Can Book-Sales Clubs Make It Through 21st Century?

Progressive Book Club, Direct Brands Aim for Relevance in Kindle Age

By Published on .

A correction has been made in this story. See below for details.

NEW YORK (AdAge.com) -- Online booksellers may have forever altered how we browse for and purchase books, and Amazon's latest Kindle may yet do the same for how we read them. But at least two companies are certain that there's still a place in the digital future for an 83-year-old service: direct-to-consumer book clubs.

DIRECT BRANDS: In three months, relaunched 20 websites for its clubs.
DIRECT BRANDS: In three months, relaunched 20 websites for its clubs.
Even if the numbers, not surprisingly, suggest otherwise.

Last month the Association of American Publishers released its annual estimates for U.S. book sales, based on data from the Census Bureau and 81 publishers. Book sales in 2008 totaled $24.3 billion, down 2.8% from $25 billion in 2007. Books sold through book clubs or mail-order made up roughly 2.5% of that total, or $600 million. So book-sales clubs already are a small piece of that pie, and that piece is shrinking. Between 2002 and 2008, the compound growth rate for total book sales was 1.6%, whereas for book clubs and mail order, it was -5.7%. For e-books, that rate was 57.6%. Clearly, book-sales clubs are hurting.

Direct Brands, parent of 21 different book-sales clubs in addition to DVD club Columbia House and a music club; and Progressive Book Club, a year-old start-up, are two direct-to-consumer marketers trying to change the perception of traditional book-of-the-month sales clubs and elevate their relevance in the 21st century.

Evolving services
"We are very aware that this is an old model," said Sharon Siegel, exec VP-marketing with Direct Brands. "But we are also very aware that we have millions of members who still want to be a part of this model."

She added that the book clubs under Direct Brands, including the Literary Guild and Doubleday Book Club, are committed to evolving their services and offerings to attract new members and keep current ones returning.

Book-sales-club models vary, but most offer discounted books in exchange for a one- or two-year purchase commitment. Many also include some form of negative option component in which the club offers up a suggested title, and unless subscribers tell the club that they do not want the title in advance of shipment, they must receive and pay for it. Which isn't exactly the sort of behavior that will get you far in a world in which the consumer is in control.

Chief marketing officer of PBC, Pablo Olay -- who came to the start-up last December after eight years with Direct Brands -- said one of his main goals has been changing certain vestiges of the past. So, out with much of the snail-mail communication, and in with web strategy and new-fangled tactics such as cause marketing.

Community
He views PBC not as a mere book club, but as a book community. Members can discuss their views online in community discussion forums and read exclusive content from highly regarded writers and journalists. PBC also offers a unique book-reading and charity-giving combination; books are selected for their liberal bent by a renowned editorial board (members include Michael Chabon, Dave Eggars and Erica Jong) and $2 of the proceeds from each book sale go to one of the participating nonprofits.

PBC does all of its marketing online, including significant e-mail campaigns to select lists, search advertising and some online banner ads. It secures the e-mail distribution lists through partnerships with 45 nonprofit organizations, including Mother Jones and Air America. PBC is an e-commerce outlet only, and it does not communicate with customers by mail -- nor does it offer them a "bill me later" option, something that once was synonymous with such clubs but came with hassles around payment.

Direct Brands has been slower to embrace the web, but it is showing signs of change. In the last three months alone it has re-launched 20 websites for its book clubs. Since January, clubs have become credit-card-only for enrollments, and while Direct Brands uses direct mail in its marketing campaigns, it has come to rely on e-mails, banner ads and search efforts as well.

And, boy, do they e-mail. Sharon Fantera, head of editorial with Direct Brands, estimates that book clubs communicate with their customers about new books or recommendations around three or four times a week.

But Ms. Siegel was quick to point out that all e-mails are opt-in. "Saying no is as easy as saying, 'No, thanks,'" and clicking the appropriate button, she said.

But the e-mails go out to former members, too. They promise four books for 99¢ and a free book if you rejoin, in one recent example.

"We don't like to think of ourselves as pushing our books on readers; we like to think that we are curating and recommending a selection of books for our readers," Ms. Siegel said.

Direct Brands spent $51.8 million on advertising in 2008, according to TNS Media Intelligence estimates, excluding internet data -- a decrease of 18% over 2007.

Still experimenting
So do these book clubs have a chance?

Both companies are privately held and declined to share sales or member data. Mr. Olay said he is pleased with his company's growth in the past year, and sales have been higher than anticipated.

Direct Brands is the largest direct-to-consumer media distributor in the U.S., so the -5.7% compound growth rate from the Association of American Publishers for book clubs and mail order is a good proxy for the company's declining business over the past six years. Before Direct Brands was sold to the Phoenix-based Najafi Cos. in July 2008, the company was part of Bertelsmann Media Worldwide. There, in 2007, the North American group's revenue was down 10% to $1.42 billion and customers down 18.7% to 13 million users, according to The Wall Street Journal.

But the clubs' claims to really be listening to customers may help. PBC is experimenting with different payment models, and testing which are most attractive to consumers. Direct Brands hopes to unfold community web features in the coming year, something its readers want. Both companies say they are also looking at how to integrate their clubs with e-readers such as the Kindle.



~ ~ ~
CORRECTION: An earlier version of this story indicated that Direct Brands had launched 20 new sites. It has relaunched 20 sites. Also yourmusic.com is accepting new members.
In this article:
Most Popular