The New Competition, Revisited

(Years ago, in the long-gone Comic Book Business mag, I wrote about the new competition coming from techie things like video games, laser tag clubs and the Internet. I never thought our most severe test would come directly from comics' publishers in concert with chain bookstores...)

The advertising blitz is on for "Four Flicks," the boxed set of Rolling Stones DVDs, exclusively available in the U.S. at Best Buy stores. The big box electronics and appliance dealer is not only retailing the Stones' exclusive, it is also serving as the manufacturer and distributor, allowing Best Buy to retail the item for around $30. In England, where Warner Music is the distributor and there is no retail exclusive, the set sells for the equivalent of around $90.

In a recent New York Times' article, it was reported that retail juggernaut Wal-Mart, along with other discount stores, accounted for only 13.5% of music sales in 1994, but that had grown to nearly 35% in 2003. Major chains like Best Buy and Circuit City still have their sales accounted for in the traditional music store category, so big box sales of music CDs likely have zipped right past the 50% mark.

Some music specialty stores, both chain stores and independents, are reacting to the Stones' exclusive by boycotting all Stones' back-list products. But the concerted multi-million dollar ad campaign by Best Buy, along with the entertainment media's attention to this story, has resulted in a more than 25% increase in sales of older Stones' CDs, anyway.

With the boycott backfiring, more music sales are driven out of the specialty music market. As sales shift to the mass market, specialty market stores are closing. As Clark Benson, head of a company that sells data about retailers to record labels, said in the same article, nearly 360 music specialty stores have been shuttered in the last six months alone. He attributes this to the sales shift away from specialty stores even more than the prevalent downloading of music from the Internet.

Then there's the news of Border's making deals for "category management," in which the retailer will work with suppliers to manage specific product categories. Some suppliers will pay Border's up to $100,000 to be the "captains" of their category. The captain of the graphic novel category will be Client distribution Services, the bookstore distributor for Marvel, Tokyopop, CrossGen and other publishers. Each of those publishers will be kicking in funds to CDS to cover the charges for the category management. This arrangement could lead to more prominent display of CDS's roster of publishers at Border's, which is a real concern for publishers left out of the category management loop. Some prominent authors maintain category management also suppresses access for new creative work, opting instead for higher sales of top-sellers, rather than support for the full spectrum of published works.

Then there's the potential for exclusive product availability. In the last year, there have already been a number of deals by comics' publishers providing exclusive product to mass market bookstores, or at the very least months of exclusive availability. Marvel's $12.95 soft-cover Masterworks exclusive with Barnes & Noble and the number of Viz and TokyoPop early ships to mass market retailers, are only the beginning. The mass market can no longer be looked at as a feeder market for comic book retailers. In fact, there are signs the mass market is already siphoning sales from our market. Early reports point to 2003 as a flat year for sales in the direct market after two years of growth, while '03 was another year of robust growth for graphic novels in the mass market. Honestly, with each Diamond press release regarding the signing of more publishers to exclusive bookstore distribution through Diamond Book Distributors, it's clear that the mass market is an area of significant growth for even our dominant distributor.

This evolution in our industry reminds me of the beginnings of the direct market. When comic book sales were falling in the newsstand market and many outlets altogether dropped the comics' category, publishers responded to the overtures of small business entrepreneurs and created a new channel for selling comics. So here are a few suggestions towards better health of the direct market:

* What direct market retailers need--- perhaps more than anything--- is to find zealous rededication and increased productivity from within. Many retailers seem merely content right now. Or worse, many more want to let the other guy do the work and then ride the coattails of others' success. If you plan on being in the comics' biz for another bunch of years, the onus is on you to make every day count, to reach out to new readers and collectors, and to effectively communicate your concerns to industry colleagues. Finding new local channels for business, such as schools and libraries, is critical right now.

* Direct market suppliers need to be creative in supporting new store openings from current retailers and other entrepreneurs new to our market. Publishers, especially the ones willing to pay out serious dollars for category management developing business in big box stores, could definitely be more creative in sales promotions and new store incentives in the specialty market. DC Comics leads the way, notably with its co-op programs, Share the Risk returns' tests and Retailer Representative Program.

* The creative community plays a crucial role, too. With some of the big publishers heading toward being co-opted by deals in the mass market, it's even more important for creators to have a direct line to readers through retailers. The outlook for comics as a creative medium is very bright, but retailers' actions now will go a long way to determining if the direct market is a part of that sunny forecast.

(Joe Field can be reached at Flying Colors Comics & Other Cool Stuff, 2980 Treat Blvd., Concord CA 94518. E-mail is joe@FlyingColorsComics.com)