Written By: Dave Baxter

PART 1 - EVERYONE PASSES "GO": THE BREAKING OF A MONOPOLY

"THE HIBERNATION PERIOD IS OVER, IT'S TIME TO MAKE SOME SOUP. The bear has awakened, and it needs to be killed. Not later, now. Or some comics creators or going to die."

KILLING THE GRIZZLY was going to focus on a far different topic for its third installment--a fair number of different t'ings, actually--but between KtG #2 and now, something rather big happened, and as it now stands as the (one and only) talk of the town, especially whenever "the changing landscape of comic publishing" is brought up, by necessity it must then become the core of this latest one-sided conversation between you and me.

Diamond has raised the minimum bar on preorders for comics. For those of you not in the know, here's the skinny: Diamond Distributors has been the sole source of mainstream Marvel, DC, Image, and Darkhorse distribution since the early 90's, as well as for all major small publishers and the few lucky independents that wedge their way inside the hallowed halls of Diamond's Previews catalogue. It is the one and only retailer resource for ordering comics across a national system and in any quantity that truly matters to creators.

Diamond is and has been for some time, a monopoly. They are, by-and-large, the stranglehold on the industry in much the same way that megaliths Borders and Barnes & Noble alongside the practice of "returns" are the stranglehold squeezing the life's blood out of the book publishing industry. Everyone involved is aware of the limitations such monopolies enforce on either side of the commercial print world, but little has ever been done to change the reality, or challenge it, even as the world of publishing has suffered a slow, suffering decline in recent years.

So when Diamond announced a hefty raise on the minimum order allowed for all comics carried in their catalogue, this meant that any book Diamond ships to retailers must achieve a guaranteed revenue via pre-orders...or else they'll be dropped. Not immediately, per se, but eventually, should sales not increase, a book will find itself without retail distribution, or at least without distribution through the sole retailer that has ever carried any sincere weight within the American comic book market model for the past fifteen years.

The old minimum was $1500 in net profit of a given title; the new minimum is $2500, which requires an approximately $6000 in gross sales, and you might recall from the Publisher's Weekly chart given in KILLING THE GRIZZLY #2, that very few small press books meet this requirement, including those put out by Image, and virtually no independents (especially when beginning with an unknown issue #1) have ever succeeded by such margins.

What are the margins we're speaking of, exactly? Following research done by John Jackson Miller over at THE COMICHRON, the following cover prices would have to reach these numbers per issue today to meet the new Diamond minimum:

For Floppies or Prestige Formats:

$2.99: 2,090 copies

$3.50: 1,785 copies

$3.99: 1,566 copies

$4.99: 1,252 copies

$5.99: 1,043 copies

$6.99: 894 copies

$7.99: 782 copies

For Graphic Novels:

$12.99: 481 copies

$13.99: 446 copies

$14.99: 416 copies

$15.99: 390 copies

$16.99: 367 copies

$17.99: 347 copies

$18.99: 329 copies

$19.99: 312 copies

Now the question is: what are comic book singles and GN's selling on a regular basis? Is this new minimum as prohibitive as most fear?

Time for numbers, wonderful numbers!

Mr. Miller studied Diamond's Top 300 chart, which revealed the copies sold per month for their best-selling titles, and noticed that, initially, the outcome appeared overwhelmingly positive: Slot #300 for November 2008 sold 2,779 copies, a good 700+ copies over what most single issues require to meet the new minimum. However, when Miller glanced to the #300 slot for the end of 2007, he noted the copies sold of that book were only 2,069--right on the cusp. Then, looking even further back, Miller discovered these numbers for the #300 slot for the last month of the following years:

2006: 1,796 copies

2005: 1,427 copies

2004: 1,238 copies

2003: 1,403 copies

2002: 1,050 copies

2001: 1,017 copies

2000: 1,758 copies

Common sense will tell us two things about these numbers: 1) The biggest indie and small press hits of the past 10 years would all have failed under the new minimum requirement, hits such as Scott Pilgrim, Bone, Cerebus, and Strangers in Paradise. However, we should also note that: 2) The final, #300 slot is selling more than enough, today, regardless. Which means that point #1, if translated into today's market climate, is moot.

