Posted by: Keir
Bertelsmann AG’s buyout of Time Inc.’s Bookspan, which includes the venerable Book-of-the-Month Club, prompts an examination of retail book clubs in the age of Amazon.com. From the Wall Street Journal (”Book-of-the-Month Club to Turn a New Page,” by Matthew Karnitschnig):
Book and record clubs have shown surprising resilience in the digital age. More than 20 million people in the U.S. — members are typically women in their 40s — continue to subscribe to the clubs despite the popularity of Amazon.com, iTunes and other online platforms. For consumers overwhelmed by the sometimes-bewildering array of choices on the Internet, the clubs offer simplicity and value.
A closer look at the “value” part shows that the book clubs’ offerings, which are “generally inferior to the retail editions,” aren’t necessarily cheaper. Why, then, are people sticking with book clubs?
“What you’re getting is editorial selectivity,” says Mr. Kirshbaum. “They cut through a lot of titles and present the ones you should consider. The History Book Club in particular does an excellent sorting job. They also find offbeat things, such as a pocket historical atlas.”
And how do the book clubs make their money?
Members who fail to make their own choices are automatically sent books from the catalog. These shipments can be returned, but most people don’t bother to do so, ensuring operators a steady revenue stream.
This business model, called the “negative option,” has sustained the clubs for decades. Bookspan, which includes 40 clubs such as Book-of-the-Month Club, Mystery Guild and Black Expressions, generated about $700 million in revenue last year and has about eight million members. Its operating profit margin was about 5%, similar to that of major book retailers.
When I was a kid I used to get LPs through the mail from the RCA music club. If I didn’t mail the monthly postcard back fast enough, telling them I didn’t want the new John Denver album, it was shipped to me automatically. Talk about a negative option.
