It's completely morally bankrupt and is effectively theft.Bankruptcy as a whole is morally bankrupt and is effectively theft. The only question is, 'theft from whom?'
But considering that the historical alternative is debtor's prison...
I wouldn't consider bankruptcy in and of itself to have moral standing.
Effectively you have more debt than you can pay, and you tell your creditors that "you're giving up". Sometimes that results in restructuring of the company and selling off assets and continuing to operate. And yes, it could be viewed as theft from your creditors, but I feel like that is the risk that creditors take. In my view, that is the risk they're taking and in the event of bankruptcy, they are the ones who should get screwed.
Also, debtors prisoners only work for individuals not corporations. But individual debtors generally aren't the problem (they don't get big enough loans to matter) for the system to fail.
The Housing Crisis of 2008 says hello. Individuals can definitely get big enough loans to create a systemic risk, usually in big ticket items like houses, education, and car loans if enough went belly up. It's all layered and flows both ways.
Single big loans by companies are often less dangerous because they have higher lending requirements than lots of smaller loans to retail borrowers buying houses and such which have lower lending standards and more government support.
Housing busts have been some of the biggest systemic risks in our history driven by smaller borrowers unable to payback mortgages as the use of credit by the public for big ticket purchases has become more common in the past 60 or 70 years.
If the price of homes, vehicles, and education weren't rising drastically faster than wages and purchasing power, these loans wouldn't be unaffordable, and people wouldn't be defaulting to the level where it causes a crisis.
Diamond isn't making the decisions any more if they declared bankruptcy. They have some arrangement with a court as to what they can do. That's why acting like they're thieves is thinking they have a say in the matter. Once you enter bankruptcy proceedings, you are relinquishing control to a bankruptcy court and the lawyers involved.This appears to be chapter 11 bankruptcy and it sounds like they are already purchased and still basically in operation. It seems a lot more dubious to just claim and sell all the inventory from the consignors when they are still operating and selling stuff.Actual attorney here. Some experience with Bankruptcy, but not a bankruptcy attorney.
Deriven is correct. Once you enter bankruptcy, CH 11 or otherwise, most of the decisions are made by the Bankruptcy Trustee. This is a Court official who acts to equitably distribute the assets of the (in this case) business to all the Debtors, as guided by Bankruptcy Law. The Debtor has to get the Court's approval to do almost anything, even pay their own lawyers.
Bankruptcies are usually referred to by a "chapter." It is a reference to the section of the bankruptcy code that regulates the type of debt relief sought. The three most common types of bankruptcies are Chapters 7, 11, and 13.
Chapter 7 is liquidation. This is for both businesses and individuals. The Court takes all the assets and sells them to pay what it can of the debts owed per the bankruptcy code. The whole point is there isn't enough money to go around so everyone is going to lose some money. Generally secured creditors are first in line. Your house is put of as "security" for your mortgage. So in a Ch 7, your Mortgagor gets your house. Now that may pay the full mortgage, but sometimes it doesn't. An unsecured creditor, usually a credit card or other line of credit, is usually out of luck for in a Ch 7. They get nothing, or pennies on the Dollar.
Chapter 11 and 13 are restructuring debt. Ch 11...
Yeah it seems strange if they expect to leave chapter 11 shiving the the people who make the product that makes your business work seems to make it unlikely for you to successfully continue.
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If the price of homes, vehicles, and education weren't rising drastically faster than wages and purchasing power, these loans wouldn't be unaffordable, and people wouldn't be defaulting to the level where it causes a crisis.It's completely morally bankrupt and is effectively theft.Bankruptcy as a whole is morally bankrupt and is effectively theft. The only question is, 'theft from whom?'
But considering that the historical alternative is debtor's prison...
I wouldn't consider bankruptcy in and of itself to have moral standing.
Effectively you have more debt than you can pay, and you tell your creditors that "you're giving up". Sometimes that results in restructuring of the company and selling off assets and continuing to operate. And yes, it could be viewed as theft from your creditors, but I feel like that is the risk that creditors take. In my view, that is the risk they're taking and in the event of bankruptcy, they are the ones who should get screwed.
Also, debtors prisoners only work for individuals not corporations. But individual debtors generally aren't the problem (they don't get big enough loans to matter) for the system to fail.
The Housing Crisis of 2008 says hello. Individuals can definitely get big enough loans to create a systemic risk, usually in big ticket items like houses, education, and car loans if enough went belly up. It's all layered and flows both ways.
Single big loans by companies are often less dangerous because they have higher lending requirements than lots of smaller loans to retail borrowers buying houses and such which have lower lending standards and more government support.
Housing busts have been some of the biggest systemic risks in our history driven by smaller borrowers unable to payback mortgages as the use of credit by the public for big ticket purchases has become more common in the past 60 or 70 years.
It's worse than that. The banks had a good idea that the loans were going to default*, and they did them anyways because they knew they could still make money. Ultimately someone probably realized (before the collapse) that the taxpayers and society would have to bear the burden of what they were doing and decided that it wasn't their problem.
*They were lending to borrowers with incomes that were questionable compared to the loan amount and their other assets. Although to an extent it was viewed as acceptable because it was against houses, so you could claim the house and get back your value...until the housing market crashed.
This motion feels short sighted from my perspective. If you expect to continue distribution once Ch 11 is completed, this action would seem to be lighting your company on fire. Paizo and these other companies are going to think long and hard about working with Diamond again in the future even once Ch 11 is closed. I wonder if they are in worse financial condition then they initially thought and they may be looking at converting the remaining divisions to a Ch 7. Just speculation.Getting off my soapbox for a moment (because everything else I said in this thread was about the morality of it, not the legality of it) and just talking about practicality of it: I was wondering about this.