Or so it seems. But there's something more, and it's a whopper.

This is the hidden depth: we know we're in a recession, and that sales are droopy dog-eyed down all throughout the comic book industry, with retailer shops closing their doors and small press publishers closing up shop each and every day. How can this be if the #300 sales have nearly doubled? Strange, eh?

Let's look at two additional charts for the answer. Read THIS BAD BOY to see the number of Marvel, DC, Image, Dark Horse, and IDW comics that made it into the Top 300 for every month since 1996 to the present. Then go HERE to see which specific title was in the 300th position of every month for the same time period.

From those two lists we see that the number of Marvel and DC books taking up space in the Top 300 rose from filling up 134 slots total to 214 slots total, with both companies maintaining an average of 180-200 total slots per month since 2006. From 1996-2005, the average was 120-140, both companies combined--which marks a 50% increase from then to today in terms of mainstream saturation. Then take into account the "major small press" (which could equally, fairly be called the "small mainstream press") such as Image and Dark Horse, whose total slots taken in the top 300 has actually decreased since 1996. Especially considering Image, whose number of published books has expanded dramatically in recent years, putting out what would otherwise be creator-owned self-published comics only now under the Image banner, this is troubling. Dark Horse as well has kept a steady stable of licensed books, manga, and original series, yet even they have shrunken ever-so-slightly from the ranks of the Diamond Top 300.

Now, keeping all that last info in mind, let's look at the titles that made the very bottom of the chart, the cut-off #300 position. We see that in 1999 and 2000, only once was the position held by any of the major companies, in this case a DC book (Batman/Batgirl). In 2001, an Image title made the slot for one month, and a Dark Horse book on another month. Beyond that? All the #300 slots were true-blue small press or independent books from the back-end of Diamond's Previews order catalogue. Now, looking at 2006-2008, a whopping 20 times the position was held by Marvel, DC, Dark Horse, or Image (that's 20 out of 36, or a little over half - 9 times for Image, 4 times for Dark Horse, 3 for DC, 4 times for Marvel). From 3 out of 36 slots filled by the biggest of the big leagues, to 20 out of 36. An approximately 566% increase!!!

"The 300th spot in 2000"

All of which means, as Miller so deftly puts it: "Part of the reason the sales numbers have increased at the 'bottom' of the list is that the bottom is now closer to the middle." Meaning that the Big Four (to append the usual "Big Two" label), though they haven't saturated the market en toto, have undeniably shoved the smaller of the small press further and further back behind the profitable trenches. Where once the bottom half of the Top 300 allowed for a fine mix of independent and small press publishers to gain a solid readership, the money left over to retailers after the full run of current-day Marvels, DC's, Image, and Dark Horse books, is slim to none. Where once the 300th slot sold only 1,000 copies, it was 1,000 copies of a relatively minor non-mainstream title, and a number that today's equivalently small-sized press or indie creator can only dream of achieving. Today's 300th slot sells twice as much, but it's twice as mainstream, if not outright an underperforming Marvel or DC mag or a book under a major small publisher's banner.

"The 300th spot in 2008"

So the plain-face realization that comes from this: the small press and independent market is struggling to make it, even into the Top 300. Three hundred!!! And not far beyond the 300, lies the new Diamond cut-off territory. That is, beyond the biggest of the small press, an end to the accessibility of a distribution system the small press has relied upon since the 90's.

Many have been shattered by this news, many stand indifferent, many are secretly thrilled, and not for the childish reasons one might assume. I myself stand as one of those electrified by the Diamond announcement. In fact, when I first heard the news, a wee shudder trickled down the ol' spinal column, because I thought: Diamond just single-handedly broke their own monopoly.

It's over. Life goes on, as does Diamond, but the era of having Diamond as the only source of respectable, acceptable distribution has officially ended. Even comic readers, for all our faults as passive non-supporters for the non-standard non-mainstream, have never been so homogeneous that they'll allow, wholesale, for a world of mainstream and only mainstream, with zero alternatives. But now, all alternatives will look elsewhere by necessity. Some will strive for a system similar to Diamond's, such as Dan Vado's soon-to-be-offered online direct retailer distribution site for Slave Labor Graphics and others (who he plans to invite to join him), and some will look to the small press friendly but mirror-image to Diamond, Haven Distributors, and while both of these, as well as Diamond, will continue to play important and integral roles in the comic book industry's near-future, these will emphatically not be the end of the shattering and the changing.

