So it is with Mark Gleason and Book magazine.
When Mark, who left his job as an Advertising Age reporter in 1997, said he was going to start a magazine about books, I did not dismiss his idea. But, despite my good wishes and polite encouragement, I was skeptical about the magazine's chances-especially since it lacked the marketing support, deep pockets and economies of scale a publishing powerhouse would bring to such a project. This was Mark, as publisher, and a college buddy, Jerome Kramer, as editor, putting up their own seed money to create a niche product.
Sure enough, two years into the launch, Book, published by New York-based West Egg Communications, had a respectable but modest circulation of 150,000. Then Mark found a way to circumvent the traditional economics of magazine publishing, and Book's tale suddenly became intriguing.
Barnes & Noble was getting ready last year to introduce a frequent-buyer program and wanted to give those who signed up benefits beyond discounts on purchases, such as access to special events and the ability to pre-order anticipated releases. B&N also considered starting a custom magazine, but smartly decided it wasn't in the publishing business. Enter Book.
B&N took a half-ownership in the magazine, which it uses as an added-value marketing tool in its Readers' Advantage program. Shoppers who sign up for the program pay $25 a year and get a 10% discount on B&N purchases. By its definition, the program attracts serious book buyers-you have to spend $250 a year with one chain for a Reader's Advantage membership to pay off.
As a signing bonus, new members get a one-year subscription to Book (the magazine gets a $10 cut). After the first year, it's up to Book to renew the subscriptions.
In the B&N program's first year, Book's circulation soared to 1 million. "In a market where everyone else is struggling with circulation, we're zooming," said Mark. He invested in a redesign and will boost frequency from every other month to 10-times-a-year.
The true test for Book begins this month, when the first round of renewals comes due. Mark is shooting for a renewal rate of 15% to 20%, which, he said, "we think is achievable because the program is so targeted."
With those renewals and a steady stream of new customers-B&N expects to sign 3 million to 5 million Readers' Advantage members in the first five years-Mark is confident he can keep circulation up around 1 million. (As a safety net, the rate base for Book is still at 525,000.)
On the ad front, Book is off to a slower start. It will carry about 100 ad pages this year, from brands such as Absolut, Ferragamo, Lexus and Yahoo!. The magazine only hired a sales force late last year, after it cut the B&N deal and just in time for the economic downturn.
Book has to demonstrate to advertisers that subscribers read the magazine even though they did not actively solicit the subscription. And it will have to prove it can keep circulation levels stable. Mark said he's also at a disadvantage since he can't offer multiple-title discounts or cross-media packages.
Still, if it hits renewal targets, Book will have break-even months next year and be profitable in 2003. Mark estimates total launch costs at just $7 million.
Asked if Book can still operate as a stand-alone five years from now, he admits, "It's 50-50. You could never launch a magazine like this and build it through direct mail-it's too expensive. And it was clearly not going to be a newsstand magazine. Our business philosophy was always based on strategic alliances."
Book's success is not yet assured, but give it credit for putting a creative spin on an old business model.