If the goal here is to keep operating, liquidating your supplier's stock and them getting shortchanged on it seems like a terrible idea. Who is going to want to supply Diamond more stock after that without cash up front?
A distributor that suppliers can't trust doesn't seem like a viable business.
It isn't. That's another thing that happens with bankruptcy. Your credibility goes into the gutter. No one wants to do business with you. That's why failing businesses are so bad. It cascades on them and no one wants to do business with them. This makes it hard to recover.
In investing when a company goes bankrupt, you try to sell your stock as fast as possible to see if you can recover some capital as the stock price tanks. The stock price tanking makes it difficult for the company to access capital markets to help recover. Banks don't want to lend to you. Investors don't want to buy your stock. You already don't make enough money to sustain your business. It's a pretty terrible situation to be in for a business.
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You know what this thread has made me think more than anything, our financial systems are too complex, set up for the little guy (typically) to get screwed, and for banks (or lenders) to come out ahead.
And I really wish we could start over and make it simple and not in the multibillion dollar companies favors....without also destroying the financial systems we're comfortable with as end users (which would absolutely be impossible).
The world, especially America, has incredibly complex financial systems. And no financial education in the education system.
I know I had to learn about finance on my own.
The American education system seems content to send Americans into the world after K1 to 12 with no business education so they can't assess how to best use credit, contracts, and other financial instruments used in American business. It's hard not to think this is somehow agenda driven to send so many into the wild with no training on how to survive.
We gave kids more training in the old days on how to hunt, fish, cook, start a fire. Now that the world is changed we don't teach Americans kids nothing about business contracts, financial instruments, or anything about the complex world of business and finance they will be expected to navigate. It's pretty terrible in my opinion.
At this point in time, business education should be up there with learning English and math. I think it would improve student willingness to engage with math if they knew how math was used in relation to money by everyone.
If the price of homes, vehicles, and education weren't rising drastically faster than wages and purchasing power, these loans wouldn't be unaffordable, and people wouldn't be defaulting to the level where it causes a crisis.It's completely morally bankrupt and is effectively theft.Bankruptcy as a whole is morally bankrupt and is effectively theft. The only question is, 'theft from whom?'
But considering that the historical alternative is debtor's prison...
I wouldn't consider bankruptcy in and of itself to have moral standing.
Effectively you have more debt than you can pay, and you tell your creditors that "you're giving up". Sometimes that results in restructuring of the company and selling off assets and continuing to operate. And yes, it could be viewed as theft from your creditors, but I feel like that is the risk that creditors take. In my view, that is the risk they're taking and in the event of bankruptcy, they are the ones who should get screwed.
Also, debtors prisoners only work for individuals not corporations. But individual debtors generally aren't the problem (they don't get big enough loans to matter) for the system to fail.
The Housing Crisis of 2008 says hello. Individuals can definitely get big enough loans to create a systemic risk, usually in big ticket items like houses, education, and car loans if enough went belly up. It's all layered and flows both ways.
Single big loans by companies are often less dangerous because they have higher lending requirements than lots of smaller loans to retail borrowers buying houses and such which have lower lending standards and more government support.
Housing busts have been some of the biggest systemic risks in our history driven by smaller borrowers unable to payback mortgages as the use of credit by the public for big ticket purchases has become more common in the past 60 or 70 years.
We could get into a nice long discussion on the problems of the 30 year mortgage and the dual income household causing housing prices to skyrocket out of control. I won't take us too far offtrack.
I like to invest and make money. But boy, once you learn how all this works, the screwjob being done to America using credit is pretty damn sad.
This whole thing has me wondering if it would be possible for publisher and distributors to enter into a relationship where, for legal purposes, the distributor purchases the stock from the publisher at a set price, with generous repayment terms (net 180, 6 months, or perhaps even longer) with an option to return items at that same price.
It's the shared ownership of consignment that is a problem to me, that opens up publishers to risk in the case of bankruptcy. If the publisher instead had sold the inventory to the distributor, their would not be shared ownership, but instead the publishers would be a creditor to the distributor. Meaning a better chance of recouping (at least how I understand the proceeding of bankruptcy).
Heck, maybe it's an agreement of 25% of value to be paid in 6 months, 50% of value to be paid in 9 months and total net to be paid in 1 year, still with an option to return the product. Essentially the publisher is giving an short no interest loan to the distributor.
Diamond isn't making the decisions any more if they declared bankruptcy. They have some arrangement with a court as to what they can do. That's why acting like they're thieves is thinking they have a say in the matter. Once you enter bankruptcy proceedings, you are relinquishing control to a bankruptcy court and the lawyers involved.Although Diamond could have done some shady things prior to bankruptcy (not saying they did, just a possibility) you're rifht once they enter bankruptcy they don't have control. However, the situation could still be considered legalized theft, albeit by the court system rather than Diamond as an entity.
Consignment is a way for a distributor and retailer to take a shot on a new product run using the shared risk relationship. If the distributor or retailer had to put money up front first, they might not give new publishers or authors much of a shot to get on the shelves or in front of their sales channels. I don't think they would do that.
Way back when as a new small publisher, the only way Diamond would take a print run was on consignment. If memory serves me right, you had to pay a fee to get in their catalogue so their customers could buy your product. I imagine the catalogue is all online now.
No consignment would make it very risky to take on new publishers and product. Paizo may be ok with it as they have an existing customer base they can leverage, but then again why would Paizo bother to use a distributor if they can sell direct. Be no point in giving a middle man distributor any share of the profit if they can do it themselves.
New publishers would have a rough time with no consignment.
Publishing is a unique business. I learned way back when it is extremely difficult to obtain a business loan for a published work as they have no intrinsic value. Even the paper and materials it is printed on lose their intrinsic value once used. So there is no asset to secure the loan as a published work has no value until a customer purchases it.