Much as Diamond came to power due to the failing of other would-be distributors, so too will the floodgates now open, Diamond having shown signs of its own failings. Is this truly the death of the small press, as some have claimed? Or at least the beginning? What can Diamond be thinking to do such an outlandish thing as this? Long has Diamond been held to be the "evil" monopoly, and while it may be an all-powerful seemingly unstoppable source of comic book distribution, it's far from accurate to claim anything else. According to a Diamond representative, who broke down Diamond's reasoning and need to raise the minimum by such an industry-changing high:

"We looked at the last two years of sales data, and we felt that was a reasonable amount of money to have gross profit against. A $2500 purchase order at Diamond's cost of 60% off is about $6200 retail value. That would give us gross profit at Diamond on a blended average discount to retailers of 44% off retail of about $950, and a contribution to fixed costs, overhead, and profit of $200 or $300 after all the different departments and operations handle it. At $2500, Diamond's not getting rich.

On a typical product, there's a huge number of departments that are involved. There's the catalogue department, proofreaders, editors, designers; we have to pay for the catalogue space at the printer; when the order comes in there's order entry; then the product comes to us and it has to be received at four distribution centers; we have to put it on the pick line for packing; we've got to pay for the box to put it in; we have to process the invoice through accounts payable. Often there can be problems with the shipment, such as overages, shortages, or damages. It's a huge number of departments that are involved, and we've got to make sure those people are paid and we can service the market properly. So the product life cycle is very intense, and that's often misunderstood by the small press, or even by retailers or consumers. At $1500 we were losing money on every purchase order, and that's just not healthy."

So the increase is on the up-and-up, but that isn't actually why I'm sharing this bit of news. I share to point out the reality that: this isn't the last raise we're going to see. Diamond will eventually loose money on orders of $2500. As retailers continue to loose money to rising costs, so too will Diamond, not just from rising costs, but from less money pouring in from retailers. The retail, brick-and-mortar storefront is already an untenable proposition due to commercial real estate costs (which haven't plunged alongside residential), and the simple costs associated with doing business via a costly physical network of services (publishing, printing, warehousing, distributor, vendor, the list is long).

ALL of which leads me to the biggest point of all: we are not witnessing the death of the small press, or the death of comics, or even the death of print. We are witnessing the death of physical distribution. And due to this, as a side-effect, we will lose our definition of publishing as we know it, and, more specifically, of publisher.

PART 2 - WHAT COMES NEXT: COPYLEFTING, PRIVATEERING, THE NEW PUBLISHER, AND IT'S A-OKAY TO ABSOLUTELY HATE DIGITAL COMICS

In KILLING THE GRIZZLY articles #1 ("A Bold New Era") and #2 ("The Long Tail and The True Fan"), we took an in-depth look at the state of the comic book industry and the reality of bringing a new product to a market suffering the ills of "The Long Tail". Conclusions drawn from these articles were more than sobering - they were electrifying. Because like the best of scientific theories whose mathematical equations ultimately demand that the universe has imploded centuries before said scientists were even around to stand and discover the implosion--something was emphatically up.

The dynamic between Creator and Audience doesn't seem to be suffering. In fact, the rapport between struggling artists and their readership is stronger--not to mention livelier--than, arguably, ever before. And yet the numbers, on a daily, monthly, quarterly, and especially annual basis, show a stymied market, unsupportable production costs, an impossible-to-achieve minimum momentum required to survive. And yet...we look around and see: comics more popular than ever, merchandizing and mainstream acceptance of even small press and indie books like never before. There is no lack of demand for comics-style storytelling, and, if there is a steadily decreasing demand for print products, there's a contrastingly soaring outcry toward print's digital equivalents.

