This Distributor Collapse Could DESTROY Indie Comics & TTRPGs

0:00 So for those that don't know, there has been traditionally one really big distributor in the comic book industry. Diamond distribution. Diamond distribution is just massive, right? And they owned Alliance Game Distributors. Like they they owned a lot of different stuff and they were for most comic book shops the primary distributor Well diamond has declared bankruptcy Right now here's the interesting thing about this particular situation diamond is not a wholesaler per se right They are a sales agent right that matches the the comic book publishers to the stores right so oh that got all goofy um so what ends up happening is that diamond takes possession of these things like comic books right and then they take them on consignment something called consignment which means uh you are comic publisher a I don't pay you upfront for the comics that you give me.

1:19 I take them. I put them in my warehouse and as I sell them, I give you your cut. Right. So now diamonds declared bankruptcy. Right. What does this mean? It means a lot. It means that most of the comic publishers and the comic book stores do not have a way of getting their comic books into the stores okay now there's another problem right and this is a problem with consignment right um and that's this diamond has possession of all this material and thus far They are holding the inventory hostage. Okay. And so what's happening now is that the court thus far has said, you don't have to pay these guys as you sell this stuff to clear your debt. So basically anybody who sent diamond stuff on consignment Diamond has possession of that and they are allowed to

2:51 sell that to clear their debt but are not required To give the publishers any money Okay, there's a great There's a great interview on ICV2 with the head of Fanta graphics, which is in Seattle right now. I believe they say they have a. Diamonds got a retail inventory estimated in the low seven figures. Right. So somewhere in the millions of dollars. However, again, the court is saying, nope, you can hold that. Now, somebody has challenged that. Two Morals Publishing has filed a legal objection to say, hey, you can't liquidate consignment without paying us, right? Because the court has said, yes, we can. Yes, they can. And this guy's saying, no, you can't. because it's technically their property because it's on a consignment deal. This is a massive, massive mess. And if you think it's just comic books, right, it's not. Let's talk about Paizo. Paizo has said that due to this distribution snafu during August

4:24 and September, the following Paizo releases will not be available at bookstores or Amazon. Starfinder Core, Starfinder Retail, Starfinder Special Edition. Pathfinder, Battlecry, Pathfinder, Pathfinder, Pathfinder. Like I'm showing you in this, in the browser, just a huge list of stuff. They've got a bunch of stuff that D &D owns, that Wizards of the Coast owns, right? Because again, they do all this on consignment. And again, for everybody but Marvel and DC because during COVID, so Marvel and DC used to be distributed through Diamond. During COVID, Marvel and DC pulled out and they're like, we'll just do it ourselves, right? So Marvel and DC aren't part of this, but everybody else is, literally every other, basically every other comic publisher. So this is a giant, giant mess.

5:24 Jay, I'm going to I'm going to flip it over to you. What are your thoughts on this whole? And again, you're a big like weekly comic book guy, stuff like that. You have we both have a couple of favorite local comic shops that I'm sure are going to be affected by this. What are your first thoughts about this whole situation? So. One, I am a little concerned because. And I don't think you know this Alex, but I have been very recently within the past week. I started reaching out to a lot of comic book, local comic book shops to do research into the comic business.

6:11 I'm hoping that they would share like their business model, the finances to do research for an MBA project that I'm working on. So I really wanted to dig deep into the business of common books. And now I'm just like. Great research project now. Yeah, I think it's an even better research project now. Yes, but I think I think I'm going to get a lot of like, hey, this is this is really fucked right now and we're trying to figure this out. Sorry. It could be it could be really good, could be a really good research project, but or I could get a lot of like. Yeah, we don't know if we're going to stay open or not. This I did not know about Diamond. They're essentially a monopoly. Yeah. And that that's what kind of worries me that we're going to see one a lot of like little struggling comic book shops just close. And then I'm worried about the little comic book. Publishers are the ones that, yeah, they're screwed. Yeah. So yeah, my initial thoughts is like, yeah, this is like, this is really, this is really bad. Am I like worried about like Marvel DC? Like not really. I think that's fine.