No consignment would make it very risky to take on new publishers and product. Paizo may be ok with it as they have an existing customer base they can leverage, but then again why would Paizo bother to use a distributor if they can sell direct. Be no point in giving a middle man distributor any share of the profit if they can do it themselves.
New publishers would have a rough time with no consignment.
Publishing is a unique business. I learned way back when it is extremely difficult to obtain a business loan for a published work as they have no intrinsic value. Even the paper and materials it is printed on lose their intrinsic value once used. So there is no asset to secure the loan as a published work has no value until a customer purchases it.
I was trying to propose an alternative to consignment.
To be honest, I don't fully understand the legal and financial implications of the consignment relationship, but to me have an arrangement where the distributor buys the inventory, but has an absurdly long time to pay for it and also has the ability to return the inventory to the publisher at the same value seems like it would accomplish effectively the same thing, without opening up publishers to these situation with consignment where "your" inventory is taken during bankruptcy. Because at least in my mind, it changes the publisher from being a co-ownership to being a creditor, which changes how a publisher gets to interact substantially during a bankruptcy (they're more likely to get paid).
I agree without some kind of mechanism like consignment distributors wouldn't take risks on new publishers.
I've been pondering why I had such a visceral reaction to the use of the word 'theft' in this situation, and I think it is because it seems to argue that while agency, consent, and responsibility are valid legal principles, they are not valid ethical principles.
I find that very unsettling since they are core principles for every system of ethics that I would even remotely consider adopting.
Let's say that a couple gets married in a community property state. Neither expects that they will get divorced, but each understands that if they do, any assets earned during the marriage will be split evenly between them.
Ten years later they do get divorced. During the marriage, spouse A earned significantly more than spouse B did, so an equal division of assets will not correspond to the amount that each spouse brought into the partnership.
So in the divorce more of spouse A's earned wealth automatically becomes the property of spouse B than the reverse.
From my perspective, the ethics here are simple. Both people willingly agreed to this arrangement when they got married so each is responsible for upholding the terms of that agreement, and neither is acting unethically by insisting that the other person do so.
But many of you seem to view this differently. Apparently, under your system of ethics, although spouse B is legally entitled to that property, by insisting that spouse A abide by their agreement spouse B is acting unethically.
As I understand your point of view, spouse A is a victim here because this is the "legalized theft" of spouse A's property.
But that seems to completely devalue spouse A's agency. Since both people were mentally competent when they willingly consented to this outcome, I don't see why spouse A is absolved of all ethical responsibility to follow the terms of the agreement or why spouse B is wrong to insist that the agreement be followed.
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Let's say that a couple gets married in a community property state.
Why? That's not even remotely similar to the scenario being discussed here? If you're going to accuse people of being ethically bankrupt (haha) you could at least have the courtesy of staying within the bounds of the actual topic instead of constructing an entirely different fictional scenario with entirely different circumstances and dynamics.
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I've been pondering why I had such a visceral reaction to the use of the word 'theft' in this situation, and I think it is because it seems to argue that while agency, consent, and responsibility are valid legal principles, they are not valid ethical principles.
I find that very unsettling since they are core principles for every system of ethics that I would even remotely consider adopting.
Let's say that a couple gets married in a community property state. Neither expects that they will get divorced, but each understands that if they do, any assets earned during the marriage will be split evenly between them.
Ten years later they do get divorced. During the marriage, spouse A earned significantly more than spouse B did, so an equal division of assets will not correspond to the amount that each spouse brought into the partnership.
So in the divorce more of spouse A's earned wealth automatically becomes the property of spouse B than the reverse.
From my perspective, the ethics here are simple. Both people willingly agreed to this arrangement when they got married so each is responsible for upholding the terms of that agreement, and neither is acting unethically by insisting that the other person do so.
But many of you seem to view this differently. Apparently, under your system of ethics, although spouse B is legally entitled to that property, by insisting that spouse A abide by their agreement spouse B is acting unethically.
As I understand your point of view, spouse A is a victim here because this is the "legalized theft" of spouse A's property.
But that seems to completely devalue spouse A's agency. Since both people were mentally competent when they willingly consented to this outcome, I don't see why spouse A is absolved of all ethical responsibility to follow the terms of the agreement or why spouse B is wrong to insist that the agreement be followed.
Or we could discuss the ethics of completely disingenuous examples? And since you provided one, I will too:
Say for example you're doing a move, and I offer to let you store some stuff in my house until you get settled. I then sell the house along with everything inside it and keep all the money. Did I do something wrong? Or is that perfectly fine because you took the risk of putting things in my house while I was providing you the service of storage?
But getting back to the actual point: Roll for Combat's first video reaction to this made pretty clear that they actually had no idea this could happen. That's been a pretty common reaction. So the first question is if they actually even knew that. If we assume they should have known this was a risk, then someone is responsible for them (and a lot of others) not knowing that and I imagine there's going to be some hard questions put towards a bunch of lawyers about "why didn't you warn us of this or do anything to protect us from it?". But lets assume that they did, or should have known.
Even then, your example still doesn't work because none of them actually had any agreement with Diamond's creditors. Roll for Combat (and Paizo, and everyone else) had a deal with Diamond to distribute things for a percentage of the sales. That's it. Diamond never actually bought this stuff so ethically, they don't own it. They have possession of it for the purpose of facilitating sales, which they get paid for.
Effectively a third party that Paizo never made any agreement with is now coming in and claiming they should be entitled to simply take that stuff, sell it, and keep the proceeds themselves. You know what we call that when an individual goes somewhere, takes something that isn't theirs, and sells it for personal profit?
Theft.
A more accurate version of your example would be if B's new partner C showed up and claimed they're also entitled to a bunch of A's assets.
