This Distributor Collapse Could DESTROY Indie Comics & TTRPGs

WEBVTT

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So for those that don't know, there has been

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traditionally one really big distributor in the

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comic book industry. Diamond distribution. Diamond

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distribution is just massive, right? And they

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owned Alliance Game Distributors. Like they they

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owned a lot of different stuff and they were

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for most comic book shops the primary distributor

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Well diamond has declared bankruptcy Right now

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here's the interesting thing about this particular

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situation diamond is not a wholesaler per se

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right They are a sales agent right that matches

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the the comic book publishers to the stores right

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so oh that got all goofy um so what ends up happening

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is that diamond takes possession of these things

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like comic books right and then they take them

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on consignment something called consignment which

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means uh you are comic publisher a I don't pay

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you upfront for the comics that you give me.

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I take them. I put them in my warehouse and as

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I sell them, I give you your cut. Right. So now

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diamonds declared bankruptcy. Right. What does

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this mean? It means a lot. It means that most

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of the comic publishers and the comic book stores

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do not have a way of getting their comic books

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into the stores okay now there's another problem

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right and this is a problem with consignment

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right um and that's this diamond has possession

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of all this material and thus far They are holding

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the inventory hostage. Okay. And so what's happening

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now is that the court thus far has said, you

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don't have to pay these guys as you sell this

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stuff to clear your debt. So basically anybody

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who sent diamond stuff on consignment Diamond

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has possession of that and they are allowed to

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sell that to clear their debt but are not required

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To give the publishers any money Okay, there's

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a great There's a great interview on ICV2 with

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the head of Fanta graphics, which is in Seattle

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right now. I believe they say they have a. Diamonds

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got a retail inventory estimated in the low seven

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figures. Right. So somewhere in the millions

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of dollars. However, again, the court is saying,

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nope, you can hold that. Now, somebody has challenged

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that. Two Morals Publishing has filed a legal

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objection to say, hey, you can't liquidate consignment

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without paying us, right? Because the court has

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said, yes, we can. Yes, they can. And this guy's

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saying, no, you can't. because it's technically

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their property because it's on a consignment

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deal. This is a massive, massive mess. And if

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you think it's just comic books, right, it's

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not. Let's talk about Paizo. Paizo has said that

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due to this distribution snafu during August

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and September, the following Paizo releases will

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not be available at bookstores or Amazon. Starfinder

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Core, Starfinder Retail, Starfinder Special Edition.

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Pathfinder, Battlecry, Pathfinder, Pathfinder,

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Pathfinder. Like I'm showing you in this, in

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the browser, just a huge list of stuff. They've

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got a bunch of stuff that D &D owns, that Wizards

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of the Coast owns, right? Because again, they

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do all this on consignment. And again, for everybody

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but Marvel and DC because during COVID, so Marvel

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and DC used to be distributed through Diamond.

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During COVID, Marvel and DC pulled out and they're

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like, we'll just do it ourselves, right? So Marvel

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and DC aren't part of this, but everybody else

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is, literally every other, basically every other

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comic publisher. So this is a giant, giant mess.

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Jay, I'm going to I'm going to flip it over to

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you. What are your thoughts on this whole? And

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again, you're a big like weekly comic book guy,

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stuff like that. You have we both have a couple

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of favorite local comic shops that I'm sure are

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going to be affected by this. What are your first

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thoughts about this whole situation? So. One,

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I am a little concerned because. And I don't

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think you know this Alex, but I have been very

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recently within the past week. I started reaching

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out to a lot of comic book, local comic book

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shops to do research into the comic business.

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I'm hoping that they would share like their business

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model, the finances to do research for an MBA

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project that I'm working on. So I really wanted

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to dig deep into the business of common books.

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And now I'm just like. Great research project

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now. Yeah, I think it's an even better research

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project now. Yes, but I think I think I'm going

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to get a lot of like, hey, this is this is really

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fucked right now and we're trying to figure this

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out. Sorry. It could be it could be really good,

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could be a really good research project, but

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or I could get a lot of like. Yeah, we don't

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know if we're going to stay open or not. This

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I did not know about Diamond. They're essentially

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a monopoly. Yeah. And that that's what kind of

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worries me that we're going to see one a lot

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of like little struggling comic book shops just

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close. And then I'm worried about the little

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comic book. Publishers are the ones that, yeah,

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they're screwed. Yeah. So yeah, my initial thoughts

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is like, yeah, this is like, this is really,

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this is really bad. Am I like worried about like

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Marvel DC? Like not really. I think that's fine.

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Um, but some of the smaller ones that I follow,

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like I'm kind of like, are these, are they going

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to still be around? Like, in three or four months

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from now. So. Well, and again, I'll go back to

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Fanta graphics. They said seven figure thing.

