A writer at the Hollywood Reporter points to Marvel’s conduct in the mid-90s, explaining how they set a precedent for limiting the industry almost entirely to one distributor, Diamond:
In December 1994, Marvel Entertainment, at the time headed by investor Ron Perelman and fresh off an streak of corporate acquisitions that included trading card companies Fleer Corporation and Skybox, as well as toy manufacturer Toy Biz, purchased Heroes World, at the time the third largest comics distribution company in the U.S. It seemed like an unexpected move, but not necessarily a terrible one, especially given that the boom of previous years that had seen titles sell millions of copies was coming to an end, with sales notably dropping across the board. (X-Men No. 1, published in 1991, remains the best-selling comic of all time with more than eight million copies sold.) If Marvel wanted to diversify, this was certainly one way to do it.
Marvel, however, didn’t want to diversify. Indeed, it wanted to do exactly the opposite; in March 1995, a leaked memo revealed that the company intended to use Heroes World as its own exclusive distributor, meaning that any store that wanted to carry Marvel product — then, as now, the company was the market leader — would be forced to open a Heroes World account. The change would take effect four months from the announcement, immediately reducing other distributors’ market share by around 40 percent, and also reducing stores’ discounts with those distributors, as their overall order size would similarly drop.
It was, to say the least, an aggressive move, and one that had an official name that displayed the hubris at its heart: “Marvelution.”
The immediate effect of Marvelution was to cause the rest of the comics industry to consolidate behind Diamond; DC, Image Comics, Dark Horse Comics and Archie Comics signed exclusive contracts with the distributor in the immediate aftermath of Marvel’s announcement, and would ultimately absorb Capital City as the latter neared bankruptcy.
Meanwhile, Marvelution was running into a number of problems. For one thing, Marvel discovered too late that Heroes World wasn’t the most well-organized company when it was purchased, with orders left unfulfilled and accounting errors unaddressed. For another, retailers weren’t happy with the new reality either for the amount of effort required in dealing with multiple distributors or the drop in discounts; a number of stores closed as a result, continuing a downward trend that saw the number of stores in the U.S. fall by half across the second half of the decade, from upwards of 9,000 to around 4,500.
By 1997, having already filed for bankruptcy, Marvel pulled the plug on Heroes World, laying off all employees and signing its own exclusive contract with Diamond, giving the distribution company a virtual monopoly on the English-language comics industry that it enjoys to this day. A Department of Justice investigation into whether it was guilty of antitrust violations closed in 2000 after three years, finding that no action was necessary.
If Perlman was in charge of Marvel’s own direct purchases to service their publishing, that’s another serious error he made in buying a company he clearly didn’t have interest in running as a source of artistic merit. It’s long been apparent he only bought Marvel to serve as a springboard for merchandise, and till this day, he’s one of a whole generation of incompetent business execs who never seem to publicly apologize for the harm they caused. For all the good Marvel once did as a storyteller, they did not show the same talent business-wise, and it all led to a monopoly with Diamond, who could soon be going out of business themselves, due to what the Coronavirus crisis has led to.
But again, that’s why industrialists should – and come to think of it, must – consider shifting to paperback/hardcover format. The best part about that is it could put an end to all the abuse found in company wide crossover events, and could finally bring about more self-contained storytelling for mainstream comics, something sorely lacking for over 30 years now.
As for Marvel, if they survive long enough to be bought out by a more responsible business, they’re going to have to start being more careful in how they conduct business affairs and what they buy to serve theirs. The way they went about buying their own personal distributor was one of their biggest mistakes of the 90s, and since that time, the mistakes have spilled over into their stories, art, and how they handle PR management, not the least being how they push and shove phony claims of “diversity”. All this from a company which, as the article notes, wasn’t really trying to diversify, and still isn’t.
Originally published here.