This was originally published in April of 1999. Chuck was quite angry at Diamond Comics (the only major comic book distributor) and specifically Diamond’s owner Steve Geppi. He had legitimate reasons for this as they were in partnership with two online retailers and they appeared to have an unfair advantage over not only comic book stores but other online retailers too. Chuck called the US Department of Justice to have Diamond investigated for being a monopoly. The Department eventually sided in Diamonds favour and took no action against them. The online retailers involved are no longer in operation.
This interview was republished in print in Gauntlet Magazine #19. That magazine’s issue was about censorship and sadly, because I lived in Canada I wasn’t able to buy it the normal way through my comic shop. Canada border guards are very nitpicky when it comes to material coming over the border and tend to flag a lot of stuff that would be perfectly okay if a Canadian produced and sold it within the country.
Sadly this is still an ongoing issue even today. Diamond’s experience with the border guards is that one “problem” book will hold up the entire shipment coming into Canada, which is why they don’t ship anything that could be controversial. In fact the only other country Diamond wouldn’t ship this magazine to was China.
I did manage to get a copy of the magazine though, but I had to contact an understanding US retailer who mailed it to me directly, which meant paying extra for it.
An Interview With Chuck Rozanski
For those that don’t know Chuck Rozanski is, he the owner of Mile High Comics. Long time readers might remember their ads in Marvel Comics and in various industry magazines. He has been in the business of selling comics for decades and has an influential voice in the comic industry.
Below is a very eye opening interview where he discusses his opposition to recent Diamond Comics / Steve Geppi dealings with online super stores AnotherUniverse.com and the upcoming NextPlanetOver.com. Also discussed are his near purchase of Marvel Comics publishing arm and his thoughts on other industry matters.
Jamie: You recently asked the Department of Justice to investigate Diamond Comic Distributors. For those that don’t know what is going on, can you explain what Diamond is doing to warrant this investigation?
Chuck Rozanski: My initial contact with the Justice Department was when they called me for my opinion on Steve Geppi’s acquisition of anotheruniverse.com. I told them that I considered his personal ownership of the leading Internet retailer of comics to be a direct conflict of interest with his other role as the owner of Diamond Comic Distributors, the sole-source supplier to the retail comics trade of Marvel, DC, Image, and Dark Horse publications. But I told the investigators that I was negotiating with Steve Geppi personally to find ways to mitigate the conflicts involved with his ownership of anotheruniverse.com.
Unbeknownst to me, however, at the same time as I was trying to explain to Steve that he needed to find ways to utilize the huge Internet mailing list (400,000 addresses…) of anotheruniverse.com help the Direct Market retailers dependent on Diamond, Diamond was secretly negotiating an arrangement with yet another Internet retailer, Next Planet Over, to enter into a deal by which Diamond would provide exclusive shipping from their Sparta warehouse. This arrangement allows Diamond to collect shipping and fulfillment fees for a period of two years from Next Planet Over, while denying this same opportunity for that same two-year period to any other Diamond accounts. It also allows Next Planet Over nearly immediate access to the huge Diamond Star System inventory backlist of trade paperbacks, toys, cards, etc. with minimal, or possibly no freight charges. The Diamond team also revealed, under intense questioning by retailers, that they were going to warehouse inventory in the Sparta warehouse for Next Planet Over, including back issue comics. The revelation that caught everyone by the most surprise, however, was Steve Geppi’s admission that he had an option to purchase equity in Next Planet Over. If exercised, that option would give him partial ownership of both major Internet retailers of comics product.
This information came out by accident at the annual DC Comics retailer meeting the weekend of March 12-14, and it’s sudden release caught the Diamond management team by surprise. They tried to convince the approximately 65 retailers in attendance that their secretly negotiated contract with Next Planet Over was no threat to other Diamond accounts, but were met with extreme skepticism. All the retailers with whom I had discussed the matter at the DC meeting were very concerned about the possible implications of Diamond/Steve Geppi making this bold intrusion into comics retailing. Given that he already owned the majority of stock in anotheruniverse.com, Steve Geppi was viewed as now having a personal interest in gaining a percentage of the retail market for comics.
