ORIGINALLY PUBLISHED AT INSIDE.COM (4/26/01)
Battered by the rise of Internet retailing, skewered by deep-discount bookselling chains and wounded by waves of sweepstakes scandals, the mail-order book publishing business has been hit hard, as customers have become increasingly cynical about their responsibility to pay up, return promptly and — above all — remain loyal to the companies that drop those familiar rectangular boxes on to their doorsteps.
Though many direct-mail houses insist that they’re adroitly shifting gears as customers dump unopened mailings straight into the trash, industry prognosticators are in agreement on one thing: the numbers aren’t looking good.
Indeed, the industry-wide statistics for mail-order publishers have been dismal, according to the Book Industry Study Group. Despite an uptick last year, sales have slid from $521 million in 1997 to $431 million in 2000. That’s a compound annual rate of contraction of 6.1 percent, says Al Greco, associate professor at Fordham University’s graduate business school and the guardian of the BISG’s book data. ”Looking at a 5 or 10-year period, of all the categories this one looks to be the weakest,” he says. ”This market segment has really suffered and it will continue to suffer. It’s a question of how fast it will be absorbed into other channels of distribution. It probably doesn’t have a long life span.”
Is that why traditional mail-order publishers like Rodale, National Geographic and Harlequin are running to bookstores with their latest offerings? All three publishers have beefed up their trade lists in recent years, and Rodale has just announced the appointment of trade sales veteran Amy Rhodes as publisher of its trade division. Meanwhile, Harlequin announced earlier in April that it would start a trade paperback line, Red Dress Ink, primarily for the bookstore market — a channel that is resistant to the usual Harlequin packaging. And, following the introduction of several trade lines in the last three years, National Geographic is launching National Geographic Directions this Fall, with authors such as Joyce Carol Oates and Larry McMurtry on board.
Sally Wood, president of Prentice Hall Direct, agrees that ”the economics are getting more difficult, in particular with the postage increase of January 2001.” A division of Pearson Education, Prentice Hall Direct mails up to 80 million pieces per year and publishes under the Prentice Hall Press imprint, among others. While the company has sold to the trade for a long time — now through sister company Penguin Putnam — Wood says ”the retail side is growing,” with titles on the mysteries of leadership including Cigars, Whiskey & Winning (leadership lessons from Ulysses S. Grant), and Business Week bestsellers Elizabeth I, CEO, and Patton on Leadership breaking loose from the pack. The company also sells over 1,000 titles via its web site.
Several direct-mail publishers are quick to point out that aggressive trade sales are simply part of the evolving marketplace. ”I can’t deny that there is a slowdown in direct mail,” says Nina Hoffman, president of books and school publishing for the National Geographic Society. ”But National Geographic entered the trade market in 1993. It was not a reaction to an industry slowdown in direct mail. It was an ardent wish to make available to a greater populace the material which the society was developing.”
While trade sales have been integral to the company for years, Hoffman says, one significant difference is that publishing a book now comes with the recognition that while it may be offered to members first, it will ultimately be available in all channels (distribution is now via Simon & Schuster). Also important for National Geographic is the role trade serves as a conduit for new membership. Indeed, Hoffman says the impetus for the nonprofit organization to be in the trade was an acknowledgment that its future members will be in those channels. ”Channels of distribution have in many ways blurred,” she adds. ”If you are going to be successful, you are going to have to distribute in multiple channels.”
Neal Goff, a publishing veteran who comes out of direct response, thinks there is a ”grass is always greener” element at work: it is rare to have a runaway success in direct response and ”even then the process of hitting the accelerator is a slow, deliberate process.” In trade publishing, on the other hand, ”once the book is on the shelf, consumer demand can take over,” providing handsome profits. At the moment, everyone is looking for those elusive profits, and ironically, trade looks like a surer path to them.
Rosanna Hansen, SVP and Publisher/Editor in Chief of the Weekly Reader Corp., has been on both the direct and retail sides of publishing, and sometimes, as was the case at Reader’s Digest, she has represented the trade component in a large direct-mail publisher. She argues that publishers who come out of trade offer direct marketers a deep knowledge of the product. ”What is sometimes lacking in classic direct response companies is a very strong product sense,” Hansen says. ”The emphasis is on the technical side, but they’re missing the point. If you want a healthy business with a long life, you’ve got to start with the product.”
And as the direct-mail industry weathers a difficult transition, lack of creativity will only make matters worse, says Barbara Gregory, an editorial consultant who had worked with Hansen at Grolier. ”Everyone’s doing what everyone’s doing,” she adds, noting that the inbuilt resistance toward innovation in direct-mail operations is a recipe for disaster.
If only Time-Life Books had gotten the message. The continuity publisher was forced to walk the corporate gangplank earlier this year, as it ran out of viable book programs, fresh names to mail to, and the patience of its new corporate owner, AOL Time Warner and Little, Brown.
