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Atom Freeman Calls Philbo Distribution's Business Model "Destructive"

Adam Freeman Calls Philbo Distribution's Business Model "Destructive"


New indie comic book distributor Philbo Distribution, founded by Phillip Russertt, has its new catalogue out, Phillviews, for comic books shipping in November. As Bleeding Cool revealed the terms and conditions that the new indie distributor is making for retailers, there has been a little back-and-forth online. Collector Steve Kempton posted to Facebook,

"When Diamond Distribution filed bankruptcy and the new Diamond buyers also weren't interested in the small guys, a new Distribution Company has come forth trying to do better. PHILBO DISTRIBUTION. Here is a photo of their July Catalog. They have lots of companies that have been around for a long time like AC Comics, Antarctic Press, Devil's Due, Hermes Press and Zenescope. I was happy, until I discovered my Comic Seller DCBS has decided not to carry them. As has Midtown Comics and most Comic Shops. They have no minimum order and are just trying to get their foot in the door. So if your comic shop or E-Tailer doesn't offer them now is the time for action. Don't let the small Indies die."

Well, DCBS and Midtown are both competitors to Philbo, as distributors themselves. But Atom Freeman of Prana Direct Marketing, formerly an Eisner-winning comic book retailer and then marketer for Top Cow, Valiant, Bad Idea Comics, blamed the terms and conditions that Bleeding Cool had posted, namely a 40% wholesale discount on top of shipping.

