The weird thing is that we may see a situation in the next few years where millions of dollars of Paizo product (among others) make it to retail shelves without the publisher having been paid at all, if Chase/Diamond are allowed ti go through with their plan.
So more than lost revenue even, this creates millions of dollars of direct competition, because how many people walking through Half Price Books who were curious about checked ng out Starfinder someday will know about any of this?
Yes. Absolutely this. Particularly on those products that end up "remaindered" and in places like Half Price Books or Ollie's in the US, the damage to the publishers and the creators will be profound and, as already noted, potentially multiplied.
For those not familiar with the term or the process, remaindered books are those sold by the publisher to "remainder houses"--operations that specialize in these kinds of transactions--for a fraction of their usual rate. When a book goes through a normal distributor, the publisher gets paid somewhere around 50% of the cover price, but when it goes to a remainder operation the publisher may get 5% or even less of the cover price. (Rates are only ballpark here.)
Publishers remainder a book for different reasons, but typically it happens when a contract or license is ending, a new edition is on the way, or sales have slowed to the point where they do not cover warehousing costs. If you fail to remainder the product, the other main option is "pulping," or destroying, the book, which nets you nothing or even costs you. So that 5% (or even less) from remaindering may be preferable. Sometimes those remaindered copies are marked somehow to indicate they are remainders--a black marker line on the top of the pages, a hole punched in the bar code, that sort of thing--but not always. I don't expect the Diamond Zombie copies to be marked. (That may be something the publishers involved can push for in court, if they can't get the stock back.)
If Chase/Zombie Diamond blows out potentially viable new stock to the remainder houses, which is a likely fate for a lot of the books they are holding, many of those products will end up for sale at 50% of cover in new condition at discount bookstores. If the products make it to hobby retail, those products will be competing for shelf space with any new, non-remaindered copies the publisher might offer, but since the Zombie Diamond copies will likely be available to retail at much higher discounts than new copies, they will be eating at least some shelf space and could be sold at a steep discount off MSRP. And the publishers have received zero dollars for all those Zombie Diamond copies, despite having paid to create and print them.
Some publishers will let those captive titles go out of print. If they have copies left in other warehouses, selling them new against the Diamond copies will be a challenge. If Diamond had their entire stock of a book, they would have to print additional copies to sell new anyway, and that is a huge expense at a time when they have lost a lot of money. Some publishers may, effectively, lose their entire backlist for years or maybe forever, if those books were published under fixed-term contracts. This is a huge, potentially fatal problem, depending upon the backlist titles involved and the percentage of overall backlist.
All this damage flows downhill to creators. The freelancers getting flat fees have likely been paid for the creation of the books being held captive. But if you receive royalties for any of your works, you likely got and will get nothing for all the copies captured by Zombie Diamond. (Contracts regularly state money for transactions will not be owed to the creators until the publisher receives the money--publisher licenses a translation of a book and the translating publisher fails to pay up, the writer or artist or whoever was getting a cut of that transaction gets nothing, as well.) And those remaindered new-condition copies suppress the market for new copies for which you might get full payment. And even if your current deal ends, so long as the remaindered copies are hanging around in discount stores, it's harder to get a new deal for the project. And... And...
One final notable detail about the current situation: I've heard about (and experienced firsthand) cancelled future projects and contracts ended in line with the written agreements, and we now have the recent Paizo staff cuts. But it appears the publishers involved have not broadly shifted the damage from all this to freelancers or staff. I have not heard a lot of stories of late or missing payments or royalties from the publishers involved, which is kind of remarkable given everything going on. Knowing some of those houses--I've done projects over the years with Green Ronin, Paizo, Magnetic, and several others caught up in this--I am not shocked. A lot of the places impacted are professional operations with solid business practices. This makes me all the angrier about the situation.
