DCnU Follies: Biting the Hand That Distributes Them

Much has been made of DC Comics' recent announcements to relaunch their entire line of regular series with new #1 issues and begin same-day digital distribution both beginning in September. Fans and retailers have lined up both for and against the company's initiatives, even as DC has continued to make announcements. All 52 series and their creators have been announced, and DC employees and executives have committed to "taking the show on the road" to many public events and private retailer mini-conferences over the summer. When the original news broke, I made my most urgent opinions known. Now, after more news has come to light, I'm digging deeper along the winding road that led to DC's--let's call it brave and perhaps foolish--decision.

I recently interviewed a comic shop owner in Pennsylvania and read a host of articles written by Mile High Comics owner Chuck Rozanski, as well as an excellent Comics Journal article series by Michael Dean, and what I found brings to light two huge details. Number one: the digital comics revolution is to the 2010s what the Direct Market was to the 1970s and 1980s. Number two: DC Comics has gone from conservative follower of trends, to the company that takes risks in order to potentially reap great rewards, and is doing so against the wishes of those in the current print distribution framework.

As previously mentioned, DC had an upper hand in comics distribution in the 1950s, when distribution was severely curtailed in the wake of the infamous Kefauver hearings in the U.S. Senate. Those hearings drew links between comic books and society's evils in a similar fashion to Wertham's Seduction of the Innocent book, among other things. Many publishers severely cut back or even eliminated comics from their plans altogether. Marvel Comics (then Atlas) signed a very restrictive distribution deal with chief competitor DC Comics (then National) just to stay in existence. The deal included allowances for only eight titles to be distributed per month (or sixteen bi-monthly titles). Really, DC controlled Marvel's publishing future, and I doubt the former seriously considered the latter any real competition.

In 1956, then, DC ushered in comics' Silver Age with the introduction of a new Flash. In 1959 they introduced a new Green Lantern, and in 1960 they united all of their most popular superheroes as the Justice League of America. Then, Marvel publisher Martin Goodman let Stan Lee loose, and his attempts to emulate DC's newfound success led first to the development of the Fantastic Four, followed by the Hulk, Ant-Man, Spider-Man, and the many others that followed. The distribution deal remained in place, so Marvel found creative ways of keeping its new host of characters visible, with bi-monthly scheduling for most books or using a "split-book" format to host two characters in a single title (i.e. Tales To Astonish and Tales of Suspense).

Tales To Astonish, one of Marvel's many "split books" in the 1960s.

Such tactics remained until 1968, when Goodman sold Marvel to Perfect Film & Chemical Corporation, which soon became Cadence Industries and assumed control of Curtis Circulation Company, former distributors of The Saturday Evening Post. This situation enabled Marvel to break their distribution deal with DC, which led to the explosion of new titles from the publisher that same year (which explains the dissolution of the "split-book" series into two titles apiece, one per original star).

In spite of its successes, Marvel remained second-place finisher to DC in the late 1960s. Their true ascendancy didn't come about until 1972, when they schemed to make all of their titles 52 pages in length. DC caught wind of the plan and intended to follow suit, but a funny thing happened after that first month of 25-cent, 52-page wonders hit newsstands: Marvel decided not to keep up the practice, instead returning to 32-page series and reducing prices to 20 cents. (All in-progress giant-size stories were summarily split in two parts, for publication in the following two months' worth of issues.) When DC kept up the increased page count and price on all its titles for a year, sales declined and Marvel became top dog of the sales charts, which is largely where they have remained ever since.

During the wars with Marvel, Kinney National (owners of parking lots and funeral parlors!) bought DC in 1967, and Warner Bros.-Seven Arts in 1969. Shortly thereafter, they renamed themselves Warner Communications, and the rest, as they say, is history. Throughout the 1970s, DC tried to play catch-up to Marvel, most notoriously with the "DC Explosion," an initative launched by then-new DC publisher Jenette Kahn whereby dozens of new titles flooded the market, some with inflated page counts like the giant-sized regular titles of 1972. Warner saw that the initiative failed to deliver and cut DC's purse strings, leading to another infamous event, the "DC Implosion" which saw the cancellation of many books. Luckily also in the late 1970s (right in the middle of the emergence of comics' Direct Market), Warner Communications developed Superman: The Movie. Its gains helped to temper the losses from the Implosion, as Marvel's licensing of the "Star Wars" franchise helped buoy that company's otherwise poor late 1970s output.