While I had already resolved at the meeting that I had to call the Justice Department (I promised them I would call them back if the situation with Steve Geppi changed…), I was given added impetus by Diamond’s announcement of March 17th that all retailers currently being serviced out of Diamond’s Sparta warehouse (including Mile High Comics) would be shifted to Diamond’s warehouse in Plattsburg, NY effective April 8th. The net effect of this shift (according to our Diamond customer service representative) is that it will now take seven days, instead of five, for Mile High Comics (and all other retailers formerly serviced out of Sparta) to receive a Star System reorder unless we are willing to shift from truck freight to UPS. Given that UPS shipping costs are significantly higher, we’ve just seen a degradation of our service. Meanwhile, Next Planet Over has nearly immediate access, and theoretically no freight costs. All this because they’re willing to pay Diamond a fee to ship for them.
According to Diamond, the shifting of accounts from Sparta to Plattsburg is being done to facilitate expansion of the Star System. But the fact that the displacement to Plattsburg comes right on the heels of the admission by the Diamond staff that they had a secret arrangement to give space in Sparta to Next Planet Over, makes this entire process highly questionable to many retailers. In any event, whether it was planned, or not, this move increases the already significant competitive advantage of Next Planet Over over the retailers who were displaced from Sparta. It was this combination of events that made me feel that petitioning the Justice Department for relief was the only option left.
Jamie: If Steve Geppi/Diamond Comics continues their plans with NextPlanetOver.com, what will their positions in the industry be like one or two years from now?
Chuck Rozanski: I have no way of knowing. Much depends on the negative feedback they receive from retailers, fans, and the Justice Department. I have already been told that they are changing the reality of some of the answers they gave to the retailers in Baltimore. I have to believe that they were expecting little, or no, reaction to the eventual announcement that they were taking fees for giving Next Planet Over competitive advantage over their captive retailers. The fact that comics retailers have taken to the Internet to inform the entire world of comics about how the Diamond team is altering the competitive environment of comics retailing, seems to have never occurred to them. What they do now completely depends on how much negative reaction they get…
Jamie: You have asked for other retailers to join you in getting Diamond investigated. How has the response been?
Chuck Rozanski: I’ve actually been working primarily on a very lengthy report to the Justice Department about the entire history of my interactions with Steve Geppi about anotheruniverse.com. Since I had been trying to reason with him for five months prior to the DC retailer meeting, this report is up to 22 single-spaced pages, and still growing. I actually have only sent my Justice Department letter to comicon.com, and a couple other individuals. They have been spreading the word. I am now receiving e-mails from around the world faster than I can download and answer them… Once my report is finished, and I post it on our website, I am anticipating far greater response.
In terms of feedback, I have had 100% support. There are those who are (quite naturally) skeptical that we will win, but all those who have written me have praised me for taking this public stance in opposition of the Steve Geppi/anotheruniverse.com/Diamond/NextPlanetOver.com potential combination.
Jamie: Diamond has come out with a press release discussing the terms between them and NextPlanetOver.com, what was your reaction to the release and the information in it?
Chuck Rozanski: They’re working like crazy to “spin” this information now that they’ve been forced to reveal their secret dealings. If the press release you’re referring to is the one where they say that Steve Geppi “forgot” that he owns a small part of Next Planet Over, I would ask how anyone could believe such a statement? The retailers at the DC meeting asked Steve point blank if he owned any stock in NPO, and he swore he didn’t. Now they’re saying he does, but he didn’t contribute any funds.
So how did he get the stock? No one ever gave me stock for nothing…That’s just one of many inconsistencies in their press release. I think it’s safe to say that these guys are sweating the proverbial bullets.
Jamie: The press release says Diamond is exclusively fulfilling internet orders from NextPlanetOver.com, what does that do to others selling comics online, like Mile High Comics?
Chuck Rozanski: Since we specialize primarily in collectibles (back issue comics, toys, etc.), this will have less impact on Mile High Comics than others who sell more new, or Star System backlist. Those who have been selling Star System backlist are now at a huge competitive disadvantage, as they now have to either buy massive amounts of inventory and stock it at their in-house shipping site, or pay the huge expense of setting up a fulfillment point in Sparta. Otherwise Next Planet Over will have up to a seven-day advantage in filling orders for Star System Backlist. There is also the fact that they will have to pay freight, while Next Planet Over theoretically does not. And don’t forget that Next Planet Over will have a much greater likelihood of being able to discover when the Star System is running short on a desirable item. When we call in to Star, they tell us if an item is in stock, or not. But they never tell us how many are left… Even if Diamond sets up a “firewall,” it seems reasonable to assume that the managers of Next Planet Over will figure out how to get the information on what’s available on the other side of their same building.