7:40 Um, but some of the smaller ones that I follow, like I'm kind of like, are these, are they going to still be around? Like, in three or four months from now. So. Well, and again, I'll go back to Fanta graphics. They said seven figure thing. They say that right now, like they all Fanta graphics, thirty five thousand dollars. And anybody that knows anything about small business, thirty five grand is a massive amount of money for just this. Fanta says as of May 16th, they'd stopped returning their calls. Right. This whole thing is a giant, giant mess. I so something that I will say. I like to draw. I used to be way more into it when I was younger, started recently getting back into it. I looked at last year, I looked at. uh, becoming a comic book artists, like one, what would it take? Is there like a degree program? Yes, there is. And this is something that really, really shocked me one to get your, uh, I think it was a bachelor's in fine arts with a focus and comic book art. I would spend more money getting that degree than I spent on

9:11 my engineering degree. And your engineering degree is going to pay you a whole lot more. By the way, side note, I can actually introduce you to a formal Marvel and D .C. artist if you'd like to meet them and ask. Oh, nice. But yeah, looking at their salary, like I would get paid less. And then also there's no guarantee that you're even going to going to get a job. Nope. And I was like, wow, like this is really not like a good kind of investment thing to try to go for. But yeah, I think the whole people struggle and you know, Alex, we've talked to a few people at comic con. Um, there's some people that are able to pull it off that go to like kind of travel with the cons, right? They do a lot of, um, they sell a lot of their art. They do commissions.

9:57 Um, but then you have others that aren't really that. Diverse, uh, and they struggle. And this is, I feel like we're going to see. Small little comic book companies close. And again, not just comic book companies. I'm going to bring this back up. Green Road and Publishing, which publishes a lot of various comic book stuff, says that Diamond has eighty five hundred books in their inventory with a retail value of over three hundred thousand dollars. And if Diamond is permitted to quote, let me get the quote here. Sell its consigned inventory quote free and clear of liens claims interest or encumbrances Right meaning they don't have to give anybody any money to sell this stuff, right? Yeah It's it's huge In March, publishers weekly reported that Diamond owed $9 .2 million to Penguin Random House, $1 .7 million to Consumer Products, $500 ,000 to Lunar, as well as additional funds to publishers like D &D's Wizards of the Coast. Just wow. Yeah, this is going to be interesting to see how this

11:27 plays out because I don't think there's a whole lot that some of these companies can do. I mean, like they can sue. They can sue. That's just it. It'll be a legal fight. Like and how much money they got to spend on lawyers to get this done. Yeah. Couple of things I think you're going to see out of this is one. I think you're going to start seeing random RPG show up at fucking discount stores. You're going to head over to the dollar general. They're going to have copies of Pathfinder for 10 bucks. Right, um And that's where a lot of shit goes The other thing that I think is is is that we need to take into account here and coming from I published a role -playing game owned a game store All the companies up and down the chain in this in this physical media market whether it's comic book stores gaming stores, etc to distributors The margins are so tight and there is zero room for error, right?

12:29 So you get yourself into a bad situation that what and you're just you're done. You're you're toast. Right. It just. It crushes you. Right. Somebody in the chat talking about Paiso Paiso CEO Jim Butler says, quote, Please support your favorite game and comic publishers by buying directly from them or going to your favorite LGS and asking them to order for upcoming releases. Right. For gaming, for tabletop gaming, the upside is there's other distributors. There's MagEx, there's GTS, there's Southern Hobby, there's Peachtree. the tabletop space while this is gonna screw a lot of tabletop companies believe me because diamonds screwing them there at least are other Distributors out there who carry this stuff and can can get money to your favorite tabletop Really? This is gonna hurt the comic book guys. This is just all the small publishers are screwed And again, they don't have the money for a shit ton of lawyers And by the way, if you know anything about bankruptcy proceedings, they're gonna get in line Right chase says chase bank has a 45 million dollar line of credit out to diamond who you think is gonna get paid first Yep Because you know what chase has lawyers and they'll pay their lawyers Three million to recover 30 million of the 45 that they're owed and then

14:01 they'll write the rest off as a tax deduction So pour one out for the guys we love them Boy oh boy Jay any other final thoughts on this on this story before we move on to our next Actually kind of nicer story sucks. Yeah, it just sucks like yeah Stay tuned as we watch this develop. This is probably a story that will update a bunch as it moves to the courts and things like that. So I'm gonna keep my eyes open on this one. So yeah, stay tuned to this channel for more updates on this.