As was reported earlier this week, Marvel has decided to end its relationship with Diamond Book Distributors (DBD) in favor of a new relationship with Hachette Book Group. Effective September 1, 2010, Hachette will be responsible for sale and distribution of Marvel’s collected editions into the book market. In the last few days it seems there has been some confusion about what this announcement means for Marvel, the comics industry, retailers and most importantly, readers. Hopefully I can shed some light on the subject to those who still care (after all, it’s been 72 hours…long enough for another dozen or so news cycles).
The Myth of the “Amazon Glitch”
Many have posited that the now infamous “Amazon Glitch” — which led to massively discounted mispricing on innumerable collected editions — was the impetus for Marvel’s decision to leave DBD in favor of Hachette. I’m not going to suggest that the VERY expensive error on the part of a Diamond employee wasn’t a factor, but it’s important to realize that it was just the cherry on top of an inevitable move by Marvel. The pricing gaffe may have accelerated the decision, but it wasn’t the match that lit the fuse.
Marvel Losing the Book Market Battle
As comic book fans, we can sometimes be myopic. We like to think that the end all, be all for comic book publishers is the sale of single issues and trade paperbacks to consumers of the direct market. But in an honest moment, we know that’s far from the reality. The direct market is, and will remain, a vital cog in the machine, but the publishers, particularly Marvel and DC, generate more money from licensing, toys, and media than they do from their publishing arms. And within the publishing businesses, sales OUTSIDE of the direct market are an ever-increasing portion of the total pie.
Within the direct market, Marvel holds a sizeable lead over DC Comics (which combine for nearly 80% of the market). Marvel’s monthly market share (in units and dollars) regularly hovers between 40% and 50% of all comics and trade paperbacks sold. That’s dominance.
Recent Publisher Market Shares by Diamond to Comic Shops in North America
Source: John Jackson Miller, Comic Chronicles (www.comichron.com)
But outside the direct market, it’s a decidedly different story. According to the data provided by BookScan (by way of Brian Hibbs, whose annual analysis of this data was instrumental in my ability to pen this column), Marvel accounts for barely more than 10% of comic related sales into book stores.
2009 UNITS (BookScan Sales of Comics and Manga)
- Total Units = 14.095 million
- Total Marvel = 0.954 million (6.8% of total units)
- Total DC = 1.902 million (13.5% of total units)
2009 DOLLARS (BookScan Sales of Comics and Manga)
- Total Sales = $189.0 million
- Total Marvel = $19.6 million (10.4% of total sales)
- Total DC = $37.8 million (20% of total sales)
It’s bad enough that Marvel holds only 10% of the book market in spite of being the dominant brand in traditional comic stores, but the salt in the wound is undoubtedly DC’s superior share and faster growth. Marvel’s sales over the last three years, according to BookScan (via Hibbs), have remained steady:
- 2007 — $19.9 million
- 2008 — $20.1 million
- 2009 — $19.6 million
Over that same three year span, DC’s sales into the BookScan market have skyrocketed:
- 2007 — $22.0 million
- 2008 — $33.6 million
- 2009 — $37.8 million
Now let’s not pretend that DC hasn’t benefitted tremendously from the otherworldly sales of Watchmen over the last few years. Watchmen’s sales, by themselves, skew the data. That said, it can’t go unnoticed that DC’s success in the book market coincides with the timing of its distribution agreement with Random House.
Selling into the book market is an entirely different beast than acting as a monopolistic distributor in the direct market. Diamond has to compete against distribution arms of massive global publishing houses including Random House, HarperCollins, and Hachette. That’s no small feat, and it requires scale, dedicated resources, and unyielding competitiveness.
Rumors of Diamond’s Death GREATLY Exaggerated
I’m not going to get on my soap box and suggest that fans are misguided in their criticism of Diamond and its role in the direct market. But I do cringe a bit at the incessant hatred thrown at the distributor who, in many ways, serves at the behest of Marvel and DC. A great many of the things fans (and store owners and indie creators) loathe about the direct market can really be traced back to decisions made by the big publishers. Diamond is arguably the sword Marvel and DC wield to maintain their direct market duopoly. But that’s a discussion for another time (mental note…file this away for a week where I can’t come up with anything timely to write about).