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I…don’t have a problem with Gisher’s example, it just seems like a useful way of illustrating their understanding of what folx in this thread are upset about.
Personally, even though you might have the legal right to sell off “stuff what ain’t yours” because binding contract doesn’t mean you have to or that anyone should have any sympathy for your legality or not call it legalised theft. It’s not their stuff. No one thinks it is “theirs”. No-one should resort to “but it’s legally ok, bcoz agreement written in blood”. Sure, it’ll hold up in a court of law, if your lawyer is wearing the right color pants, and the Judge isn’t having a bout of gout, or is, or will or whatever. But that doesn’t make it ethical where ethics mean doing what is “right”. If you can absolutely go to bed at night thinking you acted ethically, because someone in full possession of their mental faculties agreed to you having the right to sell off their stuff just coz it ended up at your place when the disintegrate hit, then….great. But to me, it isn’t ethical.
To use another poor comparison - corporations that pollute often make sure to cry that they are “well within state regulations” or “observe limits as supplied by governments” while also knowing full well that those limits are borked, and there often is no “safe” limit. And they feel that operating within those limits makes their activities ethical. It really, really doesn’t.
So resorting to “but, contract!” to me is actually twice as unethical, because the activity was unethical to begin with, and then engaging in legalese (“I’m well within my rights”) is unethical.
Like most things, it just comes down to what your definition of “is” is… To my mind, whoever is running whatever arm of former-Diamond has an ethical responsibility to return held items that were created/published by someone else, and the law should not permit that just because at time of declaration, that Fraughtday in Octember, stuff (again, that isn’t “theirs”) was on their site, that it is somehow caught up in this and can be considered “sellable” with no proceeds going to the producers. To say that this is all correct and proper let alone ethical absolutely indicates that the system is erroneous, and that humans have tricked themselves into an unethical system.
And I get that some folks will lose out. But creating more losers (consignors) than there already are (whoever is owed by bankruptcy) seems…needlessly stupid.
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I'm surprised Diamond has gone bankrupt. They were the big distributor in the market 30 plus years ago when I was looking to publish a comic book. Diamond Distributors has been doing business a long, long time. Not sure if Covid got them or just changing times with everything moving digital or some combination of the two.
If Diamond Distributors is going out of business, that hurts the overall small publishing business. Looks like they been in business since 1982. That is 43 to 44 years of business.
I know this hurts a lot of people, but I'm fairly certain Diamond did not want or intend this to happen. And it does look like COVID got them as it did so many other businesses that had been around a long time. That is too bad.
Diamond may be gone soon. One of the rocks of the publishing market brought low.
Looks like Diamond lost some very big customers during COVID. This may have been the start of the end of their business.
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I've been pondering why I had such a visceral reaction to the use of the word 'theft' in this situation, and I think it is because it seems to argue that while agency, consent, and responsibility are valid legal principles, they are not valid ethical principles.
I find that very unsettling since they are core principles for every system of ethics that I would even remotely consider adopting.
Let's say that a couple gets married in a community property state. Neither expects that they will get divorced, but each understands that if they do, any assets earned during the marriage will be split evenly between them.
Ten years later they do get divorced. During the marriage, spouse A earned significantly more than spouse B did, so an equal division of assets will not correspond to the amount that each spouse brought into the partnership.
So in the divorce more of spouse A's earned wealth automatically becomes the property of spouse B than the reverse.
From my perspective, the ethics here are simple. Both people willingly agreed to this arrangement when they got married so each is responsible for upholding the terms of that agreement, and neither is acting unethically by insisting that the other person do so.
But many of you seem to view this differently. Apparently, under your system of ethics, although spouse B is legally entitled to that property, by insisting that spouse A abide by their agreement spouse B is acting unethically.
As I understand your point of view, spouse A is a victim here because this is the "legalized theft" of spouse A's property.
But that seems to completely devalue spouse A's agency. Since both people were mentally competent when they willingly consented to this outcome, I don't see why spouse A is absolved of all ethical responsibility to follow the terms of the agreement or why spouse B is wrong to insist that the agreement be followed.
Nah, very different systems/structures at play here. There is an expectation that each person in a marriage is bringing something to the table, though that something may not be tangible income, but it could be services, such as child care. Ultimately in a marriage (barring a prenuptial agreement) the established legal principle is that everything * is jointly owned and in the event of divorce split evenly (although if both parties agree things can be split not evenly), because each person is an equal owner of all their stuff.
The difference with consignment is that its incredibly expensive and legally challenging to get the "perfect consignment" (as I understand it being referred to) or publishers may not even understand the risk they're taking by entering into a consignment relationship.
Honestly, in my mind there's simply no analogy between marriage legal/ethical issues and business legal/ethical issues.
*Conditions apply and its complicated, if you can establish ownership of items prior to marriage you can is some circumstance even without a prenup effectively remove that from the calculation of "evenly" splitting the joint marriage property.
That complexity creates a whole ton of benefits for regular folk. Without the ability to monetize and share (i.e. buy and sell down) risk, banks would be unwilling to loan most people money so you can forget owning a house. Small businesses would be much harder to start. Goods would likely be more expensive and there would be fewer of them. Paizo/Diamond is a good example: consignment is cheap and takes much of the work off Paizo. Without a consignment deal, third party sellers might charge more (because without consignment deals, they buy down the risk of <100% of stock selling with a higher profit margin on the units that do sell), and because Paizo would have to negotiate with all those third party sellers directly, there would likely be fewer third party sellers at all. Goodbye, local TTRPG stores. The system would be much more in favor of "money makes more money" than it is now, because the only ones able to take business risks would be the groups that have a lot of capital to start with. Yes, the downside is that when something goes wrong, more people than just the responsible party pay for their mistake. Much more rarely, we have something like the housing crises where there is a cascade failure and lots of people get hurt. But it's probably still true that, even including such events, economies grow faster and people become more prosperous using this system than not using it.