  • Atom Freeman: "I wish him well, I really do, but this just doesn't work. 40% off means that if a retailer has a preorder for a copy of a book, they have to be certain that they can sell 2 more before they make a profit on shelf copies. And, while I understand why you wouldn't want to give them terms (collections is a pain in the ass), asking them to pay upfront for a product that they will then need to fight for returns on damaged product doesn't work in a retail environment. So, the only real service he's offering (to the retailer) is aggregating shipping where his volume isn't high enough to negotiate better rates? I understand there needs to be a solution for smaller publishers, but this just ain't it. Carrying smaller publishers MUST be a sound business decision for the retailer and not just a donation for "supporting the community"."
  • Comics creator Niall Orourke wrote "Rather than blowing up on Facebook I suggest you reach out personally to Phillip Russertt. The guy is a complete gem and supports every indie project on social media. We need support not infighting.
  • Atom Freeman replied: "I disagree. Comics is not a charity that needs supporting. This is a business. If discussing it in public is damaging, then it isn't ready to be promoted."
  • Phillip Russertt, he of Philbo Distribution, joined in. "agreed it's not a charity. Demanding 50-60% profit off the creators, free shipping and not having to pay for two months after getting product has been a charity that destroyed diamond. I'm glad we agree it's not charity."
  • Atom Freeman: "Is that what they are doing? Demanding those things? Or are they telling you what the barrier for selling to them is? I'm curious how many retailers you think you are going to persuade by making these accusations? Why not just encourage the publishers to increase their cover price and give retailers a discount that works? Doesn't that solve the problem you are trying to fix?"
  • Phillip Russertt: "So, books you claim won't sell at $4.99, you feel will sell at a higher rate? The unknown indie you don't care about, admittedly, going to compete with Spider-Man at a higher MSRP? You admit you won't order much but want bulk pricing. That's not how it works in retail. Are you ok with Lunar and their 35% discount unless you spend $1000 per week? We are nowhere near their level or DC level and offer a better percentage, but that's a problem?"
  • Atom Freeman: "I believe that your model is destructive for shops and not productive for small publishers. My work is supporting both. That is why I did the post. I hope you change the model.
    1. I am not a retailer. I was for many years and talk to them on a daily basis but I haven't been one for a long time.
    2. I never said that books won't sell for $4.99. In fact, I completely disagree with that. My guess is that most of the publishers in your list regularly sell through crowdfunders and at conventions at well above that cover price. In fact, the average sale of a single-issue comic is actually well above 4.99 currently.
    3. Indie comics are not competing with Spider-Man. They are supported by Spider-Man.
    4. Yes, Lunar's discount structure works where yours doesn't for a simple reason. Lunar's discount structure is designed so that stores that are carrying comics as sideline or are business accounts that are fronts for buying clubs or personal collections don't get the same discount afforded full-line comics shops.
    So, to answer your question, yes, it is a problem. Which is why it doesn't work.
    And characterizing retailers as trying to take advantage of small publishers instead of suggesting they adjust to be more competitive for the retailer's dollar is making it worse."
  • Comic book retailer Dennis L Barger Jr butted in: "No, instead you trash him like a coward, for many years pre-foc many Indies through Diamond gave 40-45% off, and I didn't hear all this 'I'll never buy from them' talk… it's odd"
  • Atom Freeman: "Did I trash him? Please let me know where I did that, and I will edit or delete. It was never my intention to be disrespectful. But, I do believe that the model he has chosen is destructive to both the publishers who sign up with him and the retailers who choose this path. But, I honestly hope he chooses a different one. I am pointing out the experience that publishers who sell at less than 50% off don't get orders. This has been a recommendation for publishers who had a choice for decades. This is nothing new…. I'm gonna try to answer all the places you and I differ. I am not a member of ComicsPRO. It is a trade organisation for brick-and-mortar comics retailers. I have not been one of those in a very long time. I suppose the terms are fair to the publisher who misprices their product and you but it is not profitable for the retailer. As someone who has built a career around supporting those stores, I can't imagine supporting this effort that asks them to fund someone else's business to their own detriment. You seem to be confused about the difference between retail and wholesale. Is that the issue here? All of the other outlets you named regularly get 50%+ off. I'm not sure why you think demonising brick-and-mortar comics shops is the path to success. That's a very strange take. The rest of your rant is very strange. I'm not sure how to comment on it. If a retailer orders 2 copies of a book from you and only sells one, they have taken a loss (and that's before factoring in shipping costs). That is simple math. While, yes, I do believe the way your current business model is set up is destructive to both small publishers and the stores that work with you, highlighting the areas where that is the case. Personally, I hope you use this as an opportunity to go back and rework your model because this is a problem that needs solving. You seem to be confused about my experience and why so I will point out that I was a retailer for 15 years and have worked with dozens of independent and small press publishers for the past 16 years."
