Article 10: Zero FM

As another direct market distributor closes its doors, Paul O'Brien asks whether the future of comics distribution looks brighter than you might at first think.
13 March 2006

Well, so much for FM International. The beleaguered distributor stopped issuing new catalogues last December but kept up a rather implausible ?business as usual? stance for several months after, on the basis that they were still filling back orders. But now things finally seem to be at an end. The website is down. The phone is disconnected.

Minor distributors have gone under many times before, of course. It's never good news for the publishers involved, since if the distributor has gone bust, any money they've collected won't be coming soon, and quite probably won't be coming at all. Mind you, at least this time around we haven't seen any indie publishers reduced to making public appeals. Perhaps the slow run-out has helped matters. Or perhaps it's just that nobody was that heavily committed to FM International by this point.

It's tempting to make some comment about how this leaves Diamond with total control of the direct market, but really, that would miss the point. Diamond already had total control. Thanks to their exclusive deals with all the major publishers, it's been years since they've had any serious competition within the direct market.

This situation is far from ideal, unless of course you happen to be Diamond. As everyone knows, monopolies are bad news all round. With no competition, the monopolist no longer has an incentive to keep prices low, to maintain quality of service, or to offer a decent range of products. They can just sit there and do what they feel like. Of course, this is the basic problem with unregulated competition: if you're not careful, somebody could actually win.

In the direct market, at least, Diamond's position seems unassailable. They've comprehensively defeated their competitors, and there's no risk of anybody new coming along. With all the big publishers signed up already, there's simply not enough business out there to allow anyone to offer a substantial challenge. And after the Heroes World fiasco, the publishers will think long and hard before trying self-distribution again.

Of course, to be fair to Diamond, they haven't really exploited their position as much as they could have. They've been complacent, perhaps, but not abusive. They continue to carry a lot of very low-selling titles. Even their recent introduction of minimum sales thresholds only had the effect of excluding micro-selling comics which can't have been profitable for anyone concerned, let alone Diamond. It's hard to criticise them too harshly for that. They're not a charity, after all.

How much control does Diamond really have, though? As so often in comics, it depends on your perspective. If you're looking at the world from within the direct market bubble then sure, they've got complete control of everything. But the direct market is not the be all and end all of comics. Publishers still have alternatives to Diamond. Indeed, if anything, one of the big trends in comics over the last few decades has been the attempt to get out of the direct market and expand into completely different channels.

Admittedly, newsstand distribution has problems of its own. Frankly, those retailers just don't seem to have much interest in comics, no doubt because there are so many other things they could devote the shelf space to. Attempts to re-open the newsstands as a major distribution route have met with mixed success, and I suspect it's going to take a drastic format shift before comics become an economically attractive option for those retailers.

But the bookstore market still looks rather healthy. Granted, it's looking even healthier for the manga publishers than it is for the direct market players. Nonetheless, the bookstores are a thoroughly viable alternative for any publisher with a decent trade paperback selection ? which, in this day and age, is pretty much all of them. Diamond have a presence in the bookstore market and already handle distribution for several publishers, but they're never going to establish any kind of monopoly position in the bookstores.

There's also the relatively unexplored possibility of online sales, cutting out the distributors (and the stores) altogether. Most of the major publishers have yet to try online sales seriously. CrossGen gave it a go, and admittedly, it didn't really work out for them. Nonetheless, it has the feel of an idea whose time will come. Comic book piracy is growing in profile, and for companies with an extensive back catalogue, there's obvious attraction to running some kind of subscription service. Diamond can no doubt take comfort in the knowledge that reading comics on a computer screen is a bit of a chore, not least because they're generally designed for the printed page and the dimensions simply don't add up. But a lot of people are evidently willing to put up with it for the sake of free stories, and no doubt they'd be prepared to put up with it for low-priced stories as well.

It's a mistake, then, to think that Diamond have no competition. Their competition is the other forms of distribution, and in particular the bookstores where a vast chunk of the comic book market already exists outside their control. True enough, no major publisher is likely to abandon Diamond altogether ? the direct market is too important to their revenue in the medium term. Marvel and DC are still building their presence in the bookstores and can't afford to put all their eggs in that basket. If the direct market disappeared then a lot of fans would simply stop buying comics or cut back dramatically on their purchases, since they wouldn't have the same sense of habit when it came to buying trade paperbacks. To that extent, Diamond still hold an awful lot of power.

But in the longer term there are escape routes, and publishers have the option of developing their business in other directions that take them out of the reach of Diamond's control. Diamond's monopoly only means anything so long as publishers remain committed to the direct market. And that isn't necessarily their priority. That provides Diamond's incentive to deliver a good service.

Of course, this isn't much consolation for the retailers, who don't have any meaningful choice unless they fancy a drastic change in their line of business. They truly are stuck with Diamond. But Diamond need the stores (as a whole) just as much as the stores need them, and it's ultimately not in their interests to undermine the stores. That puts some limits on their behaviour, at least.

Diamond only have a monopoly if you're talking about the direct market. Yet in 2006, we're not just talking about the direct market any more. After all, it's a pretty shoddy comics monopoly that doesn't control manga.

Paul O'Brien is the author of the weekly X-AXIS comics review.

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