Here’s what you need to know about Diamond and its future:
- This announcement has NOTHING to do with Diamond’s stranglehold on the direct market – In fact, Marvel has extended its relationship with Diamond in the direct market (probably as a way of appeasing the loss of the book store business). What that means is, barring an aggressive and unexpected change of tune from DC Entertainment, the status quo remains intact (sorry to be the bearer of ill tidings).
- Financially, this hurts Diamond, but only at the margin – Diamond is a privately-held company and owner Steve Geppi keeps the company’s financial details well guarded. Although it’s impossible to say with certainty what impact this has to Diamond, we can frame the magnitude of the loss against the rest of its business.
Combining the data we have from BookScan with the data Diamond provides on the direct market, we know that:
- 2009 Sales of the top 300 comics and Top TPBs into the DM = $335.5 million
- 2009 Sales of Marvel (distributed by Diamond) into BookScan = $19.6 million
Marvel sales into the book market accounted for just over 5% of those combined numbers. A big hit for Diamond? Sure. But insurmountable? Not at all. Remember, Diamond remains the distributor for a few dozen other publishers into book stores, including Dark Horse, Image and IDW. I haven’t been able to track down the total sales Diamond had into BookScan last year, but I know that it sold at least $8.5 million of other books based on the data available. And given the long tail of the book store sales, you could safely add a few million more to that. Net-net, Diamond is looking at the loss of 5% or LESS of its gross sales revenue.
Add to that the following considerations:
- Diamond Book Distributors can and will cut costs and overhead to account for the loss of Marvel.
- I would be shocked if the margins Diamond gets in the book market weren’t much lower than what it gets in the direct market.
- Diamond won’t have to deal with the disruptive nature of returns (remember, the book market is returnable, the direct comics market is not).
OK, Enough Diamond Talk…WHAT DOES THIS MEAN FOR READERS!?!?!
Comic Book Store Impact — If you buy your comics and collected editions from the direct market, nothing is going to change, at least in the near-term. Diamond will still be responsible for getting comics and trades to your store owners each and every week. There is the slight chance that your store may be progressive enough to order some of its collected edition inventory from Hachette going forward, but that will largely be a function of fulfillment and wholesale cost. Store owners will have to take some time and see what Hachette’s approach will be to small accounts, and we won’t have a window into that until late 2010 at the earliest.
Book Store/Amazon Impact – Hachette is a powerful global company in its own right, and won’t be as beholden to bending to Marvel’s whims for the sake of it. Think of this new arrangement as a true partnership. What that means is that Hachette will have a say in what titles get pushed to book stores, when they’re pushed, and why. Hachette will leverage its experienced relationships to better frame the book market buying patterns. Hachette’s job is to figure out for Marvel why DC is more successful in that channel, and then come up with a plan to close the gap. There WILL be changes; we just can’t define them just yet. Could this mean fewer titles in print? Possibly. Could this mean different trade dresses? Yes. Might this mean a different release schedule? One would think. All bets are off; because Marvel wisely understands that it doesn’t have the book store market figured out, yet.
Convention/Discount Buying – A few iFanboy readers have asked me whether this will change the way Marvel trades are handled at conventions and at online vendors who routinely sell Marvel books at huge discounts. I’m merely hazarding a guess here and going to say that, over time, this WILL impact the volume of deeply discounted Marvel merchandise. If you have ever gone to a convention, or availed yourself of a sale online, you’ve probably noticed that there are a lot more Marvel books available than DC titles. The reason for that is two-fold. One, Marvel prints more of its new material shortly after the single issues hit the stands. Two, overstock is made available at deep discounts to vendors willing to take on inventory due to the non-returnable nature of Diamond’s distribution agreements. With Hachette in place, I suspect we’ll see the end of the days of massive $5 hardcover sales littered with Marvel overstock. I hope I’m wrong, but time will tell.
