A Brief History of Comics Distribution (And That Pesky Industry Collapse)

A few short weeks after the news first came down the wire that DC Comics was adding same-day digital distribution to supplement their print line and relaunching all their titles with 52 new #1 issues in September, I've got more to say on the subject. However, before I can address my key points, it's very important you, my readers, understand comics distribution in a historical context. Herewith is a brief overview of distribution channels as they developed from the 1930s through the present day. Along the way I'll address societal changes, emerging demand for back issues, and new comic formats like the limited series, the graphic novel, and the collected edition. (Expect a longer discussion about the limited series very soon!) Much of the research in these matters I must attribute to articles written by Chuck Rozanski of Mile High Comics, Michael Dean of The Comics Journal, Torsten Adair of The Beat, and other sources.

The comic book industry began mainly to reprint comic strips published in newspapers during the 1930s, but soon the industry changed with the commission of original strips for the format. Newsstands were plentiful in the 1930s and 1940s and the industry flourished. It wasn't long before circulation for many publications reached a million or more copies per issue. (The most successful comic book of all time, Walt Disney's Comics & Stories, had a circulation of 3 million copies at its zenith in 1953.) Comics were also more varied in genre in the early few decades, with funny animal, romance, crime, science fiction, horror and spy books filling the shelves beside superhero fare.

After the 1940s, circulation began to fall, and most superhero books disappeared from stores. Frederic Wertham's 1954 book Seduction of the Innocent led to a crusade against comic books and their creators. blaming increasing rates of juvenile delinquency on the medium. With additional stigma heaped on crime comics and superheroes for all manner of innuendo, sales continued to decline. Wertham and his supporters began the movement that led to comics' self-regulating body, the Comics Code Authority (in a similar fashion to the video game industry's Entertainment Software Rating Board).

Another factor in comic books' declining sales was the continuing development of television throughout the 1950s and 1960s, which had the unfortunate effect of lowering readership in general and hence, declining newsstand sales. Sales were so bad for Atlas/Timely in the 1950s that they signed a distribution deal with DC/National Comics that only allowed them to publish eight titles per month--a tactic of apparent generosity that would come to bite them on the ass with the company's resurgence as Marvel Comics in the 1960s. (The deal ended in 1968, leaving Marvel free to publish as many books as they desired--and boy, did their line explode!) Alas, since newsstands already barely reaped any profits from comic books in the first place, newsstands cut back orders or even eliminated them altogether in favor of product that supported their bottom line. Circulation had fallen dramatically between the heyday of the 1940s-1950s and early 1970s, and distribution channels were drying up. How could the industry survive?

Enter Phil Seuling, who pioneered the Direct Market almost single-handedly with his Seagate Distribution company. One of the keys to Seuling's success centered around the idea of returnability, or rather, the lack thereof. Whereas newsstands had standard policies whereby their unsold books were returnable, Seuling approached the main comics companies such as Marvel and DC with a scheme whereby he would purchase books directly from them at rates comparable to newsstands, with the difference being that his company would be unable to return the books. Such a scheme was immensely favorable to the comics companies, and they readily agreed. Seuling set up a group of sub-distributors to which he shipped the books, and the first hint of what would become the Direct Market system took shape.

The nonreturnable quality of the Direct Market was not only advantageous for the comics companies; it also became profitable for retailers, who for years had trouble obtaining comics for back issue sales. By placing their orders through a main distributor, they received their books at least a week ahead of their newsstand competitors, and also received enough copies to reasonably sustain their business through aftermarket sales. Regular practice, then as now, involved holding onto back issues and repricing them at a premium in subsequent months. (Of course, retailers still didn't have access to previews of coming months' stories--such catalogs that helped anticipate demand for individual issues came much later, in the mid-1980s.) These practices--first the increased availability of issues in the wake of non-returnability, and later the advent of preview solicitations--would account for the vast availability of back issues from roughly 1980-up compared to previous years.

