Grotesque Anatomy
Friday, April 16, 2004
  Your "Why-The-Direct-Market-Sucks" Reading Of The Day
The latest installment of Brian Hibbs' "Tilting at Windmills" column in up at Newsarama.  He examines several recent topics of note:  CrossGen's ongoing, increasing woes; the move of Powers and Kabuki from Image to Marvel; and Tokyopop's recent exclusive distribution arrangement with Diamond.  It's the last topic that's the most interesting to me, as it provides concrete examples of how the Direct Market works.  One example in particular seems to shed some light on why indie books aren't well-represented in many comic shops:
For example, for books that are offered with a “H” code, your discount is the “Lower of 40% or Standard Discount”. Thus, if you were a “55% account” (like I am), you’d still only get 40% from Diamond on Drawn & Quarterly or TwoMorrows. Most publishers are evenly split between “E” (50%) and “”F” (45%)

Now the thing is, this only applies to orders submitted through Previews, otherwise Diamond assesses a 3% reorder fee. That means that every trade paperback I reorder, Diamond gets an extra 3% of the cover price, if you can believe that.

Interestingly enough, understanding what a huge drag this is upon growing the backlist, the brokered publishers actually eat this fee themselves. That is to say, they pay it (or a reasonable facsimile thereof) to Diamond rather than making the retailer pay for it.

So, in other words, while I can buy a DC and Image TP at 55% and Marvel one for 54% off, when I buy a Drawn & Quarterly TP from Diamond, I only get 37% off the cover price (base discount of 40% minus the 3% reorder fee)

And people wonder why independent books don’t sell better?

Sounds like a factor to me.  (There's much more in the piece, including why the Tokyopop deal might end up being a worse arrangement for many retailers despite the higher maximum discount through Diamond, so go read it if you want to understand some of the difficulties comic retailers face in navigating the labyrinth that is the Direct Market.)
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