Some news most of you won't care about that affects DC and Marvel prices...

[lighthouse]

This is a relatively long and dry post, and will likely only be of interest to a select portion of forumites. If you think that's you, read on...

 

Received this email today from Greg Buls of Bulldog. Ordinarily I wouldn't share the contents of an email, but since this was sent to all his accounts (which is about 1/3 of all comic shops) it will be public knowledge soon enough.

 

Dear valued customer,

 

If you have tried to order DC comics from us recently, you are well

acquainted with the words, "sorry, we're out." We are now able to relate

to you what has transpired in recent months.

 

On Monday, June 19, Bulldog received the following email from DC:

19 June 2003

Dear Greg: Following our conversation last year at the close of

Comic-Con International: San Diego, DC Comics has again reviewed your

website and your other promotional efforts. Due to your continued

subdistribution of products in violation of DC's terms of sale, DC

Comics has determined that Bulldog is no longer eligible to buy DC

products via Diamond. If the nature of your business changes in the

future, we will revaluate (sic) your eligibility.

Sincerely,

DC Comics

 

We were cut off from purchasing DCs from Diamond the next day, for a

period of just over two and a half months. This required us to look

elsewhere for books to cover our advance order customers, some of whom

rely on comics for their livelihood, with Bulldog as their primary or

sole supplier. We've always had good things to say about DC and DC

comics, and we've always provided good customer service to those

retailers who have purchased DC comics from Bulldog. We have not been

told why DC didn't formally ask us to "cease and desist" and give us a

chance to comply, rather than deciding to act immediately.

We have reached an agreement with DC. Here are the three main

provisions, in outline form, of Bulldog's contract with DC, with my

comments inserted in parenthesis: 1. Bulldog can sell DC comics to

consumers or retailers, provided that those retailers do not have an

active account with Diamond Comic Distributors, Inc. (In other words, we

can sell DCs to the consumers that shop at stores serviced by Diamond,

but we cannot sell to the store itself. (It is Bulldog's longstanding

policy to establish new accounts only for retailers.))

 

2. We can sell DC comics to Diamond accounts, but only after they have

been on the shelves for three months, and only if we purchased the

comics from someone other than Diamond. (We can't buy DC's from Diamond

and sell them to Diamond accounts under any circumstances. This applies

even to product that Diamond no longer has available.)

 

3. Bulldog must provide detailed records on a quarterly basis to DC,

specifying what DC comics we have sold and to whom. We are also required

to provide DC a list of all new Bulldog customers so that they can

properly categorize them as to their ability to purchase DCs from

Bulldog.

 

We do not know why this action has been taken. We have never heard a

hint of concern from any quarter that we were not taking good care of

our customers or that we were somehow a disruptive influence in the

marketplace. In fact, Diamond has referred a number of customers to

Bulldog, particularly when they have failed to ship something that is no

longer available. The week before DC cut us off, Diamond referred a

customer who had been shorted 70 copies of Superman Red Son #2, which we

covered. And Bulldog is entering it's tenth year in business; in nine

years we've never had a serious problem with any publisher or supplier.

The only reason we have ever heard for the action (aside from DC's trade

terms) goes something like this: When DC books are sold through

Diamond, DC knows where they are sold and in what quantities, and this

information is critical in formulating DC's marketing plans. When

Bulldog sells DC comics, DC doesn't know where they are sold or in what

quantities, and this damages DC's ability to make effective marketing

plans and decisions. Prior to DC's action, Bulldog was likely less than

1% of DC's comic sales in an average month. It may be debatable to what

extent such a small amount of missing data could throw off their plans.

In any case, we can provide the data they may or may not need, but

apparently they are not interested in utilizing our data in a way that

allows us to continue selling their books to Diamond customers.

Ironically, the contract requires that we provide our sales data to them

anyway. For the record, in an email received Monday, Sept. 29th, DC

offered the following suggestion as to what to tell you about their

decision:

"Perhaps you could say something like this to your customers: "Bulldog

has knowingly violated the DC Comics Terms of Sale for years. Instead

of shutting us down completely, DC has consented to allow us to continue

to service our customers who are consumers, and to continue to service

our customers who do not have a Diamond account and who are not eligible

to get a Diamond account. Please don't ask us to subvert our

arrangement with DC by asking us to sell to you under a different name,

a different address, or by selling to one of your employees. We have

given our word to DC that we will strive to live up to this agreement.""