Having said that, yeah it could definitely be tweaked. For bankruptcy, for instance, it would be nice if the priority of creditors generally did a better job of favoring (lawyer fees first then) 'first in' rather than 'biggest investment'. That would put us little guys on the same theoretical footing as the big guys. But maybe some bankruptcies already do that? IANAL, and as you say, it's complex.
I generally agree with your observation, but I disagree that the complexity inherently creates benefits. I think you could have those same benefits with less complexity but again you'd have to create a whole new financial system....which is damn near impossible to do without destroying....everything in the process.
I'm surprised Diamond has gone bankrupt. They were the big distributor in the market 30 plus years ago when I was looking to publish a comic book. Diamond Distributors has been doing business a long, long time. Not sure if Covid got them or just changing times with everything moving digital or some combination of the two.
When this broke the subreddit and a discord I follow were fully of dozens of posts screaming with glee about the Diamond bankruptcy part back in January, apparently there were an awful abusive/nonresponsive monopoly who everyone hated to deal with for decades. One or two other companies finally entered the space as competitors and stole their big clients some years back (DC in 2020, Marvel in 2021).
Let's say that a couple gets married in a community property state.Why? That's not even remotely similar to the scenario being discussed here? If you're going to accuse people of being ethically bankrupt (haha) you could at least have the courtesy of staying within the bounds of the actual topic instead of constructing an entirely different fictional scenario with entirely different circumstances and dynamics.
I'm sorry if I offended anyone. It wasn't intentional. I'm aware that my thought processes are unusual, and that this can often lead to communication difficulties — especially in online environments were facial cues and other aspects body language aren't available to provide me with immediate feedback so that I can correct misunderstandings as they occur.
To clarify, I wasn't accusing anyone of being morally bankrupt. I don't even subscribe to the concept of moral bankruptcy as I think you are using the term.
Since everyone has different values, and ethical systems are just methodologies for preserving or increasing the things that one values, ethical systems will naturally differ both in their approaches and their ends.
Since value systems vary, there can't be a universal framework within which the morality of entire ethical systems can be evaluated.
So while an ethical system can be evaluated based on criteria like effectiveness or internal consistency there isn't any framework from which one can meaningfully evaluate an ethical system as intrinsically morally good or morally bad.
All of which means that, while other ethical systems are different from mine, or might even support values that are in direct opposition to mine, that doesn't make them morally bankrupt in my view — just different.
In this current case, it seems that some people here are using a different ethical system than the one that I use or other ones that I'm familiar with, and I'm just genuinely curious as to how that system works.
All analogies are imperfect, but I had hoped to create one that had a similar structure, but perhaps a bit less immediate emotional resonance so that people could clarify the principles that they are using to evaluate their concept of "theft" for me.
From the responses that my post received its clear that my attempt failed miserably, and I'm sorry if my phrasing caused anyone emotional distress.
I'm not judging anyone's point of view as "right" or "wrong" because, as I said, that would be a meaningless judgment.
I'm just trying to understand points of view that differ from my own current point of view, and for me that requires understanding the fundamental principles that are involved.
I'm still curious about this, so I'd like to try again. This time I'll avoid analogies and just try to strip the situation down to the bare essentials as I currently understand them. I have no idea whether or not anyone will find this approach offensive, but please understand that I am not trying to be offensive.
I'm just trying to understand how you are approaching this situation because understanding other peoples approaches helps me improve my own.
Here is the general situation as I currently understand it.
A number of companies want to engage in a business venture together that each believes has the potential to earn them a profit.
They all hope that it will be a successful venture, but understand that there are a number of different ways that it might not turn out as profitable as expected or even fail completely: the product might not sell very well, the product might be accidentally destroyed or damaged before being sold, one or more of the parties might go into bankruptcy, new taxes might be levied during the sales process, costs of materials might rise, etc.
So in order for each party to be able to make an accurate risk assessment before committing to this venture, they create an agreement that defines the processes by which the assets involved in this joint venture will be divided up in the event that any of those forms of failure might occur.
All of the parties agree to the terms of the contract and they all sign on to it.
Eventually one of those failure points occurs, and under the terms that all of the parties agreed to, some property that formerly belonged to one set of companies, now becomes the property of a different set of companies.
For me, this transfer of assets doesn't qualify as theft in either a legal or ethical sense because the parties that had ownership before the property became part of this venture consented to this outcome when they signed the agreement.
There's clearly a tongue-in-cheek sense in which I could refer to this as "legalized theft" (in the same way that I might refer to heart surgery as "legalized assault"), but because I view the lack of consent as an essential component of both the legal and ethical definition of theft, there isn't any meaningful sense in which I can refer to this situation as legalized theft.
But it seems that some people here do consider this to qualify as theft in an ethical sense despite the fact that all parties involved consented to this arrangement before the failure point occurred.
Those people must be using some principle other than consent to distinguish changes of ownership that are theft from changes of ownership that are not theft.
That's the thought process that I'm curious about; what are the fundamental qualities that you are using to distinguish theft from non-theft in an ethical sense?
Again, I apologize if this question offends anyone. I am just trying to understand your point of view, and would appreciate your help.
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So in order for each party to be able to make an accurate risk assessment before committing to this venture, they create an agreement that defines the processes by which the assets involved in this joint venture will be divided up in the event that any of those forms of failure might occur.
All of the parties agree to the terms of the contract and they all sign on to it.
These bits here are bits I take disagree with, and why I would the situation tantamount to legalized theft (though to be clear, not on the part of Diamond but by the court system).