Seagate came into trouble when a wannabe competitor, Irjax Enterprises (remember that name!), filed an antitrust lawsuit in 1978 against the comics companies because of what they saw as a monopoly they wanted to break up. This situation, together with the involvement of Seagate sub-distributor Chuck Rozanski, who wrote a scathing letter to Marvel Comics in the same year, precipitated a situation where multiple (former sub-) distributors were allowed to purchase their comics directly from Marvel. This situation gave birth to a very prosperous Direct Market where nearly two dozen distributors operated from coast to coast, but also a very competitive market where everyone vied for their share of the pie. In the meantime, DC Comics mainly dealt with Seagate, while within the space of three short years, the Direct Market grew from seven or eight hundred shops to over three thousand. Rapid growth, indeed!

Eventually, Seagate Distribution folded, having greatly overextended itself. Irjax also folded, but from its ashes would rise Steve Geppi's Diamond Comic Distributors, Inc. Capital City and Heroes World would also become major players in the distribution network over the 1980s. The advent of the so-called "Air Freight Wars" of the mid-1980s decimated the distribution network, with the larger distributors able to ship at great volume and speed for low cost, making the smaller distributors with lesser volume unable to compete. Still, life was good for the comics business throughout the 1980s, regardless of a few factors that would begin to eat away at readership.

Regardless of the signs of trouble down the line, the proliferation of the comics specialty store that the 1970s brought gave birth to an explosion of experimentation in the 1980s. That explosion could never have occurred in the age of newsstand distribution and here I should make it clear: the Direct Market likely saved the comic book from extinction in the late 1970s-early 1980s. I can't knock it in that regard. The Direct Market brought with it the rise of a huge independent comics movement, virtually none of which could have found an audience without the wide distribution channels the Direct Market afforded. The market experimented in other ways, including but not limited to the short-lived revival of tabloid-size "treasury" editions, the limited series, the original graphic novel, press posters, and collected editions of popular storylines (in first softcover, and later hardcover, formats). The "big two" still employ a few of these formats today to varying effect.

The diversity of the market that the Direct Market brought was not without its drawbacks. With the movement of most comics sales from the newsstand to the Direct Market, one of the main avenues for new fans to enter the hobby began to shrink. After all, if you couldn't find a comic at a newsstand, or a supermarket, or a bookseller, then you had to really go out of your way to find one--to a specialty store or some manner of hobby shop that stocked comics. Hence, with key entry points largely removed, the fan base gradually grew older. How would I have entered the hobby if it weren't for the spinner rack at my uncle's butcher shop? Good question, indeed!

Another problem came with investor Ron Perelman's infamous purchase of Marvel Comics in 1989. In his nearly eight-year reign, his policies, one may successfully argue, all but decimated not only Marvel, but nearly the entire comics industry. Scheming to amplify the worth of the company, he put into place a number of policies whereby the number of titles in the Marvel line was greatly increased along with the per-book cost. These plans alienated many longtime readers who enjoyed collecting every book in the line, a venture that had been feasible in the earlier days of the Direct Market when the full Marvel and DC lines of about 40 titles only cost about $25 each per month. Even when Marvel's previous owner, New World Entertainment, increased the pricing in the line from 65¢ to $1 and output to 50 titles, most fans remained, but with a tripling-plus in output to nearly 150 titles, and a doubling in pricing, many opted to jump ship altogether instead of merely curtailing their purchasing habits. Add in countless events and cover gimmicks that contributed to the speculator boom of the 1990s, and you could see where this was all heading. Sales fell precipitously across all comic lines in late 1993 as blowback from the speculator boom caught hold (the result of the death and subsequent return of Superman spanning nearly the entire previous year, along with other factors).

Keep in mind, by the mid-1990s, most of the Direct Market distributors had fallen by the wayside or been absorbed by their larger brethren so that the biggest distributors were Diamond, Capital City, and Heroes World, with a few other smaller distributors still extant. Perelman and his team blamed the falling circulation not on the inflated pricing and the line's glut, but on an inefficient, untrustworthy distribution system. In 1994 they resolved to fix the problem by purchasing Heroes World, the third-largest distributor to the Direct Market, in an effort to self-distribute. (The prevailing theory goes that Marvel wanted to open up comic shops from coast-to-coast which distributed exclusively Marvel Comics products. This would have been in the mold of the "Marvel Mania" restaurants at Universal Studios, and a one-time display the company had at FAO Schwarz in NYC. How was this a good idea?) The ensuing disaster led to a maelstrom that had the remaining two major distributors fighting over exclusive rights to distribute the remaining companies' books. Eventually Capital City lost the competition, and Diamond assumed all distribution rights over a market that only continued to dwindle over the coming years.