 

DC's published trade terms contemplate Diamond customers being allowed

to "resell" their product if they are given written permission from DC.

But a written inquiry from my attorney as to what would be required to

receive such permission went unanswered. Bulldog probably has as good a

track record taking care of retailers as just about anyone in the

business, but DC has no interest in even telling us what standards we

must meet in order to sell their products to Diamond customers. On a

related note, with their existing trade terms and apparent lack of any

criteria for securing written permission to sell their books, it is

unclear to us how anyone could ever build a business that might someday

offer Diamond some competition.

Whether DC intends to make their action against Bulldog universal is

not known to us. We are not aware of DC ever acting against any other

companies that sell DCs to Diamond customers, nor acting in any other

way to enforce their trade terms, though one entity or another has been

sub-distributing DCs continuously and openly since at least the late

1980s.

 

************************************************************************

**********

 

Thank you for taking the time to read this. We're hopeful that as

Bulldog grows and our ability to serve you grows as well, DC will

reconsider their current decision.

 

{snip of some closing personal remarks}

 

The effects of this aren't immediately clear, but there will be fallout from this as far as modern DC and Marvel pricing is concerned. Most people aren't aware, but Bulldog is one of the three largest accounts for Marvel Comics from Diamond, and is usually in the top three for DC as well. He has made a decent living buying large quantities of new comics from Diamond and reselling them to retailers who run out. His customers are very loyal, and will usually go with minimum orders through Diamond until they see how a title is selling, knowing they can supplement their orders from Bulldog (at a slight premium).

 

There are a lot of retailers out there who order 100 copies of Amazing each month from Diamond, and then order an additional 10-50 from Bulldog depending on how the books sells that month. Greg also speculates on certain titles, knowing he can mark up hot books when Diamond runs out. Sometimes he gets burned, he still has well over 1,000 copies of Ultimates 1 for example. It's actually a lot more than that, but "over 1,000" is enough to make the point here...

 

Bulldog's sub-distribution has had two distinct effects on the marketplace. One is that many retailers are more conservative with their initial Diamond orders because they have an additional source for new books. The other is that the opportunity for appreciation in an issue is tied to how much Bulldog believes in it. Greg single-handedly killed the potential back issue value of Ultimates 1 the day he placed his order. If he had the same opinion of Fables or Y, they'd be $5 books at best right now. If he gambles on a book and orders 5,000 extra copies, it's tough for the marketplace to absorb them unless it's a smash hit...

 

I'm not entirely certain yet what changes this decision will bring. On the one hand, retailers will be forced to increase their orders from Diamond for DC product. This puts more copies in stores initially and therefore makes them slower to sell out at individual stores. But without the presence of a sub-distributor, nationwide sellouts can happen faster. On the other hand, Bulldog will be forced to buy even more copies of Marvel comics to maintain his volume, which should add even more variability to their back issue prices. Books he orders heavily on will be even slower to appreciate. And the books he under-orders have a greater relative chance to appreciate.

 

We'll see, I guess... We'll see...

[joe_collector]

What I gather from this, is that DC is intent on making comics even harder to come by. Not a good move when you're looking to score into a slowly growing new comic market.

 

I bet Marvel doesn't bat an eyelash, and just counts the extra cash.

[aardvark88]

Wonder if DC will try to stab Chuck in the back by saying Mile High is sub-distributing DCs to smaller direct sales accounts?

[Aman619]

everyone always complains about Marvels policies...its 'nice' to see that DC can be a dikk to deal with too!

[Zanarkand]

Maybe I'm reading too much into it, but it doesn't sound to me like DC is the culprit. It sounds to me like Diamond is.