And yet the plain fact of the matter, as so eloquently stated by Newsarama's Brandon Thomas (writer of the thus-far unfinished Miranda Mercury series from the now-stalled Archaia Studios Press) in his latest Ambidextrous article:

Besides making it clear once and for all that the comics industry is hardly "recession-proof," [the new Diamond order benchmark is] also a major blow to those still convinced that relying entirely on Diamond Distribution is a sustainable business model. 2009 will be a critical year for the entire business, because of the economy and the 800-pound elephant in the room with the sentence, "How is the digital age going to affect comics?" written on it. It now appears that we'll be forced to answer this a little sooner than expected and get used to the awful, inconvenient truth...the future of comics heading into the next decade is digital. This is whether some of us (including me) like it or not.

The title of the article that offered the above quote is: "I Hate Digital Comics", which cuts to the heart of the new-digital-era matter: everyone hates digital comics. Seriously. If someone tells you they don't, what they really mean is they aren't resisting digital comics, that they accept them, but they definitely do hate them, at least by comparison. They'd rather have print comics for the same price, easy accessibility, and offered in the same variety and ability to share without having to locate a convention or comic shop. But since they can't, and since even a professed digital comics "hater" as Mr. Thomas has kow-towed to: digital is what works. It's what's coming.

But why? If everyone hates digital, why is god's name would it be managing a foothold let alone a stranglehold on the print industry?

Practicality, plain and simple, and not just of business but of creativity as well. Movies did not replace the playhouse, not even after a century gone by, though cinema is far more popular. It can no longer be said that staging a lavish play is cheaper than filming a slick-ish fan film on video. And the fan film can additionally be distributed online, on DVD, and shown is theaters across the world (not likely, but it's possible) whereas a play would require the entire cast, crew, set, and more to be transported wherever the audience might potentially be. The plain vanilla reality is: it's more practical to craft a shoestring budget movie than a shoestring budget play. One hasn't entirely replaced the other, but only one is the feasible venue for the majority of creators. Especially if they plan on the performance ever being seen.

Digital is not more popular than print, not even to the younger generations, however the younger generations are far less satisfied with accepting product from a single and somewhat homogenized resource, and digital product is the only product that can worm its way through a wide enough array of distribution venues to find a larger audience than those who are part of so stratified an audience as "comic shop goers". Now that Diamond has flagged, and has by necessity shoved respectable publishers and books to find alternate distribution venues, so too will these venues find a greater respectability and acceptance. And these will be venues not gripped by a single monopolized intermediary.

Print will no more die or fade away than live performances have: their prominence and accessibility will decline, but perhaps an advantage will be found in increased prestige and audience rapport with such an increasingly specialized experience (there will be print readers, as there are concert goers and live theater lovers, for as long as the memory of such persists). Continuing the metaphor, no matter the hardcore concert purist, they will not drop so much as $50 for a ticket or vinyl recording until they've dropped a far cheaper $10 for a used CD or $0.99 for an mp3 track, to determine whether they care for an artist and their product. Very few are upset (removing illegal piracy from the equation) by the "recording/better recording/live performance" or "television/professional DVD/theatrical experience" hierarchy of purchasing and enjoying music or movies. This is, ultimately, all that is happening to comics. The "live performance" or "theatrical experience" of the comic (or any print media, really), being the print edition and/or live interaction between creators and fans at conventions, signings, and panels.

Or, to keep the metaphor confined to a single media format alone: print comics are motion pictures. Digital comics are television. Up until now, we've had to go to the "theater" to read our comics. Now, we get them broadcast into our homes, both new comics made just for the TV in-home format (TV shows, made-for-TV flicks) and then the occasional television premiere of a theatrically-released blockbuster (print comics posted online). Obviously, for those comics made for theatrical release (print), it's the theater that's the ideal venue to read them in, and yet it's the syndication on television that allows the movie to find a broader audience.

A direct simile that doubles as a real nifty bit of film history trivia: It's A Wonderful Life was a gargantuan theatrical bomb, losing its studio money and virtually ending the career of its star director, Frank Capra. However, there followed a combination of clerical error and then a lapsed copyright that was never renewed, and we all know what happed after that (because we've all been living it): television channels played the film, without fail, every single year, because it was free to do so. This led to the movie earning a dedicated following, eventually a mainstream colossal following, and now today it's one of Paramount Pictures biggest money makers.