Since Diamond Comics Distributors took control of virtually the entire comics market in the mid-1990s, logically an old issue came up all over again: was Diamond a monopoly? The Department of Justice investigated just that between 1997 and 2000. Interestingly, they concluded that Diamond was not in fact a monopoly, on the basis that while they did distribute nearly all comic books, they didn't distribute all periodicals, period, and so no monopoly could be levied against them.

Huh? Say wha? If you'll remember, the very same charges had been levied against Seagate in the late 1970s, which resulted in the dissolution of Phil Seuling's apparent monopoly and the rise to prominence of his many sub-distributors as distributors themselves in the explosion of the Direct Market. How in God's name could the same situation not hold true with Diamond now that every comic shop in America had to answer to them? The answer lies in the testimony of Chuck Rozanski before the DOJ. In one of his many Tales From the Database entries, Rozanski claimed the following:

Chuck Rozanski, owner of Mile High Comics. Photo by Luigi Novi.

"It was on that fateful day that I could have potentially caused some serious damage to Diamond. I chose not to take that course of action, however, because I honestly felt that it was not in the best interests of anyone in the comics world. No matter how much I might have disagreed at the time with some of the things Diamond and/or Steve Geppi appeared to be doing, there was no way that I was going to do anything to weaken the only viable comics distributor left in the business. Instead, I stressed to DOJ that the comics industry was so fragile at that point in time that the Diamond exclusive agreements were really quite necessary to provide Diamond with a large enough stream of revenue to continue operating. I also stated that I saw no benefit to breaking up Diamond, nor did I see where eliminating the exclusive agreements would work for the public good."

Rozanski's actions seem self-serving but also have the ring of truth about them. Unlike in the late 1970s, there was no ring of sub-distributors waiting to take up the slack from the dissolution of Diamond. In fact, DC Comics, one of Diamond's exclusive distributors, even put it in their contract that they were to not subdistribute their products. That clause was a barrier to any competitor to Diamond ever arising, and it would be extraordinarily difficult if not impossible to have a new distributor arise out of the blue. (This situation, and their previously having been burned with an attempt to directly distribute outside Diamond, is doubtless the basis for why Marvel, under their new owners Disney, have as yet refused to use the Mouse's vastly larger distribution channels for their product.) Distribution is in a rut as result of Diamond, and without the chance for another distributor, with the Department of Justice having found an antitrust lawsuit without merit, you can see the comic book industry is in about as dire straits as it's ever been.

To make matters worse, in the early 2000s Marvel took another huge initiative. First, they scaled back the continuity between their titles and stopped overprinting their issues, instead preferring to print to order, a sharp difference in practice. Stores then increased their orders, and this idea briefly created an upswing in the back issue market because collectors perceived the books as "rare." The market for back issues, revivified after the tremendous overordering of the 1990s, soon crashed and burned in the wake of Marvel's next move, that of kicking their collected editions program into overdrive. With oversize hardcovers, Premiere Edition hardcovers, softcovers, Essential black-and-white collections, and the renewed Marvel Masterworks program, they decimated the back issue market that used to be so essential to comics retailers. Who would want to buy back issues at premium prices when you could get a softcover or hardcover collection at or under the price of the individual issues (and even cheaper on Amazon and the like)? Whereas previously, companies were content to let stores absorb the funds from back issue sales, this more corporate incarnation of Marvel (with DC and other companies to follow) wanted any profits they could get, at the cost of the retailer. It also became Diamond policy to discourage retailers from offering back issues, preferring to have them offer a healthy selection of collected editions to keep the comic companies' and Diamond's own profits rolling in.

And all of the above is why DC Comics' digital distribution program has become so critical.

Next: DC Comics deigns to bite the hand that distributes them...

~G.