You see, the agreement that is created likely relies on boiler plate text that the actual operators (publishers) likely didn't understand or only partially understood. From some reading I've done, many publishers did not know or understand this could be the result of the kind of consignment contracts they entered into. It's even unclear exactly what kind of contracts exactly were entered into.
And my qualm is more that this kind of "standard legal contract" even exists in which the outcome can be that the publishers loses their inventory because somehow Diamond is considered a co-owner of that inventory.
There also exist (from my limited understanding) something called a perfected consignment which would have prevented this sort of thing, but it is expensive and create a heavy legal burden to attempt to do. Making it something out of reach to many smaller companies.
It was earlier I was trying to postulate some alternative to these consignment agreements (admittedly I don't fully understand them) that would preclude the situation by preventing the distributor from being a co-owner, or turn the distributor into a buyer (and thus owner) of the inventory with generous terms for payment (turning the publisher into a creditor, which would treat them differently in the event of bankruptcy).
All of which just boils down to me effectively saying the legal system in draconian, complex, and hard to understand and not set up to the advantage of smalls companies. And in this situation while the law is clear, it's pretty much a case of "didn't read the fine print", and so while it's legal it's "not fair" and feels a lot like being stolen from.
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Let's say that a couple gets married in a community property state.Why? That's not even remotely similar to the scenario being discussed here? If you're going to accuse people of being ethically bankrupt (haha) you could at least have the courtesy of staying within the bounds of the actual topic instead of constructing an entirely different fictional scenario with entirely different circumstances and dynamics.
I'm sorry if I offended anyone. It wasn't intentional. I'm aware that my thought processes are unusual, and that this can often lead to communication difficulties — especially in online environments were facial cues and other aspects body language aren't available to provide me with immediate feedback so that I can correct misunderstandings as they occur.
To clarify, I wasn't accusing anyone of being morally bankrupt. I don't even subscribe to the concept of moral bankruptcy as I think you are using the term.
Since everyone has different values, and ethical systems are just methodologies for preserving or increasing the things that one values, ethical systems will naturally differ both in their approaches and their ends.
Since value systems vary, there can't be a universal framework within which the morality of entire ethical systems can be evaluated.
So while an ethical system can be evaluated based on criteria like effectiveness or internal consistency there isn't any framework from which one can meaningfully evaluate an ethical system as intrinsically morally good or morally bad.
All of which means that, while other ethical systems are different from mine, or might even support values that are in direct opposition to mine, that doesn't make them morally bankrupt in my view — just different.
In this current case, it seems that some people here are using a different ethical system than the one that I use or other ones that I'm familiar with, and I'm just genuinely curious as to how that system works.
All analogies...
Okay so stepping back a bit, one thing I dislike about your analogy is that it changes the power dynamics and goals significantly in a way that redefines some of the ethical considerations.
For instance, in your marriage example the assets being divided are jointly held. In our real example, contractually the whole point of the agreement is to minimize the distributor's risk by not giving them a direct stake. There is no joint ownership, intentionally, except for in this obscure and specific case wherein the assets are repossessed to the benefit of the distributor's creditors. Can you see why it's somewhat odd to have a business arrangement intentionally built to minimize the distributor's stake, except for in the very specific instance of taking full ownership of those assets for the express purpose of paying off a bank?
Which leads into...
During the marriage, spouse A earned significantly more than spouse B did, so an equal division of assets will not correspond to the amount that each spouse brought into the partnership.
[..]although spouse B is legally entitled to that property
This section of your example radically alters the power dynamics of the deal being discussed here. In your marriage hypothetical, the more wealthy party is asked to monetarily compensate the less wealthy party to help support the latter's lifestyle.
In this example, 'party A' (the creators of the books being withheld) are significantly smaller and less wealthy than 'party B', Diamond and their creditors.
Equally importantly, the asset seizure in this case is not being used to directly support 'party B', but rather are being used to compensate their creditors.
There's been a lot of discussion in this thread of 'risk sharing' and assumption that misses this key point here, that this has nothing to do with benefitting Diamond or any inevitable risk on their part (the whole point of the consignment process is to shift almost all the risk off the distributor after all) but solely to benefit creditors. I think that last part is somewhat important: This is not Diamond invoking some normal part of business operations, but rather assets being taken from one of their business partners in order to pay a second.
I realize this is all window dressing to you and besides the point, because your main concern is about agency and consent, but I think it's important to illustrate because power dynamics are a central concern as I understand them for the ethical concerns being raised by other posters.
That said...
I think 'willing consent' warrants some consideration here too. Strictly speaking, you're correct, two parties willingly entered a business deal, and to some extent it's hard to disagree that if two people signed a contract willingly that they shouldn't be stuck with those terms even if they're a bit silly. However-
From my perspective, the ethics here are simple. Both people willingly agreed to this arrangement when they got married so each is responsible for upholding the terms of that agreement, and neither is acting unethically by insisting that the other person do so.
If I had a legal agreement with you which stated that in the case of a bankruptcy you could sell those goods, and you went bankrupt, then that would be more equivalant to what's going on here. Now why would I ever sign such an agreement? Well if you're charging me $5/day for storage and everyone else is offering to charge me $50/day, maybe I accept that risk in return for your really cheap deal. But as with many many investments, that higher profit for me should signal to me that there's much higher risk of something going wrong with you.
Easl's example suggests that Paizo took a cheap/easy deal and maybe cut corners and this is just that biting them in the ass. Gisher's comment here emphasizes that this is an equal deal between peers made entirely clearly. I think both of these have the problem of again ignoring broader power dynamics (I think there's also a question of reasonableness here regarding the 'risk' actually being discussed here but that's far enough in the weeds I won't get into it here).
