ORIGINALLY PUBLISHED AT INSIDE.COM (12/6/00)
When Stephen King pulled the plug last week on his online serial story The Plant, citing a dwindling base of readers willing to pony up a buck for the latest installment, pundits rushed to declare electronic self-publishing dead on arrival. But many of them failed to notice that King’s supposed rout was actually a striking vindication for something known in direct-to-consumer lingo as ”inertia marketing,” the very model on which book clubs are built.
Yes, book clubs. Remember those?
Alas, long gone are the days when the Book-of-the-Month-Club ”wasn’t just a company; it was an institution — one of those lucky businesses that have slipped into the American vocabulary, instantly recognized in jokes and conversations,” as author William Zinsser wrote on the occasion of BOMC’s 60th anniversary in 1986. ”I remembered a cartoon in the New Yorker by Helen Hokinson,” he continued, ”that showed one of Miss Hokinson’s earnest ladies breaking the difficult news to her local librarian: ‘I’m afraid this is goodbye, Miss MacDonald. I’m joining the Book-of-the-Month-Club.’ ”
Nobody even shed a farewell tear last March, though, when a joint venture was announced between the nation’s two oldest and largest book clubs, and BOMC effectively ceased to exist. With the coming together of Time Warner‘s Book-of-the-Month-Club and Bertelsmann‘s Literary Guild — once archrivals for readers, books and profits — a monopoly was created that would be intolerable in most industries. The partnership controls more than 40 clubs in total, with access to 10 million active members who buy books that are licensed at very favorable terms from publishers. But the Federal Trade Commission could hardly bestir itself to look into possible antitrust violations, as it so fervently did with Barnes & Noble’s attempted purchase of wholesaler Ingram Books.
No, not even the bookstores, which have long been the clubs’ natural foes, seemed to take notice as they battle for readers on what the retailers perceive to be a radically skewed playing field. Indeed, shortly after the announcement, BookSpan, the newly named co-venture, began testing clubs in conjunction with BN.com, in which Bertelsmann also has a hefty investment.
But as direct marketers will tell you, clubs aren’t dead yet, and they’ll give you a two-word explanation why: Inertia happens. Where there’s a lack of will, you might say, there’s a way.
And that’s the problem with Stephen King’s installment plan. His numbers were good, direct marketers say, even at the end. (About 120,000 people downloaded the first chapter. By the sixth installment, the number was 40,000.) The numbers were especially impressive considering the effort readers had to go through — remembering to go to the site, writing their checks (or going to Amazon’s site for the credit card payment), and then downloading the next chapter, never knowing whether King would pull the plug before the story’s end.
Most book marketers don’t take those kind of chances with potential buyers; companies like Reader’s Digest send out a condensed book on a regular basis to subscribers, until that subscriber tells them not to. Book clubs send members the monthly main selections unless they’re told not to. The trick is to make the incentives for remaining with the program attractive enough to outweigh the inconveniences. King’s ”defeat” was in fact a personal triumph against the forces of inertia — and an encouraging sign for less-demanding online book club business model.
Don’t think the clubs didn’t notice, either. Using the traditional marketing methods (negative option, commitments to buy, etc.), but now updated for a wired world, ”we’re going gangbusters,” says Markus Wilhelm, president and CEO of BookSpan. Wilhelm thinks there will be ”over a hundred clubs” in the BookSpan stable in the next couple of years. At some future date those sites will be accessible from PDAs or other e-book readers. As most clubs are hybrids — mailings are sent out, but the member has password access to the club Web site — members can choose how they want to buy (or refuse) books; in certain clubs, they can chat online with fellow readers, as well as with the editors. Meanwhile, new clubs can be tested in a snap (over 10 have been launched this year alone) and increasingly narrow markets can be targeted. An Antiques Roadshow club, an equestrian club and a Teen People club (in coordination with the magazine) are among those being tested.
Neal Goff, senior vice president of marketing at BMG Direct, which oversees Bertelsmann’s music clubs, give credit to another continuity concept: ”negative option,” where members receive that month’s selection unless they remember to cancel. Goff says negative option has turned members into ”perpetual recidivist visitors” to BMG’s site, which is now ranked the top music-focused retailer, drawing 3.7 million visitors a month. Clubs make money, Goff pointedly notes, while e-tailers don’t.
But ask knowledgeable insiders about the future of book clubs, and you’ll find sharply contradictory assessments. Ruth Stevens, president of direct marketing consulting firm eMarketing Strategy (and herself a club veteran), contends that the book club ”value proposition” is fast disappearing. First there was the rise of the chains and superstores, which offer greater choice than the clubs do, and then along came Amazon.com, which, like other e-tailers, offers the variety of a superstore, plus superior customer service, low prices and no annoying deadlines by which a reader has to either send back the ”no book” card or risk receiving unwanted books. ”The ability of the clubs to compete is already deeply eroded,” Stevens says. ”Mamas, don’t let your babies grow up to work at bookclubs.”
What do publishers think about clubs? One subsidiary rights director, who did not want to be identified for obvious reasons, says she doesn’t know whether publishers can make the transition to the online world fast enough to keep members from defecting. From her perspective, the growing emphasis on smaller numbers of books for specialty clubs and the declining sales at the general-interest flagship clubs means that potential book club money is rarely factored into a publisher’s acquisition budget. A publisher has traditionally sold off book club rights, hoping for an auction that would raise the advance, but knowing that the prestige of being selected by a club — and the advertising that the club might give the book when soliciting new members — would make the modest royalties (under 10 percent) that the club pays for each copy of the book sold easier to accept. With a proliferation of niche clubs, however, many of those benefits evaporate. Another rights director summed up his experience selling books for as little as a $1,000 advance as ”very depressing.”
Anyway, what could possibly be in it for the consumer? Why commit to buying a set number of books each year, plus having to exercise ”negative option” every time the club’s mailing doesn’t appeal? Even with an increasingly sophisticated system for offering members the kinds of books they’ve shown a predilection for, the truth is that most members end up turning down most selections.
Wilhelm points out that club prices are often lower than competitors’. All books in The Literary Guild, for example, are 50 percent off the retail price. Meanwhile Amazon’s prices, Wilhelm notes, have increased 15 percent. Plus, according to Christian Friege, once marketing director for BookSpan and currently CEO of Bertelsmann’s U.K. division, Book Club Associates, now that the clubs are online, there is the chance to chat with other, say, railroad aficionados (yes, BCA has a book club for train buffs), as well as taking advantage of the editorial selection and direction that each club’s editors offer. Friege’s clubs provide those perks not just to U.K. members, but also to those in other countries who want guidance on their choice of English-language books. There are Bertelsmann-run English-language book clubs in 12 European countries so far, with more planned.
Though they may not agree on the future of book clubs, those in the club biz make one thing perfectly clear: what has raised the bar — on service, on offers, on prices — is Internet bookselling in general and Amazon in particular. Mail-order may always be a component to the relationship with members, say book club managers, but as the Web has forced clubs to be more responsive to their members, it has afforded them a new lease on life. As with everything else in commerce, it seems, the Internet has made inertia viable. Now it’s just one click away.