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They say that right now, like they all Fanta

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graphics, thirty five thousand dollars. And anybody

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that knows anything about small business, thirty

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five grand is a massive amount of money for just

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this. Fanta says as of May 16th, they'd stopped

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returning their calls. Right. This whole thing

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is a giant, giant mess. I so something that I

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will say. I like to draw. I used to be way more

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into it when I was younger, started recently

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getting back into it. I looked at last year,

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I looked at. uh, becoming a comic book artists,

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like one, what would it take? Is there like a

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degree program? Yes, there is. And this is something

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that really, really shocked me one to get your,

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uh, I think it was a bachelor's in fine arts

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with a focus and comic book art. I would spend

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more money getting that degree than I spent on

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my engineering degree. And your engineering degree

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is going to pay you a whole lot more. By the

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way, side note, I can actually introduce you

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to a formal Marvel and D .C. artist if you'd

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like to meet them and ask. Oh, nice. But yeah,

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looking at their salary, like I would get paid

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less. And then also there's no guarantee that

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you're even going to going to get a job. Nope.

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And I was like, wow, like this is really not

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like a good kind of investment thing to try to

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go for. But yeah, I think the whole people struggle

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and you know, Alex, we've talked to a few people

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at comic con. Um, there's some people that are

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able to pull it off that go to like kind of travel

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with the cons, right? They do a lot of, um, they

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sell a lot of their art. They do commissions.

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Um, but then you have others that aren't really

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that. Diverse, uh, and they struggle. And this

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is, I feel like we're going to see. Small little

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comic book companies close. And again, not just

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comic book companies. I'm going to bring this

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back up. Green Road and Publishing, which publishes

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a lot of various comic book stuff, says that

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Diamond has eighty five hundred books in their

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inventory with a retail value of over three hundred

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thousand dollars. And if Diamond is permitted

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to quote, let me get the quote here. Sell its

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consigned inventory quote free and clear of liens

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claims interest or encumbrances Right meaning

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they don't have to give anybody any money to

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sell this stuff, right? Yeah It's it's huge In

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March, publishers weekly reported that Diamond

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owed $9 .2 million to Penguin Random House, $1

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.7 million to Consumer Products, $500 ,000 to

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Lunar, as well as additional funds to publishers

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like D &D's Wizards of the Coast. Just wow. Yeah,

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this is going to be interesting to see how this

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plays out because I don't think there's a whole

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lot that some of these companies can do. I mean,

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like they can sue. They can sue. That's just

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it. It'll be a legal fight. Like and how much

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money they got to spend on lawyers to get this

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done. Yeah. Couple of things I think you're going

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to see out of this is one. I think you're going

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to start seeing random RPG show up at fucking

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discount stores. You're going to head over to

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the dollar general. They're going to have copies

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of Pathfinder for 10 bucks. Right, um And that's

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where a lot of shit goes The other thing that

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I think is is is that we need to take into account

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here and coming from I published a role -playing

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game owned a game store All the companies up

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and down the chain in this in this physical media

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market whether it's comic book stores gaming

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stores, etc to distributors The margins are so

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tight and there is zero room for error, right?

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So you get yourself into a bad situation that

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what and you're just you're done. You're you're

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toast. Right. It just. It crushes you. Right.

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Somebody in the chat talking about Paiso Paiso

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CEO Jim Butler says, quote, Please support your

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favorite game and comic publishers by buying

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directly from them or going to your favorite

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LGS and asking them to order for upcoming releases.

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Right. For gaming, for tabletop gaming, the upside

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is there's other distributors. There's MagEx,

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there's GTS, there's Southern Hobby, there's

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Peachtree. the tabletop space while this is gonna

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screw a lot of tabletop companies believe me

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because diamonds screwing them there at least

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are other Distributors out there who carry this

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stuff and can can get money to your favorite

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tabletop Really? This is gonna hurt the comic

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book guys. This is just all the small publishers

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are screwed And again, they don't have the money

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for a shit ton of lawyers And by the way, if

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you know anything about bankruptcy proceedings,

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they're gonna get in line Right chase says chase

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bank has a 45 million dollar line of credit out

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to diamond who you think is gonna get paid first

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Yep Because you know what chase has lawyers and

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they'll pay their lawyers Three million to recover

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30 million of the 45 that they're owed and then

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they'll write the rest off as a tax deduction

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So pour one out for the guys we love them Boy

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oh boy Jay any other final thoughts on this on

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this story before we move on to our next Actually

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kind of nicer story sucks. Yeah, it just sucks

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like yeah Stay tuned as we watch this develop.

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This is probably a story that will update a bunch

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as it moves to the courts and things like that.

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So I'm gonna keep my eyes open on this one. So

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yeah, stay tuned to this channel for more updates

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on this.