About the benchmark

EDIT: after additional consultation with Diamond, the below numbers are not correct.  The $2500 figure is indeed the wholesale benchmark.

I’m not going to discuss the cancellation of Previews Adult at the moment, as I think the seriousness of suddenly losing a catalog which had a circulation of 12,000 is quite self-evident.  How we got to this point may be good fodder for another post, though.

Instead, I’d like to take a small amount of time to explain what the purchase benchmark increase means in the real world, and perhaps betray my own misconceptions in the process.  But this is as best as I understand things now, absent a more public and detailed announcement from Diamond themselves.

Diamond, the undisputed ruler of direct market distribution, asks vendors to meet two sets of sales guidelines.  The first is a general sales threshhold applicable to initial orders, somewhere between $3000~4000 retail, that Diamond expects comics to meet to continue to be listed in Previews.  New comics are given a few issues to reach that plateau.  If the comic doesn’t, or falls below it after a few issues, Diamond will ask the series to be cancelled.  While the sales threshhold is applicable to all products, this is most relevant to the concept of comics as periodical magazines; serials which have limited shelf lives.

The second type of sales minimum is the purchase order benchmark, which before today was $1500 retail.  This is the minimum value for which Diamond is willing to issue a purchase order.  The difference is subtle, so it’s best explained through examples:

• Comic Ace issue #1 has a cover price of $5, and retailers order 1000 copies, putting its retail value at $5000.  It surpasses both the sales threshhold and the purchase order minimum.  A purchase order for 1000 copies is issued by Diamond, and Comic Ace issue #2 appears in the next Previews catalog.
• Comic Bee issue #1 only garners orders for 500 copies, totalling $2500 retail.  Diamond issues a purchase order for 500 copies, but warns the publisher that if orders for issue 2 does not increase, they would not allow issue 3 to appear in Previews.
• Comic Cee issue #1 gets an abysmal 200 orders, for a total value of $1000.  Despite retailers ordering 200 copies, they will never receive them… Diamond refuses to issue a purchase order at all for Comic Cee because it missed the PO benchmark.

Thus the important functional distinction is that the first sales threshhold only applies to the first time a comic is listed in Previews, while the purchase order benchmark applies to new and repeat solicitations.  Here’s a fourth example:

• Comic Dee is a stand-alone book.  It sold 800 copies when it was first offered in Previews.  Good, but not better than Comic Ace #1.  But Comic Dee is resolicited again, and sells 300 more copies for another $1500.  It’s become even more profitable than Comic Ace.

Serial comics from indy pubs aren’t often resolicited, because the sales window for such books is small.  But stand-alone comic series and trade paperbacks benefit greatly from being solicited again.  They may never achieve the same level of orders as when they were initially offered, but these reorders eventually add up.  For many indy pubs who may not recoup production costs on initials, this may mean the difference between profitability or closure.

And now that Diamond has increased the benchmark to $2500, it just became much, much more difficult for publishers to do that.

To put this into perspective for you… perusing ICv2’s top 300 graphic novel estimates for November 2008, Salt Water Taffy volume 2 from Oni Press placed at 294.  This is an all-ages book that has received great buzz (it’s recommended by YASLA), and is likely to have strong “legs”…  long-term, consistent demand.

…and it sold 413 copies at $5.95, which means it is at the very cusp of the benchmark.

Because later listings almost never do as well as the first, this book may not realize its full sales potential if Diamond were to enforce its $2500 benchmark and not list the book again.  This is a book that’s in Diamond’s top 300!  It’s from the publisher of Scott Pilgrim!

Actually, that’s unlikely to happen to Oni.  But I wanted to show just how high a bar Diamond is setting.  (And I’m not picking on you, Oni Press.  I just using this for illustrative purposes.  I’m so sorry! m(_ _;)m)

It’s not very useful to give blanket statements on whether such policy changes are beneficial to publishers, readers, and retailers.  If you’re a retailer who wants to buy two copies of Salt Water Taffy, but can’t because there aren’t 250 other retailers who’d do the same, then the benchmark does not benefit you.

Now, not being able to resolicit doesn’t mean that a book will never be ordered by Diamond again.  And Diamond itself has always been very flexible about enforcing its own rules.  And there are strategies that publishers can adopt to beat the benchmark, such as bundling multiple issues together.  But perhaps the most appealing and expedient option is to raise cover prices, which brings with it its own pitfalls.  And these sales threshholds are like property tax… they only go up, never down.  Those who are clearing the benchmarks this year, may not find themselves in the same position in the next.

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Finally, there are a couple of things I want to warn against, two polar viewpoints that seem to get reflexively trotted out any time the discussion turns towards the relationship between Diamond, retailers, and the small press.  On one end are people who say that Diamond and the direct market are the moral equivalent of Sauron, out to quash plucky indies and pillage creators at every step.  On the other end are those say small pubs are irrelevant, and have no business being publishers if they can’t meet the meager requirements of Diamond.  This ain’t no charity, they’d say… get used to it.

One suffers from naivette and perhaps a dash of victimhood complex.  The other, a digital, uncreative, myopic world view of an organic business far too complex to be reduced to a spreadsheet.

Too often the merits of the direct market are overlooked.  There is inherent value in having a distributor that is financially sound, and upholds standards.  There is inherent value in having thousands of independently-run, independently-minded retailers.  There is inherent value in a distribution system based on real demand instead of speculative buying (yes, ironic, isn’t it?).

But right now a lot of people must ask themselves this: is there value in niche, small press comics beyond simple monetary terms?  This has to be carefully considered, with an eye towards the long term, which is hard to quantify.  Throughout independent comics, there are publishers who will never, ever, ever sell a single copy for a vast majority of retailers.  Some might not even be driven by traditional profit motivations.  Nevertheless, many of them are important… some in obvious ways, such as publishers of cutting edge work that are so far outside of the mainstream, breaking even on printing costs is a miraculous bout of luck.  For others, their significance are only revealed with the passage of time.  But as a whole, all of them contribute to the identity of the comics medium.  Think of the diversity of readership that indy comics bring in.  Think of the major talents who years ago honed their skills either by themselves or with the only small pub willing to give them a chance.  And think of the fact that most indy comics are the exclusive domain of the direct market… they simply cannot be found anywhere else.

Diamond has every right to streamline its business.  In fact, it has an obligation to every one of its retail and publishing partners to do so .  But efficiency should not come at the expense of great potential.  At a moment when the industry is fast approaching a crossroad, that cost may be too great to bear.

Edit: In the comments section at Comics Worth Reading, SLG publisher Dan Vado say the $2500 figure is actually the sales threshhold in wholesale terms.  The average discount non-brokered publishers give Diamond is 40%, so $2500 translates into a $6250 retail; a comic book with a cover price of $3 must sell over 2000 to meet that threshhold.

I don’t believe this is the case, but if true, then the news is even worse for small publishers.  I’ve fired off an email to Diamond to clarify, and there should be an answer by Monday.