Capital City’s Collapse and a New Status Quo
Larry Reid: When I started working there in ’92, Fantagraphics, and all comics publishers, I believe, survived solely with this very odd economic model called the Direct Market. It was wonderful for the publishers because you get these preorders from Capital, Diamond and then there were a couple of smaller ones, and you knew exactly how many comics you were going to sell three months in advance. You printed that many, and then they were gone.
It was hard enough competing with the Image titles and their imitators, but then Gary went out of his way to piss these people off and call them names, God love him. And I didn’t really have a problem with that, because he was right, they were shlockmeisters and they were dumb assholes and I didn’t like them.
Groth: We were being marginalized more and more at this point, because there was a lot of money to be made due to the popularity of Image and comics retailers were paying more attention to that and less attention to the kinds of comics we did. You could feel a tectonic shift. Everyone was trying to exploit this insane commercial bubble of Image — creators and retailers and anyone else who could ride the Image gravy train and make some dough before it collapsed. It was like getting in on a housing bubble and ripping off as many people as you can before it blows up in your face. Our sales just flattened out or diminished at this point, which was frustrating.
Reid: While Fantagraphics was sort of taking over the hipster world, there were like, probably 10 carbon copies of Image Comics. I can’t even remember; they all just came and went. I think that Image bubble, when that burst, that really imploded the whole Direct Market. But that was complicated, because Fantagraphics was getting squeezed out of shelf-space in all the comic book stores.
Spurgeon: The short form is that the big companies were pumping out an enormous amount of product and the smaller companies were basically just trying to hang on, keep a presence on the shelves, keep some focus on what they were doing. Marvel never really understood why they were paying money to distributors, so they bought a regional distributor called Heroes World and tried to distribute themselves. DC reacted by entering into a secret deal with Diamond that gave them exclusivity and DC the option of later purchasing the company, exposed by Eric Reynolds at the Journal. This set up a drama for the summer of 1995: Would the remaining companies, particularly Dark Horse and — by a factor of 10 over Dark Horse — Image Comics, join DC at Diamond or keep Diamond’s competitor Capital alive?
Reynolds: Although I was merely a reporter covering it and not actively involved in the business, it seemed logical to me at the time that allowing so much of the distribution business to be consolidated into one distributor was a terrible idea. When we exposed DC’s secret deal with Diamond — which granted them favored-nation status, favorable trade terms and even an option to purchase Diamond outright — in the wake of Marvel purchasing their own distributor, it felt like we had the smoking gun that could undermine Diamond’s efforts to line up the remaining publishers. But of course that didn’t happen. The two publishers who could have tipped the scales and kept Capital alive — Dark Horse and especially Image Comics — cravenly lined up behind DC at Diamond and almost immediately put Capital out of business. It’s been over 20 years now that Diamond has had no competition.
I remember visiting Capital in Madison, Wisconsin, around this time and they had a dartboard made out of Diamond owner Steve Geppi’s face.
Groth: Our sales were not particularly affected by Capital’s absorption into Diamond. And although Capital went out of business owing us about a 100 thousand dollars, they eventually paid it; it took them a couple years, but they eventually paid every cent. Which is unheard of. It is to Milton Griepp and John Davis’ everlasting credit that Capital was the only distributor who ever went under who paid its debts.
Spurgeon: A few companies went exclusive with Capital, I guess in the long term to set them up as an “all the rest” distributor, or maybe to keep them alive until a possible lawsuit could be filed against Diamond’s dominance. Or maybe just to be contrary, I don’t know. Capital ceased distributing at exactly the wrong moment for Kitchen Sink: During the opening for the movie The Crow II, which bombed and cut short the company’s window for selling merchandise to almost exactly the number of days Capital was off the grid. This hastened their demise.
Matt Counts: The Capital City crash was basically the worst. When the dust cleared, we were pretty much left with Diamond being everything and Last Gasp being five to 10 percent of that at the most. I had moments where I was pretty sure that Fantagraphics would have to cut back considerably. I was certain people were going to be laid off, [but] as long as Kim and Gary could scrape together enough money to publish a comic book, Fantagraphics would keep going.
Groth: I’m still puzzled by the behavior of the majority of the publishers, who essentially created a monopoly with Diamond. I still don’t get it. Clearly, they wanted a monopoly, because they essentially created one. I don’t understand that.