Jason is a mutant with the ability to squeeze 36 hours into every 24-hour day, which is why he was able to convince his wife he had time to join the iFanboy team on top of running his business, raising his three sons, and most importantly, co-hosting the 11 O'Clock Comics podcast with his buddies Vince B, Chris Neseman and David Price. If you are one of the twelve people on Earth who want to read about comics, the stock market and football in rapid fire succession, you can follow him on Twitter.
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Great piece, Jason! Wowzers!
Hm, that’s very interesting. I don’t usually read articles with this much depth and investigation here. That’s new. Entertaining read.
All I know is, I hope I still get comics cheap as possible! I do that with Amazon, subscriptions, and Marvel Digital. I’m glad Marvel is working to get superior distribution in book stores. Cool.
Lot of stuff to think about here. Interesting how Marvel sells less in book stores than DC. Hopefully this will close that gap.
And about the book store numbers vs. direct market numbers: That totally matters in the discussion of sales. And that NEVER gets talked about on any other site. NEVER. I don’t understand why I’ve not read another article on other comics websites discussing bookstores sales numbers vs. direct market numbers. So thanks for that. It should always be included in the discussion.
Thanks Jason! Great article.
Great piece, Jason. I think you covered ALL the bases in complete detail. The one aspect I hadn’t yet considered was the idea of the discounted overstock that pops up at conventions. It totally makes sense now that I think about it.
All told, it sounds like a shrewd move for Marvel, realizing that they don’t have the bookstore market figured out, and bringing in some experts to handle it.
Awesome article Jason. Thanks for demystifying some of that stuff.
Your best guess: does this mean new printings of out of print omnibuses, hardcovers etc?
Great article. I can’t understand why Marvel doesn’t do as well as DC. They get trades out there much faster and in a more complete way. Maybe people in book stores are intimidated by all the volumes and numbers and decide to just forgo what they see as a huge time investment.
That would be pretty funny considering how much most people who regularly read comics loath DC’s trade program.
The first thing that hit me when I read about the Marvel/Hachett deal, is why it didn’t happen sooner – as in years ago. Perhaps the sale to Disney had something to finally push Marvel to do something different (or even drastic). Another consideration is the financial problems of Steve Geppi, himself. Yes, Diamond is separate from Gemstone Publishing and as you state Jason, Geppi, keeps his financials close to the vest, but one cannot help but wonder if reputation has something to do with it. Maybe he should share a little and state that Diamond is a viable avenue for Book Market Distribution. But that seems a little too late now.
As for the Amazon Glitch, I hope that wasn’t a reason to expedite the move. Mistakes happen – even big ones like that. If it is the case, then that’s business, I guess.
I’m glad you brought up Watchmen. Take away that and what do you have? Well, Vertigo. It’s a shame that Marvel has no real counterpart to what Karen Berger has honed throughout the years. The Vertigo imprint is a force to reckon with. Marvel has a lot of catching up to do if they want to play ball with say, their Icon line. In fact, let’s take a quick look at that now:
The Top 2 selling books to the DIRECT Market in February were:
(1, Vertigo) Fables Volume 13: The Great Fables Crossover TPB, $17.99 with an estimated 11,892 units sold and (2, Icon) Kick-Ass Premiere Hardcover $24.99 with an estimated 9,143 units sold.
Sure price plays a significant role and their is already an established audience for Fables, but you would have to guess, given the history of Fables in the Top 300 that this volume of Fables will have a longer shelf life then the Kick-Ass book, whether it’s in trade or hardcover. This is where it gets tricky for a publisher – short term gain with Kick-Ass (with help from the movie) or longer shelf life with Fables?
What Marvel (and/or Icon or whomever) needs to do is try something new that will captivate and sustain and audience for the Book Market. Don’t say it can’t be done – just look at Walking Dead over at Image.