 

Having worked in the corporate world for many years now, and having witnessed daily underhanded corporate practice, I can relate to you the two cardinal rules of business:

 

1. Do anything that will make you money.

2. Don't do anything that will lose you money.

 

Corporations firmly believe that these rules are the only ones that apply to them, and other rules are for everyone else.

 

So Diamond says hey DC, wouldn't it be great, hypothetically speaking, if my customers increased their orders from me? Then I could increase my orders from you! Too bad about this sub-distributor guy though. Since he allows customers to hedge their bets, no one really needs to increase their Diamond orders. If they run out of any particular issue, they know they can always get more from this other guy. Yeah, too bad about that... Oh well, I guess we'll both have to resign ourselves to not making more money...

 

Then DC says to Diamond, oh, I don't know about that. If we cut the other guy off, then I'm sure that at least some customers will be forced to order more from you. By the way, could you sign a completely unrelated agreement to increase your orders from us by an amount that coincidentally more than offsets our loss by cutting the other guy off?

 

Diamond says sure thing. scribble scribble But won't it be, y'know, really obvious?

 

And DC says not really. It's common corporate practice to insert boilerplate language into any contract or agreement, include the one we have with this other guy, that nobody really expects anyone to follow but which we can use to strongarm smaller businesses if we have to. Something like a 'due diligence' clause. Impossible to adhere to because everyone has a different definition of 'diligence', but if you want to argue the point it'll cost so much in legal fees that smaller businesses can either suck it up or go broke. We think they'll suck it up.

 

Thanks DC, Diamond says. You're a pal. While they're sucking, do you think you could forbid them from selling to any of our customers, ever, even if they can offer products we cannot? This whole free market thing gives me a headache, I'd rather not have to deal with it.

 

Sure thing Diamond, DC replies. Should we also force them to reveal their clients by volume? We could call it market research like everyone else does.

 

etc, etc. Sound like a conspiracy theory? How do you think corporate business is conducted? By nice guys over friendly cups of tea?

[joe_collector]

I say vote with your wallet and cut your DC subs to the bone, and tell your dealer why.

 

I don't particularly like Buls, but he's just playing the free market like a true capitalist, while DC and Diamond are acting like Fidel Castro on crack, wanting total control of their "little island".

 

 

[lighthouse]

So Diamond says hey DC, wouldn't it be great, hypothetically speaking, if my customers increased their orders from me? Then I could increase my orders from you! Too bad about this sub-distributor guy though. Since he allows customers to hedge their bets, no one really needs to increase their Diamond orders. If they run out of any particular issue, they know they can always get more from this other guy. Yeah, too bad about that... Oh well, I guess we'll both have to resign ourselves to not making more money...

 

One clarification here... Bulldog gets his DC stuff from Diamond. So it's not as though Diamond isn't still selling these copies for DC.

 

It's hard to say whether Diamond will sell more or less copies of DC material than they did before. Many stores will choose to not increase their orders and will instead just be sold out after their minimum orders are gone. Some will choose to carry backstock.

 

I suspect that DC's bigger concern was market manipulation. I can go into the Diamond website at any time and find out how many copies are left of any book. I can put in a re-order for 100,000 copies of last week's Superman book, and the system will tell me "3124 filled, 96876 unfilled". So I know exactly how close a book is to selling out with Diamond. If I see they only have 50 copies left, it's awfully tempting to pick up all 50, because as soon as I do, Diamond is out and I have 50 extra copies of a hot book...

 

Bulldog could afford to play that game with much bigger dice. He sees that there are 800 copies left of Ultimate Spidey, and 2100 copies of Ultimate X-Men, he leaves UXM alone and buys up all 800 Spideys. He knows that retailers around the country will now be calling him because Diamond doesn't have any more and gee, he does...

 

If I had access to the resources he does, I might be doing much the same thing...

[Darthdiesel]

If I had access to the resources he does, I might be doing much the same thing...

 

 

Would that be the Arizona Marijuana Mafia's money?

[lighthouse]

If I had access to the resources he does, I might be doing much the same thing...

 

 

Would that be the Arizona Marijuana Mafia's money?

 

I was thinking more like the "Who knew Wizard had so many gullible readers?" money...