  • Phillip Russertt: "I will also add this post is disingenuous as no one would be fighting for damages to be taken care of and you don't have to sell two books to make money. It's a hit post attempting to hurt my business and all the publishers. Not cool."
  • Dennis L Barger Jr added "At least he's selling to all stores that want to participate and not hand picked sycophants for a snake oil pyramid scheme." That's a Bad Idea Comics dig, folks!
  • Atom Freeman: "Never stop being you, Dennis."
  • Dennis L Barger Jr: "I'm just wondering where this is coming from??? I'd think a smart and wise Eisner award-winning former shop owner and marketing guru would want as many tools for his publishers to use to get to as many retailers as possible. Why limit anyone??? Get your clients' books everywhere, and they make more money. As stated in this very post, many retailers refuse to use lunar because of the DCBS connection. That's why Universal will be a success on day one. As a current shop owner that still carries a few relevant new books, I can't wait to order from Philbo at 40% and universal at whatever percentage they offer. If the last 6 months have proved anything, it's don't carry all your eggs in one distribution basket"
  • Atom Freeman: "Because this is a destructive model.
    1. 40% off for retailers means that they are very likely to lose money on orders for the shelf. Assuming a base level of shipping cost, they would need 75% sell-through in order to get to profit. That means they need to sell 3 copies for every one that doesn't sell. Which either means loss for the retailers or fewer copies ordered from the publishers.
    2. He is insisting on payment from the retailers a full month in advance that he will hold in a personal account before paying the publishers and eventually shipping to retailers. That means that the retailers are investing in Philbo rather than their own businesses. I'd rather see him crowdfund an equity raise or a Patreon or WHATEVER than to see him hold that money for that long for retailers that need all the cashflow they can get.
    3. Publishers are being encouraged to price their books too low and make the retailers take the risk when none of the other outlets are doing so. Find me a Kickstarter where the tier to fund it is $4.99. It would be healthier for everyone if they priced based on what they needed to print and let the retailers order accordingly.
    4. If those publishers were using Kickstarter and then soliciting through more traditional means, they would at least be getting the money up front to print with. As this model exists, they are forced to pay up front, the retailers are forced to pay weeks in advance, and the only one without risk is Philbo.
    5. What happens when Phil gets in a car wreck and can't fulfill? All that money is in his account. The publishers don't get paid. What happens then? In a more traditional billing model, everyone would have a clawback and Phil would have the time to fix himself and his business.
    It's a broken, destructive model that will lose money for everyone involved. I'd rather he retool now before he starts holding onto everyone's money and it does real damage."
  • Dennis L Barger Jr added "Adam Freeman man, I think the only books I sold less than 4 of was valiant…. What was the valiant discount back then? I think you worked there around that time right???"… so many points to address, maybe you and Phil should debate it on some kind of highly successful comic industry show and let the industry decide who they should back going forward if they're only allowed 1 distribution company as you demand"
  • Atom Freeman: "Nah. I'm good. I give this feedback in hopes that he will right the ship. I'm not interested in dunking on anyone in public."
  • Dennis L Barger Jr: "I mean except this post in public??? So in person is the line"
  • Atom Freeman: "Am I dunking? My intention was to respectfully discuss the issues with his model. I've offered to meet with him virtually or in person. If I wanted to do that on video, we have outlets."
  • More joined in, such as retailer Mal Briggs: "Just staying open with rent + staff + insurance + utilities can easily eat 50% of your turnover. Any book wanting to be "on the shelf" needs to offer some fat to rent that shelf space. 40% with no terms is a special order only, paid in advance situation. This all sounds like the same conversation I'm constantly having with creators who want to use Kickstarter to sell into stores. They so often don't consider the costs of other links in the chain, or expect that others are doing this as a non profit side hustle like they are."
  • As did retailer James Wulgaert: "While I love supporting small publishers. I refuse to risk my capital on orders with any small publisher working through Lunar. Lunar is DCBS; their entire business model is to undercut brick and mortar stores. If publishers were proactive and enforced a MAP on product for 3 months to keep the playing field level I might be more forgiving. But DCBS's entire model is to undervalue publishers' products. Bottom line if publishers put zero value on their product by distributing through Lunar/DCBS why should retailers?"
  • Dennis L Barger Jr: "couldn't agree more 110%"
  • And then there was Massive Publishing's Michael Calero, who has set up a new indie distribution company, Massive Indies, operating within Lunar Distribution:  "This is a big part of why we created Massive Indies within the lunar structure rather than trying to start a distribution company from the ground up. The infrastructure and payment risks you have to take on as a distributor don't make sense unless you have a very large publisher as your anchor. I don't know much about Philbo specifically but Retailers already have enough risk with the current model, and I can't imagine them taking more on voluntarily. I do appreciate anyone trying to help indie comics survive the current market but I can see why this doesn't work for a lot of shops."
  • Atom Freeman: "what I love about your program (we offer something similar but not nearly as robust) is that you changed it once you got up and running. You didn't argue with the feedback or alienate your clientele by calling them entitled; you started, saw what could be refined, and changed the offer to be fairer to all parties involved. That should be celebrated."