Jamie: The press release also says NextPlanetOver.com will be buying comics from the comic companies and selling/shipping them to individual customers within 2 days. Does this not make them both a distributor and retailer?
Chuck Rozanski: Sure seems like it. This would very negatively impact our N.I.C.E. new comics subscription club. How can we compete with a distributor selling to consumers?
Jamie: NextPlanetOver.com had earlier announced they made deals to carry titles and online content from Abstract Studio (Strangers in Paradise), Oni Press, Slave Labor Graphics and Adhesive Comics. Will this not help those publishers?
Chuck Rozanski: Maybe. The industry currently receives most of its sales from about 3,000 independent retailers. If even just a few more of those retailers are forced out of business by these new practices, will the lost sales volume be made up by just one company? It could be that they end up with fewer sales, not more. Also, did these publishers realize who they were actually making a deal with when they agreed to give preferential treatment to Next Planet Over? These are all companies who pride themselves an being very retailer-friendly. What will they think as the truth reaches them? How will they explain their actions to retailers who have supported them for many years?
Jamie: You clearly feel betrayed by Diamond’s deal with NextPlanetOver.com, do you think you can trust Diamond or Steve Geppi again?
Chuck Rozanski: No.
Jamie: Exactly what would you like the Department of Justice do to Diamond Comics and Steve Geppi?
Chuck Rozanski: I am now a firm advocate that the exclusive relationships that Diamond has with any comics publishers must be voided. We trusted Diamond and Steve Geppi, and I feel they have betrayed that trust. I once advocated the exclusive relationships because I felt that maintaining stability in the world of comics was more important than fears of monopolization. I now fear Steve Geppi and Diamond far more than I fear chaos.
Jamie: What would Diamond have to do in order to convince you that they are no longer competing against retailers through NextPlanetOver.com
Chuck Rozanski: 1. Publish the contract between Diamond and Next Planet Over for everyone to see.
- Offer the same terms and services allowed Next Planet Over to anyretailer at the same cost
- Guarantee in writing that neither Steve Geppi, Diamond, or any member of the Diamond staff would ever take any equity position in a comics retailer ever again.
- Immediate divestiture by Steve Geppi of his personal stake in anotheruniverse.com
Jamie: Do you think the industry would improve if Diamond Comics had competitors?
Chuck Rozanski: I think Diamond has done a pretty good job of shipping comics. But I would sleep better at night if I had an alternative to their service. Otherwise they are free to inflict deals upon us like the Next Planet Over deal, and we still have to buy from them.
Jamie: Is there any chance you would start a distribution company to compete with Diamond Comics? If not why?
Chuck Rozanski: No. My wife ran a distribution service (Alternate Realities) for ten years. She found that the economies of scale in distribution greatly favor those who operate near great masses of population. Since there are only about 8 million people living within 500 miles of Colorado, any distributorship I could set up would be highly inefficient compared with a distributorship based in one of the more populous states. Besides, I am proud to be a comics retailer. Making comics fans happy is what gets me up with a smile every morning. I don’t want to do anything else.
Jamie: At the recent Retailer Representative conference between Diamond and retailers, there seemed to be other complaints about Diamond policy. Can you tell us what they were?
Chuck Rozanski: Actually, no. That meeting was so intense, and I was involved in so many discussions about anotheruniverse.com and Next Planet Over, that the rest of the meeting was a blur. I know that Rory Root from Comic Relief in Berkeley, and Mimi Cruz from Night Flight Comics in Salt Lake City briefly raised other issues, but I was distracted, so I don’t know what they were.
Jamie: How do you feel about DC Comics option to buy Diamond Distribution in three years?
Chuck Rozanski: It seems an unreasonable consolidation of the market. But I respect the individual members of the DC management team very much. After this situation with Steve Geppi, however, who I had considered a personal friend since 1977, I would like their assurances that any such deal would be reasonable to be put into writing.