If you're a small publisher looking to bring your books to a wider audience, you do not (or didn't, at the time) have a broad set of options and a variety of competitors or different services to consider. TTRPG distribution is just not a wide market, and the few companies that operate in this space are not going to be very willing to take a risk on any publisher, much less more niche ones (because again, despite some comments earlier in this thread, consignment is about minimizing risk and stake for the distributor).
So while yes, it's not wrong to say that the two parties entered the contract willingly, "agency and consent" does a lot of heavy lifting when we're talking about an industry where this is only one deal on offer and the alternative for a small company is largely not getting your books distributed at all.
So to put it together as I understand it: On the front end you have a company being presented with the only deal they'll ever get that shifts most of the risk onto themselves... and then on the back end when an obscure legal rule (many of the companies involved seemed to have been blindsided by this, even ones with established legal counsel) is invoked to seize their assets, they're told "that's just the risk we all take, you should have done your research and got a better deal".
All to benefit a creditor (Chase) who brings in more money daily than most of the companies involved will make in a a decade.
I hope that helps maybe understand the other perspective a bit. To the best of my understanding I tried to illustrate some of the key ethical concerns here.
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When this broke the subreddit and a discord I follow were fully of dozens of posts screaming with glee about the Diamond bankruptcy part back in January, apparently there were an awful abusive/nonresponsive monopoly who everyone hated to deal with for decades. One or two other companies finally entered the space as competitors and stole their big clients some years back (DC in 2020, Marvel in 2021).I'm surprised Diamond has gone bankrupt. They were the big distributor in the market 30 plus years ago when I was looking to publish a comic book. Diamond Distributors has been doing business a long, long time. Not sure if Covid got them or just changing times with everything moving digital or some combination of the two.
If that's the case, maybe Paizo will be happier in the long run after this short-term pain.
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I'm sorry if I offended anyone. It wasn't intentional. I'm aware that my thought processes are unusual, and that this can often lead to communication difficulties — especially in online environments were facial cues and other aspects body language aren't available to provide me with immediate feedback so that I can correct misunderstandings as they occur.
No worries. :) People are pretty passionate about this topic!
A number of companies want to engage in a business venture together that each believes has the potential to earn them a profit.
They all hope that it will be a successful venture, but understand that there are a number of different ways that it might not turn out as profitable as expected or even fail completely: the product might not sell very well, the product might be accidentally destroyed or damaged before being sold, one or more of the parties might go into bankruptcy, new taxes might be levied during the sales process, costs of materials might rise, etc.
So in order for each party to be able to make an accurate risk assessment before committing to this venture, they create an agreement that defines the processes by which the assets involved in this joint venture will be divided up in the event that any of those forms of failure might occur.
All of the parties agree to the terms of the contract and they all sign on to it.
Eventually one of those failure points occurs, and under the terms that all of the parties agreed to, some property that formerly belonged to one set of companies, now becomes the property of a different set of companies.
For me, this transfer of assets doesn't qualify as theft in either a legal or ethical sense because the parties that had ownership before the property became part of this venture consented to this outcome when they signed the agreement.
The fundamental difficulty is that Diamond doesn't really own these books. They didn't pay to write them or print them. They didn't buy them. They have possession of them, but that isn't the same thing.
Diamond takes possession of the inventory so they can sell it and take a cut of the sale. If they don't sell it, they still don't own it: they send it back to the creator to deal with.
That's actually a pretty good system for everyone involved: small publishers don't have the capacity to do distribution to all kinds of different stores. Even bigger publishers like Paizo probably don't want to do it so they can focus on their core business. Diamond can combine inventory from a lot of publishers and get it to a lot of stores, giving publishers reach into places they may not have contact with on their own and simplifying it for stores, and Diamond doesn't have to do a massive outlay on printing costs to have that inventory to sell.
Overall, the system makes sense. While it's not risk free for Diamond (storing inventory they don't sell isn't free and neither is distribution), they're not taking the risk of printing costs upfront on a book that might not actually sell.
There's also clearly nothing in these contracts that actually spells out that Diamond can just sieze stuff like this, otherwise so many companies wouldn't be taken by surprise by it. It's instead something buried in case files and such that no one who isn't a lawyer can possibly be expected to understand. Small publishers likely had no idea that this was actually a thing that could happen simply due to not having the money to hire a lawyer to invest enough time to know and warn them about it.
The problem is when Diamond goes bankrupt and claims "we can still sell all your stuff that we're holding except we're not paying you for it." They don't own those things. They didn't buy them and they didn't pay the costs of production. They're simply seizing stuff in the warehouse and going "that belongs to a bank none of you actually dealt with now because we owe them money." THAT is where I have a problem.
Taking Paizo/Roll for Combat/etc property and using it to pay off a bank that none of those companies had any dealings or agreements with is simply unfair, and if an individual did that they would get treated entirely differently, especially if they were taking stuff from a bank. The legal system is rigged in favor of big players and the way this is all going down isn't at all ethical. It's legal, but as Asmodeus vs Sarenrae teaches us: lawful and ethical are not the same thing.
If they told the publishers "we're going out of business, if you want your stuff back you have to pay to ship it back"? Well, bankrupty sucks, the remaining money has to pay off creditors first. That's unfortunate, but it's 100% ethical.
Adding further to this is that in Roll for Combat's recent update, they point out that Diamond is actually still operating. They're not actually shutting down (another poster pointed that out as this is a Chapter 11). They're still selling stuff. They're still sending Roll for Combat sales reports. Hell, they're apparently still taking in new inventory. So while they're trying to claim they need to just sieze and sell everything to pay off creditors, they're actually still trying to operate and still requesting more inventory come in.
Those are just fundamentally incompatible positions and it's completely absurd for them to say "we're taking your stuff, selling it, and not paying you" while also saying "we're operating normally and could you please send us more stuff that we probably won't sieze and sell without paying you for?"
