Seuling's private agreement spread to other stores, and as Direct Market comics shops proliferated, a variety of regional and national distributors developed, essentially replacing the order-taking and -fulfillment functions of newsstand distributors. Publishers began to produce material specifically for this market, series that would probably not sell well enough on the newsstand, but sold well enough on a non-returnable basis to the more dedicated readers of the Direct Market to be profitable. As newsstand sales continued to decline, the Direct Market became the primary market of the two major comics publishers (DC Comics and Marvel Comics). In the late 1980s and early 1990s, as the popularity of comics collecting grew, many new comics shops opened, and existing retailers (such as sports card shops) joined the Direct Market, carrying comics as a side business.
Such rapid growth (due partially to speculation) was unsustainable, however. The market contracted in the mid-1990s, leading to the closure of many Direct Market shops. Marvel Comics purchased Heroes World, a regional distributor, with the intention of self-distributing their products; Heroes World also stopped carrying other publishers' books. Other distributors sought exclusive deals with other major publishers to compensate for the substantial loss of Marvel's business. DC Comics, Image Comics, Dark Horse Comics, and several smaller publishers made exclusive deals with Diamond Comic Distributors. Most other distributors, including Capitol City Distribution, Diamond's main competitor at the time, either went out of business or were acquired by Diamond. Others established niches - such as re-orders - in which they could compete. When self-distribution failed to meet Marvel's objectives, they also signed an exclusive distribution deal with Diamond, which had by then become the primary supplier for the Direct Market.
In the early 2000s, the bookstore market began to challenge the Direct Market as a channel for sales of increasingly popular graphic novels. Meanwhile, Diamond has continued to dominate direct-market distribution, with the 2006 collapse of FM International leaving even less competition than ever. However, the growth of interest in comics among mainstream booksellers and book publishers has led to several publishers arranging for bookstore distribution outside of Diamond (for example, Tokyopop through HarperCollins , or Fantagraphics through W. W. Norton ), while Diamond has created Diamond Book Distributors
The Direct Market has been criticized for fostering a closed "ghetto" or elite for comics, arguing that most Direct Market retailers are specialty shops patronized primarily by existing readers and highly motivated fans, without the broader exposure of the merchandise that newsstands and other retailers once provided. Some claim that the current incapability of Direct Market to reach new readers and customers, might be cannibalizing the existing market out of existence.
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