The point: it's a-okay to absolutely hate digital comics. You're in good company, called the human race. In about twenty to thirty years, as those born INTO digital media come of age, this will no longer be the case, and much as Hollywood overcame Broadway (though again, it did not outright substitute it), digital will be beloved, through and through. But for now, the argument cannot truthfully be called "who likes digital and who doesn't?" Because no one likes it. Everyone, though, in a very short time, will support it. Because we want entertainment, and comics, and books, and we will not let them die. To support digital is to support the survival of art in the mainstream beyond the present. So yes, there's a lot of support for it. Thank bloody god.

But there is one final industry-altering side-effect to this transcendence of the digital: it's not just a matter of adopting a new way to access the product, it also means a new way of distributing the product, and this means a new way to approach said "new distribution". There is no single source of online circulation. There is, in fact, no "source" at all. Websites, blogs, social networking, promotions with other sites--absolutely anything that can be thought of and accomplished generally must be thought of and accomplished in order to reach the greatest potential audience for a digital online book. The more protected, copyrighted, and affiliated with another group the product is, the less flexibility and therefore ability it has to succeed. A "publisher" beyond the creator, in this environment, at least a pub that acts in any way shape or form as co-owner of the material as print publishers do, is often the kiss of death for a digital comic. Even worse, becoming a single part of a larger whole--such as joining a website community or e-comic marketplace, has so far proven the surest way to stay hidden from the vaster readership available, similar to the effect of having a book floating free, sans larger publisher, in the back part of Diamond's Previews.

Currently, small publishers allow only minimal freedom in the strategies employed to rope in new readers, stymieing the more proven methods of attaining maximum exposure. Which means, ultimately, that the creator needs to become the "publisher", or rather a "New Publisher", in order to control their products' own destiny. Thankfully, the costs involved in publishing digitally are nothing compared to the self-publishing costs involved in the print world. Print will play a vital role in the New Publisher's milieu, but Print on Demand and a catalogue of titles that focus solely on the creator's own books alone, allow for an overhead that an average individual can keep up with. For once, for in fact the first time in recent history, the marriage of digital and print and the necessary evolution of what is then considered "distribution", has placed publishing is in the hands of the writer, not as an alternative, but as the sole viable venue.

Certainly, there are and will be small publishers closer to the classic sense, groups like Chimaera Studios and perhaps SLG Publishing should their online retail distribution model succeed and reach beyond just brick-and-mortar comic shops. But such institutions will only continue into the farther future should they employ (or allow the employment of) the ultimate online distribution strategy: "Free".

There currently exist two major official licenses to protect a work while allowing it to find its audience online: the Creative Commons and the GNU General Public License. Both can allow for the strategy called "Copylefting", the digital era's response to the old-world's business practice of copyrighting. To Copyleft a work, is to allow others to freely share it, copy it, and reproduce it, so long as every reproduction is given the same Copyleft usage. No one may copyright a copylefted work, and therefore a creator can allow a work to find an otherwise (arguably) impossible to find audience without putting him or herself at risk of losing rights. This strategy was recently coined on the Whitechapel Freakangels forum as "Privateering". You allow others to spread the word, and the work. You give them free access to the work in the most unwanted format currently imaginable: digital. Or, should they prefer print, they'll be footing the bill and sweating to make it happen.

A Privateering crew to bolster your sole (and rather small) governmental HSS is necessary, and finding such a stalwart and rambunctious crew will prove exceedingly difficult without utilizing the market of "Free", via the CCL or GNU, even if only for a limited time. Illustrator and animator Nina Paley recently discovered the power inherent in the GNU and Copylefting when she crafted her original animated feature, Sita Sings the Blues, a feature length epic that combined the great Indian myth cycles as choreographed to the music of 1920's jazz classics. Here's a sample:

The film found a fervent fan in renowned film critic Roger Ebert, but its attempt to find a distributor was brought to a screeching halt when Paley was sent a legal letter informing here that all the music she used in the movie was in fact still copyrighted and so subject to massive copyright fees. Thankfully, Nina was able to place the film online under the GNU General Public License, as a "promotional copy", and thereby decriminalize it legally, but this still left the outstanding issue of having to pay the music copyright holders should she attempt to commercialize the work and earn a profit, which she needed to do in order to regain her initial budget to make the film. But instead of playing this fool's game, Paley continued to use the GNU license to allow others to show the film in theaters, copy the work, and freely distribute it non-commercially. How then will she make money?