As mentioned, the distribution market underwent significant changes in the 1970s as newsstand sales lagged. Enter Phil Seuling's experimentation with the Direct Market (as relayed in my earlier article). The 1979 Irjax antitrust lawsuit put an end to Seuling's distribution system and freed up his subdistributors to make deals directly with Marvel Comics, then in a renaissance under company president Jim Galton and editor-in-chief Jim Shooter. As happened so often during the decade, DC was in perennial "catch-up" mode, first in sales and now distribution behind Marvel. To think, if they never offered Martin Goodman the 1957 distribution deal, there likely wouldn't have ever been a Marvel in the 1960s! They needed an edge in distribution after the dissolution of Seagate Distributing.

DC had Warner's legal team behind them to help fight the Irjax lawsuit, an advantage vis-a-vis Marvel. They followed a cautious, wait-and-see approach, eventually settling with Irjax, but did not explore further distribution venues like Marvel did. They were content to see how Marvel developed the Direct Market, and eventually jump in to dominate that system. They wanted another "1957 moment" whereby they could again gain control over Marvel. In the wake of the Irjax lawsuit, the extant comics distributors (including a less powerful Seagate) banded together to form the International Association of Direct Distributors (IADD). Comfortable with Marvel's new distribution terms, they worried about a lack of new terms from DC.

Paul Levitz, former VP of DC Comics. (Photo by Luigi Novi.)

Enter Paul Levitz, former publisher of The Comics Reader, a comics fanzine, and freelance writer at DC, who'd since become first an editor and then company vice president under publisher Jenette Kahn. Whereas Jim Shooter, Levitz's counterpart at Marvel, was sympathetic to the comic industry more than to any corporate culture, Levitz thrived in Warner/DC's methodical management environment, outlasting Shooter by many years and presiding over a number of the company's creative successes. (You can read Chuck Rozanski's contrast between Shooter and Levitz's styles in his "Tales From the Database" articles here and here.) In 1981, part of that early success involved selecting certain members of the IADD coalition to be distributors. This plan in turn relegated the others who were not selected to being subdistributors of that group. In effect, DC's plan determined which distributors would survive and which would die off, as those primary distributors enjoyed greater discounts than they could in turn offer to the secondary distributors. This competitive disadvantage eventually led to two main distributors handling the majority of the Direct Market accounts: Diamond and Capital City, with the others being gobbled up by the larger ones. It hastened the path toward Diamond's current monopoly.

The 1980s continued DC's attempts to achieve greater market penetration, with the advent of the original graphic novel (which succeeded far better under Marvel), and other new formats including the prestige format volume enjoyed first by The Dark Knight Returns and the "New Format" (better paper) enjoyed by The New Teen Titans and Swamp Thing. They experimented with the line-wide crossover event in Crisis on Infinite Earths, which Marvel emulated the next year with Secret Wars II. Marvel remained market leader in spite of DC's many critical successes.

Hastening the impending distribution chaos was DC's "Death of Superman" event. DC aimed the scheme at the general public, intending to get them into comic shops to purchase a "piece of history." What the public didn't know was that DC had no intention of truly killing off a "cash cow" like Superman, and that they were counting on public interest to drive sales upward in hopes of--again--overcoming Marvel in market share. The state of the Direct Market was tenuous in 1992, with the bigger distributors having struck sweetheart deals to bring in hundreds if not thousands of undercapitalized retailers, and Superman #75 just contributed to a rising delusion that there was a lot of money to be made in comics speculation. (Nevermind that the larger the circulation, the less the actual books could possibly be worth. Economics 101!) And when it became apparent that DC was just riding a market wave and heralded the Man of Steel's return, that's when the "bubble" began to burst. The public lost faith, followed by comics fans, and then the retailers went under by the thousands. Marvel's behavior during that same timeframe didn't help matters (with its own events that have given rise to the even more grandiose events of today). As I've said before, it wasn't one factor but several that brought the comics market low in the mid-1990s.

In the interim, DC has still lagged behind Marvel in market share, having come close but never quite equaling with the "Death of Superman" event. They continued event after event, with "Emerald Twilight" introducing a new Green Lantern, "Knightfall" replacing Batman and "Where Angels Fear To Tread" doing the same to Green Arrow, all in the Superman mold. "Zero Hour" ostensibly rebooted the DC line, introducing several new titles and giving birth to a month-long initiative where all series were renumbered with a "#0" issue as a jumping-on point. They again renumbered virtually the entire line for a month with the "DC One Million" event.