  • Michael Calero: "that means a lot. I'm always hoping to make what we do better rather than having the mentality of "deal with it". We are doing something that could easily be done in a predatory way but I'm just not built like that. If I could make the program 100% free and add every deserving publisher at once, I would. But we are trying to make this thing healthy and an improvement on what publishers did with Diamond numbers wise"
  • James Wulgaert: "as a retailer, I offer Lunar/DCBS as little of my business as possible. Unfortunately, this means I can't invest in indies like I used to. I do appreciate you noting retailers take on enough risk. That said. Many retailers have voiced concern about DCBS devaluing your product with deep discounts, meanwhile the distribution arm Lunar sells to retailers with only a 10% difference from what they are offering direct from DCBS. Retailers should never have to compete with their distributors. If all publishers would enforce a 90 day MAP for all retailers (specifically DCBS) I could be persuaded to do more business with the enemy as it were."
  • More retailers joined the fray, such as Brian Garside: "If 40% discounts don't work, then your cover price is not real. If you are giving a 40% discount on a $3.99 comic ($2.39 my cost), then that comic has to be $4.99 to get a 50% discount ($2.49 my cost). Do not make the retailers bad guys; tell your publishers they have to increase cover prices to cover the discounts. Because of the changes at Diamond and Philbo, I am going to need to place a surcharge on products ordered from these distributors. Same goes for ordering direct, if I have to order direct, and pay for shipping (plus god knows what is going on with duties), I have to charge more. I am not in this for charity. I have to make money with my business, or I can't have a business. Plain and simple."
  • And Joe Becker: "This is a great way to look at it. I may not be the biggest fan of the $5 comic, but lots of books sell at this price point. Each of us has to decide on each title, indy or tentacle, if its worth bringing in and margin plays as much a role as creator and IP. I stopped ordering Catwoman because I didn't sell any copies ever (even the Batman crossover when Zdarsky was writing only got 2 people reading that part). And I'll try many books for the first few issues to see if they have an audience, but there's only so much budget for unknowns. At one point, circa 2015, our Dac discount dropped to 35% and it was subscribers only for shelf copies, and I was getting Evergreen trades to bump my discount back up to Keystone. And I decided that any book I can't get 50% on, I will only order for subscribers, and only if sourcing it is easy."
  • And Kelly Anderson Heying: "I'll be honest, I feel like it's a glorified Kickstarter/Indiegogo, whatever you want to call it. We the retailers would fund the indies. There's no guarantee the indies are going to follow through once we order and pay for them. I've seen it too often that it's not. No, thank you. It's also been a Long dang time since we've had to 'pay for things at ordering.' After nearly three decades, I feel that's so wrong to ask of us… And before you ask, yes we did the small press printing our own comic thing. We busted our asses to get things out, paying our creators out of pocket until the money flowed in, ate ramen when we needed to, lol. We had to wait the allotted time to get paid but we did and it was the way it works. Would we do it again? Yes. When the opportunity arises, we probably will"
  • And Mitchell Coleman: "It's harsh to say, but some of these publishers put out garbage, so I figured they be better off dead"
  • Also David Romeo: "Our store has always supported small-press comics, and many of them never made us any money, but the previous distribution system minimized problems. I applaud them for trying, but this doesn't work for me, and simply isn't worth all the extra effort."
  • Kelly Anderson Heying: "Nope, not going to work for me. I also am not and will not pay for things at FOC or for ordering them."
  • As well as Bubba Deep: "That condescending BS statement, 'our prepayment is designed to help you manage your cashflow, ' made us immediately decide we would not deal with them. I am pretty certain the majority of us don't need someone managing our cash flow for us. I know there are retailers that dont pay on time or at all, but the majority do. If they were just upfront with "we can't risk the kind of money needed to be risked to distribute a huge number of small press books, but we are optimistic that won't be the case for long" I may have said "thats understandable and in the grand scheme of things the amount of money our shop would be paying in advance would not be significant enough to stop us from doing it" But instead I feel like they are diamond-temu.
  • And Ben Chase: "I think the idea comes from the right place, but the execution is off (badly). Also, seeing some of the responses to comments here by the CEO are massive red flags. We all know the comic industry needs change."
  • But Adam Freeman would update one of his posts to add, "Through conversations with Phillip, I now understand that it is possible for retailers to get to that 50%. I recommended to him and recommend to any publisher or distributor that they make sure to communicate that rather than be dismissed as unprofitable."

Well, maybe we can help with that…


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Rich JohnstonAbout Rich Johnston

Founder of Bleeding Cool. The longest-serving digital news reporter in the world, since 1992. Author of The Flying Friar, Holed Up, The Avengefuls, Doctor Who: Room With A Deja Vu, The Many Murders Of Miss Cranbourne, Chase Variant. Lives in South-West London, works from The Union Club on Greek Street, shops at Gosh, Piranha and FP. Father of two daughters. Political cartoonist.
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