Reynolds: At one point, we even discussed starting our own distribution with a few publishers like Drawn and Quarterly, Slave Labor, Black Eye and a few others.
Groth: We published the Paul Levitz memo in the Journal where DC’s option to buy Diamond was revealed. I remember talking to Larry Marder at Image about that, and basically he didn’t give a shit. I thought it would be a revelation to him, that he would step up and say, “No, we can’t let this happen and we have a tremendous amount of clout and we are going to keep at least two distributors alive,” and basically he, and I assume all the Image partners, for whatever reasons, when they had the option of either going with Capital or sticking with both of them, chose to go with Diamond and kill Capital. Dark Horse made the same choice. Capital clearly would have served as a perfectly acceptable distributor in the direct-sales market and a counterweight to Diamond. Diamond could not have offered Image anything that Capital couldn’t, and in fact, Diamond probably had to offer them less because they became a monopoly. But for reasons that will probably forever remain a mystery, neither Image nor Dark Horse elected to keep two distributors alive in the direct-sales market. So much for competition being an essential ingredient of capitalism.
Reynolds: The DC memo was possibly the biggest story the Journal ever broke. Probably my most memorable moment working for the Journal was interviewing DC publisher Paul Levitz at the time. He didn’t know that we had the memo, which was leaked to me by a confidential source at DC. When he denied several of the terms of the deal as laid out in the memo, I called him on it and revealed that we were publishing the memo. He hung up on me almost immediately and the then-publicist at DC told me afterward that I could forget about ever interviewing anyone at DC again. It was a tremendously important story that had ramifications that affected literally anyone in the business, yet I don’t remember there really being any fallout from it whatsoever. Image and Dark Horse just lined right up behind DC, and everyone seemed to simply accept it, just as they do now.
That probably chipped away at my desire to continue to cover the industry in that way, to be honest. If no one else in the business cared about this stuff, well, then it’s every publisher for himself and I’m going all-in with Fantagraphics.
Groth: I remember that being a pivotal point in the history of investigative journalism in comics. Fans didn’t give a shit, professionals didn’t give a shit. We could’ve revealed a secret memo from Image saying, “Hey, let’s fuck over every small publisher and form a cartel,” and no one would’ve given a damn. I think the comics industry had at this point settled into the business-as-usual status quo. Throughout the ’80s, the direct-sales comics market was young enough so that business practices and attitudes hadn’t yet been codified. In the ’90s, the atmosphere had become more competitive, more cutthroat and it was every man for himself.
I mean, prior to that period, creators were probably treated worse than they were in other fields in general; by the mid ’90s, they were treated at least as well as anywhere else and possibly slightly better.
I think what slowly happened through the ’80s and into the ’90s in mainstream comics is that creators got more power, the power imbalance shifted so that it wasn’t as lopsided as it had been, and things settled into some sort of acceptable capitalist status quo. There simply wasn’t the kind of consensus injustices that people could rail against effectively.
It’s what happens in this country: If you have a nice, fat and happy middle class, the implicit message is, “Fuck the rest of you.” Not enough of them to worry about, they have no political clout, nobody gives a shit about them, they’re too demoralized by it to do anything about it, and they don’t or can’t make enough noise. In the comics profession now, you’ve got a few superstars at the top, you’ve got the mid-list sellers and everyone else.
What you had in the ’80s were people who were willing to make noise, these sort of upper-level mainstream creators like Steve Gerber and Steve Skeates and Frank Brunner and and the whole slew of creators that Jim Shooter threw out of Marvel or who quit. Many of the writers whose interviews appeared in the [Comics Journal Library] Writers book, probably, who were making waves. As soon as Marvel and DC acquiesced and gave them a cut of the profits, basically everyone shut up.
Neil Gaiman, Grant Morrison, probably a lot of these guys — they’re making tons of money. Brian Michael Bendis. And everyone basically wants to be like them, and they don’t want to rock the boat, because if you rock the boat your chances of making as much money as them goes from one percent to zero percent. It’s a microcosm of the wider American public, where everyone thinks he can be a millionaire, which is why no one wants to tax the rich. You’ve got people earning 20 thousand dollars a year who don’t want the rich taxed. Why? They all think they’re going to be rich. It’s a sucker club.