But, getting away from DC's publishing plan for a moment, we must address the impact of Marvel's purchase of Heroes World, the third-largest distributor, upon both DC and Diamond. The move (again, detailed elsewhere) threw distribution into cataclysm; after all, if neither Diamond nor Capital City could distribute Marvel inventory, then that was a vast market share that disappeared from their coffers. Inadvertently, Marvel's actions (which blew up in their faces) prompted both major distributors to solicit exclusive agreements from any publishers they could. Capital City applied a bit too much pressure, and so DC became the first to sign with Diamond, with Image and Dark Horse to follow. Soon enough, Diamond bought out Capital City, and Heroes World failed, leading Marvel to crawl back to Diamond, and voila! The distribution system we have today.

(* Also, the mid-1990s were a time in which owner Ron Perelman nearly drove Marvel into the ground. As recounted in Dan Raviv's brilliant book, Comic Wars, DC even hedged their bets during their competitor's bankruptcy, with parent company Warner having looked into purchasing the company in 1998! If you think the 1957 distribution deal was a lofty ideal for DC...!)

However, conspiracy theories have arisen over DC's original exclusive distribution deal with Diamond, driven by a memorandum "discovered" by The Comics Journal that detailed a clause in said contract allowing for DC to purchase Diamond outright. DC has never publicly acknowledged the authenticity of the document, but it certainly seems like a plausible enough circumstance. After all, if DC believed Marvel's Heroes World venture was doomed to fail, then they would have a "leg up" on Marvel, potentially able to buy the comic industry's key distribution vehicle. The result would be a situation very similar to the 1957 distribution deal, where Marvel, if forced to re-ingratiate with Diamond, would be at the mercy of its competitor's policies. (Note for economists: wouldn't DC owning Diamond amount to vertical integration?)

Regardless of the truth of the memo, Mile High Comics' Chuck Rozanski extolled the virtues of DC's deal. DC really saved Diamond's employees by being the first company to make an exclusive deal. However, the deal also put the kibosh on any attempts to resuscitate the multi-distributor system by including a clause prohibiting anyone reselling DC comics they purchased from Diamond to another retailer. (The article linked is tremendous. Please read it!)

Interestingly, the Diamond/DC exclusivity deal as originally written was a 16-year deal, which ironically means that the deal expired this year. And now we have the digital distribution deal arising! I know, I know, there's probably no correlation, but it brings me to my next point. DC saved Diamond back in 1995, so is 2011 the year when DC says "thanks, but no thanks"? If I were in Diamond's shoes, I'd be worried right now at the very least, and supremely pissed off at worst. From what I hear, Diamond is upset at DC for subverting its own digital distribution plans, and it's hard to blame them. As many plans as DC appears to be putting in place to avoid the appearance of going all-digital, including retailer incentives like more senseless variant covers, an elaborate limited-returnability policy, and kickbacks if they offer a portal to DC Digital on their websites.

Will DC Comics be abandoning local comic shops? It appears not, but at the same time, digital is the sweeping wave of the future, and to have the company embracing digital distribution marks a shift in management, perhaps due to their closer liaison with Warner Bros. in the wake of Disney's 2009 purchase of Marvel. DC Entertainment is now more accountable to Warner than at any previous point in comics history, and the parent company expects results. Upper management evidently wanted DC to increase its comics' prices to $3.99 like Marvel, but DiDio and Lee resisted in favor of the "Holding the Line" initiative which has proven less than successful.  I've heard Paul Levitz was largely against digital distribution and based on his years at DC, he probably would have preferred Marvel take those first steps--again, playing to DC's old methodical management style. But it appears the Mouse House owning the competition has put fire in Warner's veins, leading to these current initiatives that reek, frankly, of desperation. Levitz is gone from his lofty position, relegated to a consultant role, and the "new" DC is taking drastic moves which really go against their stodgy reputation. They'll either succeed and do so in a huge fashion, or they'll crash and burn, leaving Marvel to pick up the pieces of a market that's been on the verge of collapse for a decade and a half now.

Diamond's got to be quaking in their boots right now. However the industry can be saved, I don't think they imagined something like this.

~G.