I presume that one of the major reasons DC outsells Marvel in bookstores is their CMX manga line. I get the impression that manga is almost completely ignored in the direct market, but Border’s or Barnes & Noble has an entire ghetto of manga in stock. Marvel has failed to compete in that department. I wonder what the numbers would look like if you discounted CMX Manga…
Spoons, I think the major reason that Marvel trades don’t sell as well as DC in bookstores is the Random House deal that Jason mentioned. DC has the sales reps speaking with bookstore inventory buyers to push the books and recommend titles, and since bookstores can return titles purchased from Random House (or Hachette, for that matter) they can carry more inventory without as much risk as from a direct market seller like Diamond.
Oatf the many things I appreciate about this artice, multicolred highlights are among the most apprciated. Godamnned brilliant.
Slick article!
That explained a lot, thanks for the info.
@Chris – Since then, Kick-Ass has sold over 100,000 Hardcovers in the direct market. Yep, I’m that popular. It has a greater life than Fables and such, for sure.
Excellent piece.
@KickAss It wasn’t in the direct market.
With ActualButt’s comment about the CMX Manga line, it did make me think: even if we assume that DC did better because of Random House, it’s probably also worth noting that DC has a lot more diverse content when you consider not just the super-heroes but also stuff like Vertigo.
I wonder if Vertigo-type titles just play better in bookstores? Several years ago, Marvel came forward positioning themselves very clearly as a channel for super-hero properties. And that seems like a fair concept — focus on what you’re known for and what you’re best at. But even with Hachette in place, I wonder if we’ll see that super-heroes themselves have difficulty in the bookstores.
Of course, super-heroes are having no trouble in movie theaters, but since the books are derived from all the content flooding the direct market, it could still be overwhelming to book buyers. I mean, when there’s a Spider-man movie, it’s very clear where to go for your Spidey fix. If you were to go into a bookstore — even a well-organized one — you’ve still got hundreds of snippets of serialized adventure from dozens of versions of the character. But, on the other hand, if you are interested in Fables or Bleach or The Walking Dead — you can pretty easily find Volume 1 and start there.
Maybe that goes along with Jason’s comment about different trade dress and different choices for the marketplace? Maybe Marvel’s got to be more selective about product and more selective about organization it and labeling it. But I also wonder if it will affect Marvel’s content choices going forward.
I think the article touched on this, but I’ll throw it out to be sure: when people complain that DC doesn’t put out enough trades or fast enough, is that solely from advice from Random House, solely an in-house decision, or a combination of the two?
daccampo – That’s my thought as well. Usually when I go to a book store, I look to try out something new, and books like Y: The Last Man, Ex Machina, Buffy, etc. are less formidable to jump into. When I know that I can get the entire story in 10 volumes, I’ll pick that over Spider-Man (or Batman or Superman for that matter) anytime.
Beautiful. I love data. I enjoyed the article.
I wonder how much of the difference between DC and Marvel’s retail sales is driven by Vertigo sales? I would think the buying habits of the average Vertigo buyer would be dramatically different from the average mainstream DC or Marvel buyer (more trades, fewer single issues). If the difference isn’t driven by Vertigo sales, then that says some interesting things about the demographics and behavior of DC and Marvel customers and their respective business practices.
Thank you for gathering and summarizing this data in such an interesting fashion. Keep up the good work.
(You might want to use a lighter background on the graph in the future. Some of it is hard for these old eyes to decipher.)
Of course @daccampo would beat me to the Vertigo issue while I was typing. That will teach me to refresh before submitting.
@daccampo – I’d love to see this data presented with Vertigo (and the other specialty labels) broken out, but I doubt it’s easily available.
Charts and Graphs! Great article Wood, lots to think about.
great piece. wood is clearly a nice addition to iFanboy.
Jason, I love your perspective in the comics market. Thanks so much for taking the time to put this all together for us.
Jason, this was terrific. Thank you. I love when you drop the science in 11 O’Clock Comics. I’m glad your reach has extended to iFanboy and you have a chance to really spread your legs here.
Nice work Jason.
I enjoyed the piece.