From the mouth of the filmmaker herself:

The way artists always make money: donations, commissions, grants, patrons, speaking fees. Indie distributors can't pay anywhere near what it cost me to make the film ($80,000 + $50,000 to clear rights + $160,000 living expenses over the years I made the film + my TIME) but they do lock up the rights for 10+ years. In the Digital Age, distributors function primarily as a barrier between artists and audiences, prohibiting access rather than facilitating it.

I'm betting that you, audience, can find me more money - and certainly wider distribution - than a commercial distributor could. I get wonderful emails from people like you, people who offer to set up little fundraising screenings, who write good reviews, and do lots of things to help. Audiences are so eager to help distribute films! Old-school commercial distributors not only ignore the power of the audience, they actively fight it, calling it "piracy" and "theft" for example. And the audience comes up with much better ideas than I or a distributor could (I didn't think of doing fundraising screenings, you did).

And once I free the film, I won't have to do any more work on it! You, the audience, can take care of everything.

Here are some ways I imagine copylefting Sita could generate some income for me:

1.Direct donations (aka voluntary payments, aka "pay-what-you-wish")

2.Ancillary products: t-shirts, pins, toys, books, merchandise. Under a share-alike license these will be open-content as well, but there is little incentive for competitors to invest in producing such merch when it is already available (and much incentive if a certain product is not available, which is good). Any companies producing merch could use their sharing profits with me as part of their marketing; fans are much more interested in seeing their $$ go directly to the artist, than being all eaten up by some publisher or distributor.

3.Sponsorships. We expect the film to spread far and wide under a free license, and a sponsoring credit would be excellent publicity for anyone who cares to make it. Corporations sponsor shows on Public Television all the time for this reason (and under the free license, Sita can also be broadcast anywhere. At least one PBS station says they're committed to broadcasting it.).

4.DVD sales and auctions. Although the film may be downloaded and copied for free, some will prefer an "official" signed DVD from the artist. These could be sold directly by me in a limited edition (of 4,999), and/or auctioned online.

5.Voluntary payments from public screenings. We encourage the film to be shown in theaters, schools, etc. and anyone can set up a screening and charge admission. They may voluntarily send some of the revenue on to me. Most exhibitors already expect to pay something to distributors, and although this is completely voluntary, we expect many will be willing to do this.

6.Selling 35mm film prints to collectors, archives, museums, and (hopefully) distributors willing to try a non-exclusive service model instead of the existing licensing model. Prints cost about $2,500 to make; I could sell them for $5,000 each. This also outsources the expensive work of archiving.

7.Probably many more that we just haven't thought of yet!

Proof abounds that the tactic of Free and the Privateering method of word-of-mouth and copylefting product works: sales of print editions on Neal Gaiman's American Gods went up 40% during the single month the entire novel was offered online for free; Oni's North Wind #1 topped the charts after the entire issue was offered for free on Myspace; Radiohead's latest music album broke numerous sales records after a lengthy promotion allowing a full and free download of the entire album online--this is never the case for "previews", "sneak peeks", or free bonus extras, but only has this proven successful when the entire product is offered for free in its entirety, and yet STILL publishers and creators alike are reticent to so much as put a digital PDF up for cheap $1.00 download on the internet.

Well, less competition for me, I guess.

People want comics. They want entertainment. They want print. But no one wants to spend $5.00 for 22 pages of dialogue-lite story, or $10,000 to publish a single issue, or find it necessary to sell 2,700 copies of their wholly unknown first issue to make it so far as, oh, issue #2. No one wants to have to raise millions of dollars in limited theatrical releases and then pay rights owners. The more you protect your "rights", the less your work will be approached and absorbed into the new, encroaching digital culture. Even more important, creators want to make a living creating. Old Publishers will forever require a style of reader demand and payment structure that will rarely allow for this.

So today is the day of the New Publisher. And that New Publisher, my friends, is you.

NEXT: IS THERE A FUNCTIONING BUSINESS MODEL FOR THE DIGITAL COMIC?

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