Jamie: How has Mile High Comics remained successful in today’s market?
Chuck Rozanski: Internet, Internet, Internet. We run Internet auctions, we have six million back issues listed on our website, we send weekly e-mail specials, we cut deals with companies like Excite, and we post thousands of items on ebay.com. The Internet is now over half of our business, and all of our earnings. Without the sales we derive from the Internet, we would go out of business very quickly.
Jamie: Mile High Comics has an associate program for selling back issues, how much has that helped your company?
Chuck Rozanski: Not very much in terms of sales, but the goodwill has been great. Sharing revenues with anyone willing to send us a little business has been very pleasant. Even if we don’t generate many sales, we make lots of new friends.
Jamie: In terms of getting new comic readers, how do you think the industry proceed. Should we try to latch comic books to other stores or should we try to make comic shops like music and book stores?
Chuck Rozanski: My vision is entirely different. All of our stores are very profitable right now, as we have shifted over to selling more backlist and collectibles. I started selling comics in 1970, and in those days new comics were a tiny part of the business. I view the Direct Market boom period of 1986-1995 as being an aberration. The income from new comics was never intended to keep stores in business. New comics are (were) a way of getting collectors to visit your store. Selling new comics was a service you provided in order to sell them backlist. We’re now seeing a return to that more stable world, and retailers who have adjusted are doing very well. But this is bad news for the publishers, and for Diamond.
Jamie: Do you think putting comic books in book stores or other places would draw people to comic retailers?
Chuck Rozanski: It’s been tried, and didn’t work. I believe collectors like going to an environment where they can speak with individuals who share their same dreams and manias. That seldom happens in any book or record store.
Jamie: Some readers complain that comics are too expensive. Do you agree?
Chuck Rozanski: Yes! Ron Perelman wrecked this industry when he rammed through the yearly price increases after he took Marvel public. They took comics from being a cheap, disposable, impulse item to being (of necessity) a collectible. Once readers became (at least partially) investors, the industry collapsed. Comics should be a buck. But rebuilding sales volume to the point where that would again be feasible is such a herculean undertaking that I doubt it will ever happen. But it sure would be nice if one of the publishers were to take the economic risk of trying to work prices back down.
Jamie: Fans also complain that event story lines and gimmicks are hurting the industry, driving long time readers away in the long run. What is your opinion as a retailer?
Chuck Rozanski: Long-time fans complain. But publishers find that the “silent majority” buy more when those tactics are used. I think it might be a mistake to give too much credence to fans who know when, and how, to provide input. They’re good folks, but they are only one perspective.
Jamie: Mile High and Jim Shooter attempted to buy the publishing arm of Marvel Comics not that long ago. Exactly what were you two planning on doing with Marvel if you bought it?
Chuck Rozanski: I was supposed to be in charge of all marketing. I was going take Marvel on the Internet in a massive fashion, and use the Internet to drive more business into comics stores. I was also going to try and get top creators on reduced priced books. A tough job, but I was going to break the price cycle… Jim was going to run editorial, and his goal was to provide more stand-alone stories, plus make sure that the stories that were written were more understandable, and maintained the integrity of the Marvel Universe.
Jamie: Jim Shooter said you talked him into self publishing his Daring Comics line and using a limited print run of 5,500. Why the limited print run?
Chuck Rozanski: I knew that Jim could get only a limited amount of credit from Ronalds to print. I debated the issue with my staff here at Mile High Comics about how many of a new Jim Shooter book would absolutely, positively sell. I argued for 10,000, but was voted down. Everyone pointed out that the market is so bad these days, that even a Jim Shooter book (in Black & White) probably wouldn’t sell more than 6,000 copies. Well, that didn’t make economic sense. So I came up with the idea that we could have Jim sign 500 of them, and sell them for about $10 each (later raised to $17.95). If we sold a bunch in advance, and we gave Jim 90% of the gross from those signed issues, then the project was guaranteed breaking even. Since that was really the only goal of the first issue, that’s where the number came from. Some folks thought this was some scheme to drive up the price on the first issue, but it wasn’t. We just had to make sure that Jim generated enough income to pay the printer.