The Middle Ground #11: Devil’s Due Leaves Diamond, But Why?
And just when I think I know what I’m going to write about this week, Devil’s Due Publishing has parted ways with its exclusive direct market and bookstore distributor, Diamond.
Now, I’m a fan of expanding and exploring alternative distribution methods for comics as much as the next man, but something seemed odd about this news, and the press release that accompanies it. Mainly, this section:
“For almost over a year Devil’s Due has been in an unwinnable situation wherein Diamond garnishes our revenues to pay back returns and fees it claims are owed from 2008 and 2009, making it impossible for us to keep up with payments to talent, printers, and other expenses while maintaining a stable business,” said Josh Blaylock, president of Devil’s Due, who was forced to wind down the company’s publishing rather than ramp up as it originally planned to do when hit with a rough econom in 2008. “We’ve exhausted every resource to get on track, with a primary focus on catching up with talent payments first and formost, but when Diamond controls the money flow, that becomes impossible.”
I read that and thought, I am not entirely sure I understand what’s actually happening here. Is Diamond stopping all payment to DDP until it considers its own debt paid? Is the split to ensure that DDP sees any money? So, I thought I’d ask Josh Blaylock straight out.
I have to admit that my first read of the release left me with the impression that leaving Diamond was the easiest way to get around their withholding money that they believe they’re still owed. Do you still owe money to Diamond? If so, how will this move affect that repayment? Is this move in part to allow you access to money that wasn’t even getting to you through Diamond?
That’s the million dollar question. Diamond will tell you that yes, DDP owes them money. DDP has reason to question that amount, and therefore question the entire way we’ve been forced to conduct business for the past year, even going back as far as late 2008. In the spirit of still hoping to work things out (which I still would love to see happen), I can’t go into details on dollar amounts, but it is significant, and the only way to come out of it is to be able to ramp up publishing, and then KEEP enough of the sales from that publishing to pay our bills, back debts, and marketing.
My priority has always been to get the talent paid before anyone else. I’m sorry, but if you’re any other type of creditor other than basically rent and the most basic of overhead, you have to wait until talent is getting paid. Enter Diamond, June 2009, when we stopped getting payments for six weeks, and then the garnishments began, and that became impossible, because the money goes from the retailers to them first, and we get whatever deemed fit, and it changed from week to week. We’d already been struggling to catch up after the crash of the economy in late ’08. I tried for another six months to make it work, but then there were other surprises in the sales reports and it became clear we would have to call it off.
In 2009 our estimates show book store sales, returns and shortage and damage fees were much much higher in previous years, to the tune of 170% or more of our actual sales in the book market. Yes, you read that right, I said returns were almost two times as much as our actual sales. There was also a great deal of very very old material being returned that should have been past the return point, going as far back as 2006. I’d like to give Diamond the benefit of the doubt, but that is so far beyond the scope of anything acceptable that it would be negligent to let it continue.
Maybe product shortages really did increase by 800% or more from the previous year, and maybe it had nothing to do with the chaos reported about the Diamond warehouses at that time, or product being lost, but if it didn’t, then what does that mean regarding our revenue being docked for the past year? Those are the kind of questions that must be answered clearly before we can restore the relationship.
Is there a payment schedule in place for those you owe money to, outside of Diamond?
That is one of the main reasons this has to be done. The present situation with Diamond has not allowed us to set up a payment schedule with anyone. Funds are withheld at inconsistent levels, and about every six months something seems to happen wherein a serious amount of income is withheld. The has made it impossible to ramp up quality products, caused us to lose licensees, or to let properties go for the sake of the creators – such as Hack/Slash. Not to mention it’s put more than a few gray hairs on my head and seriously harmed my reputation. I didn’t just wake up after 7 years of publishing and decide DDP wasn’t going to pay its bills. I’ve always been afraid to say certain things hoping to keep the ball rolling for the greater good, but at this point its past that and if it’s going to get sorted out, this is the only way.
If not for [Diamond's] withholding of moneys for the past year, according to my estimates DDP would have been able to pay not only all talent owed, but many other creditors as well, plus a considerable amount paid back to Diamond. Instead, funds have been trickled down to us, we’ve had to slash the publishing, and hence each month the ability to rectify the situation gets smaller and smaller. The Barack the Barbarian, I Am Legion, and Jericho trade paperbacks alone would have generated a six figure amount in sales, and by this time we would have also been able to add more profitable books to the schedule.
Do you have any idea what percentage of your sales came through alternate (non-Diamond) sources prior to this change?
A very insignificant amount, because just like with every publisher in our category, we had an exclusive relationship. Diamond moved all of our content to the comic book shops as well as the book stores.
Our overhead is extremely low, though. Over a year ago I consolidated the office and my home into an apartment and cut to the utmost bare essential company expenses. Before that, however, we were generated around $2 Million in sales annually for years, so even at 25% to 30% of that we can start bringing in money to help get square with creditors. Likewise, I’m very excited about the potential of digital publishing with all of the recent developments.
For the foreseeable future, DDP titles will be distributed in the direct market by Haven Distributors, and also available through iVerse on iTunes, comiXology and Graphic.ly (with, according to the official release, “the sales from these companies… going in large part towards paying off moneys owed to licensors and talent”). Book distribution information is “coming soon.” As the saying goes, developing…