I'm surprised Diamond has gone bankrupt. They were the big distributor in the market 30 plus years ago when I was looking to publish a comic book. Diamond Distributors has been doing business a long, long time. Not sure if Covid got them or just changing times with everything moving digital or some combination of the two.
If Diamond Distributors is going out of business, that hurts the overall small publishing business. Looks like they been in business since 1982. That is 43 to 44 years of business.
I know this hurts a lot of people, but I'm fairly certain Diamond did not want or intend this to happen. And it does look like COVID got them as it did so many other businesses that had been around a long time. That is too bad.
Diamond may be gone soon. One of the rocks of the publishing market brought low.
Looks like Diamond lost some very big customers during COVID. This may have been the start of the end of their business.
Yeah, losing Marvel and DC hit pretty hard, and the COVID disruption also didn't help. Print costs have also gone way up in the last few years which is likely impacting sales volume.
It's not an easy business to be in right now. I know when I looked at Shining Kingdoms here it's $85 CAD before tax (so pushing $100), while Rival Academies is $65 at the same FLGS. That is a lot of money. Divine Mysteries is flat out over $100. Back in 2019 the Core Rulebook was less than that, and it's a gigantic book.
Folks only have so much money. I may wind up on PDF at this point not because I like PDFs (because I really don't for a lore book that I want to sit down and read through), but because I can afford them. Diamond and the FLGS get nothing from a PDF sale.
I'm surprised Diamond has gone bankrupt. They were the big distributor in the market 30 plus years ago when I was looking to publish a comic book. Diamond Distributors has been doing business a long, long time. Not sure if Covid got them or just changing times with everything moving digital or some combination of the two.
If Diamond Distributors is going out of business, that hurts the overall small publishing business. Looks like they been in business since 1982. That is 43 to 44 years of business.
I know this hurts a lot of people, but I'm fairly certain Diamond did not want or intend this to happen. And it does look like COVID got them as it did so many other businesses that had been around a long time. That is too bad.
Diamond may be gone soon. One of the rocks of the publishing market brought low.
Looks like Diamond lost some very big customers during COVID. This may have been the start of the end of their business.
Yeah, losing Marvel and DC hit pretty hard, and the COVID disruption also didn't help. Print costs have also gone way up in the last few years which is likely impacting sales volume.
It's not an easy business to be in right now. I know when I looked at Shining Kingdoms here it's $85 CAD before tax (so pushing $100), while Rival Academies is $65 at the same FLGS. That is a lot of money. Divine Mysteries is flat out over $100. Back in 2019 the Core Rulebook was less than that, and it's a gigantic book.
Folks only have so much money. I may wind up on PDF at this point not because I like PDFs (because I really don't for a lore book that I want to sit down and read through), but because I can afford them. Diamond and the FLGS get nothing from a PDF sale.
The world has changed.
Even I've reached a point where I prefer to get something as immediately as possible either buying a digital copy or having it shipped to my door.
When I was young, my buddies and I used to love to go to the gaming store and see what new stuff came out, see if anyone was playing in the back room, and buy some new dice or figures.
I wonder sometimes if young people are still going to gaming stores to meet some fellow gamers and look at new stuff on the shelves or if that era is completely over.
@Gisher, did my take on it alert you to differing concepts of “right” and “wrong” and how consent or legality doesn’t make your actions “correct”?
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When I was young, my buddies and I used to love to go to the gaming store and see what new stuff came out, see if anyone was playing in the back room, and buy some new dice or figures.
I wonder sometimes if young people are still going to gaming stores to meet some fellow gamers and look at new stuff on the shelves or if that era is completely over.
We've already got that problem. I know finding new players is harder than it used to be. It used to be just go to the gaming store, put a flyer up, or run into people and chat them up. These days it's all various online tools and such and it's a real hassle.
We have more communication than ever, and yet we also lack community and feel more isolated than before.
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I'm sorry if I offended anyone. It wasn't intentional. I'm aware that my thought processes are unusual, and that this can often lead to communication difficulties — especially in online environments were facial cues and other aspects body language aren't available to provide me with immediate feedback so that I can correct misunderstandings as they occur.No worries. :) People are pretty passionate about this topic!
The fundamental difficulty is that Diamond doesn't really own these books. They didn't pay to write them or print them. They didn't buy them. They have...A number of companies want to engage in a business venture together that each believes has the potential to earn them a profit.
They all hope that it will be a successful venture, but understand that there are a number of different ways that it might not turn out as profitable as expected or even fail completely: the product might not sell very well, the product might be accidentally destroyed or damaged before being sold, one or more of the parties might go into bankruptcy, new taxes might be levied during the sales process, costs of materials might rise, etc.
So in order for each party to be able to make an accurate risk assessment before committing to this venture, they create an agreement that defines the processes by which the assets involved in this joint venture will be divided up in the event that any of those forms of failure might occur.
All of the parties agree to the terms of the contract and they all sign on to it.
Eventually one of those failure points occurs, and under the terms that all of the parties agreed to, some property that formerly belonged to one set of companies, now becomes the property of a different set of companies.
For me, this transfer of assets doesn't qualify as theft in either a legal or ethical sense because the parties that had ownership before the property became part of this venture consented to this outcome when they signed the agreement.
I agree with most of what you're saying here, except after bankruptcy is declared it's not Diamond doing the things you're saying.
It's an officer (lawyer) appointed by the court to oversee the bankruptcy proceedings who is invoking the legal process to get Diamond's creditors paid. This process does involve seizing assets held in Diamond's inventory, but Diamond is not making the decisions. They kind of benefit form the decision, in that they may be able to continue operating long term. But they also had the company gutted, selling off divisions to other company to cover their debt which likely is not something the officers of Diamond would have chosen.