  19. ↑ Rozanski, Chuck. "Returning to the Topic of My 1979 Visit to the Marvel Offices," Tales From the Database, MileHighComics.com (March 2004).
  20. ↑ "Bud Plant Sells Out to Diamond," The Comics Journal #124 (August 1988), p. 9-10.
  21. ↑ Duin, Steve and Richardson, Mike (ed.s) "Bud Plant" in Comics Between the Panels (Dark Horse Publishing, 1998) ISBN 1-56971-344-8, p. 356-357
  22. ↑ Gray, Bob. "Newswatch: Marvel vs. Comics Unlimited : Marvel Cuts Off Distributor, Forcing Sale to Diamond," The Comics Journal # 171 (Sept. 1994), pp. 23-30.
  23. 1 2 "Diamond Timeline Chronicles 30 Years of Service & Success," Diamond Comic Distributors, Inc. official website. Accessed Feb. 10, 2015.
  24. ↑ "Retail Chain Doubles Size with Acquisition," The Comics Journal #180 (Sept. 1995), p. 29.
  25. ↑ "Newswatch: Independent Meets Its Destiny," The Comics Journal #139 (December 1990), pp. 12-13.
  26. ↑ "Newswatch: Friendly Frank's Consolidates and Expands," The Comics Journal #167 (Apr. 1994), p. 30.
  27. ↑ "Newswatch: Capital City Acquires Friendly Frank's," The Comics Journal #178 (July 1995), pp. 13-15.
  28. ↑ "Newswatch: Glenwood Distributors Sold," The Comics Journal #108 (May 1986), p.21.
  29. ↑ "Newswatch: Glenwood in financial crunch," The Comics Journal #115 (April 1987), p. 23.
  30. ↑ "Newswatch: Four Publishers Sue Glenwood For Non-Payment," The Comics Journal #116 (July 1987), pp. 17-18.
  31. ↑ "Newswatch: Glenwood Distributors Declares Bankruptcy," The Comics Journal #117 (September 1987), p. 12.
  32. ↑ Carlson, Johanna Draper. "Cold Cut Becomes Haven Distributors," Comics Worth Reading (Mar. 16, 2008).Retrieved Sept. 8, 2008. Archived September 30, 2008, at the Wayback Machine.
  33. ↑ Stahlberg, Lance. Haven website. Accessed December 17th, 2011.
  34. ↑ "Newswatch: Texas Distributor calls it quits," The Comics Journal #99 (June 1985), pp. 17-18.
  35. ↑ "Direct Distribution," in Duin, Steve and Richardson, Mike (ed.s), Comics Between the Panels (Dark Horse Publishing, 1998), pp. 126-130.
  36. ↑ "Newswatch: NM in Trouble, to File for Chapter 11," The Comics Journal #70 (January 1982], p. 16.
  37. ↑ Bethke, Marilyn. "New Media's Publishing Empire," The Comics Journal #76 (October 1982), pp. 154-161.
  38. ↑ "Newswatch: New Media Distribution out of Business," The Comics Journal #72 (May 1982), p. 16.
  39. ↑ "Newswatch: Pioneering direct-sales distributor Sea Gate files for bankruptcy," The Comics Journal #101 (August 1985), pp. 17-18.
  40. ↑ "Second Genesis Delaying Its Exodus," The Comics Journal #140 (February 1991), p. 13.
  41. ↑ "Sunrise Creditors Meet," The Comics Journal #122 (June 1988), p. 22.
  42. ↑ "Newswatch: Second Genesis Absorbs Comex," The Comics Journal #128 (April 1988), p. 15.
  43. ↑ "NewsWatch: Diamond Acquires Titan Distributors," The Comics Journal #154 (Nov. 1992), p. 14.

References

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