Can Book Clubs Survive the Web?
Kimberly Winston -- 3/27/00
With the advent of e-commerce,it's a new ballgame for direct-mail sellers
 | Titles from Harper SF, Quest and Nelson
find a ready market through
specialty clubs and direct mail. |
As the religion book market has grown, so have the book clubs and direct-mail companies that serve the category, selling everything from Bibles to Buddhist texts. With the rise of the Internet as a retail channel, these traditional outlets--with their heavy reliance on paper and "snail mail" to communicate with customers--now find themselves teetering on the precipice of major change.
For now at least, religion publishers across the board report the general health of their book-club and direct-mail businesses. Steve Oates, v-p of sales and marketing for Bethany House, reports that the company's sales though direct-mail house Christian Book Distributors are "growing, and growing rapidly," though its book-club business "has pretty much reached a saturation point." Sharron Brown Dorr, marketing manager at Quest Books, the publishing arm of the Theosophical Society of America, reports that BOMC's One Spirit Book Club has been steadily interested in about half of Quest's list for the past three years. Emily Cothran, domestic sub rights manager for Thomas Nelson Inc., also says half of the titles from all five Nelson/Word imprints make their way into book clubs and that royalty revenues are up. "The royalties are increasing every time we get a statement," she tells PW. "It seems that they are selling more books."
For the most part, then, publishers remain enthusiastic about the future of book clubs and direct mail, lauding them for the extra exposure and promotion they offer. But increasing Internet competition and the partnership between the Bertelsmann/Doubleday clubs and Time Warner's BOMC has raised some eyebrows as well as some questions about how these channels will evolve. "The question is, is this a sales media whose time has come and gone?" asks Stuart Matlins, publisher of Jewish Lights, which routinely places titles with book clubs and direct-mail companies large and small. "Twenty years ago, we were limited by the size of the neighborhood bookstore. When the book clubs came in, they were bigger. But now, these other Internet guys are even bigger. We need to ask, d s the consumer need the book clubs anymore?" He adds, "There is an irreducible book-club market, but is it a growth market? What function d s the book club serve?" These are the questions religion book clubs and direct-mail catalogue companies are struggling to answer today.
Where Are They Now?
Though there are more than 20 religion book clubs, ranging in focus from New Age to Roman Catholic, Doubleday's Crossings and BOMC's One Spirit have the largest memberships. With its emphasis on evangelical Christianity, seven-year-old Crossings claims three-quarters of a million members; the broader spirituality-oriented One Spirit, while it would not specify numbers, told PW last year it had the fastest-growing membership parent BOMC had ever experienced. Only Crossings agreed to speak with PW about the current state of the book-club business.
At Crossings, the approach has been to face Internet competition head on. Last year, the club launched its own Web site, www.crossings.com, and has since worked to make the site complementary to rather than competitive with its paper catalogue. Now, after browsing Crossings offerings in the catalogue, members can go online to order or decline a selection, to read expanded versions of articles or interviews or to visit a "prayer corner." "We saw the Internet as a force that was not going to go away," says Crossings editorial director, Michelle Rapkin. "As a result, we are spending a lot of time and energy in feeling out where we want to be in terms of our site and in ways of freshening Crossings and making it more than just a book source."
The development of its Web site also prompted Crossings to rethink its digest-sized paper catalogue. Last August, members received a new 8-by-10 inch, 24-page version with 50% more page space. Instead of filling it with more books, Crossings added articles, interviews, columns, essays and p try, essentially turning its catalogue into a "lifestyle magazine," in Rapkin's words. The club has also started a short-story contest and asked for members' input on the design of a proposed faith journal that will not be offered as a premium but sold side-by-side with the books on its list.
The changes on the Web and on paper are still too new for results to be measured, but Rapkin tells PW that feedback--through both snail mail and e-mail--has been encouraging. And orders, both online and on paper, are up, though she declined to say by how much. Rapkin emphasizes that the primary goal of the changes is not to boost sales but to foster a sense of community, something she views to be the club's major edge over the online booksellers. "D s this help us sell books?" Rapkin asks. "Not in any way we can measure. But d s it help us create an entity that people want to be a part of? I certainly hope so."
Still, at a time when most Internet retailers are growing their number of customers, Crossings' membership figures have remained steady. Rapkin says this is by design, an attempt to hold on to and better serve the members it has. Some publishers, however, are concerned by the holding pattern. "We are bothered by it because of the promotional aspects [Crossings] provides for us," says Paul Van Duinen, v-p of international sales for Zondervan. "We would like to see them have two or three million members." According to Van Duinen, Zondervan has informally presented ideas to Crossings about how they can better compete with online booksellers, such as presenting each publisher's entire backlist and relying on overnight shipping from publishers to fulfill those orders. "That way they can provide their members with the opportunity to buy more than what is in their monthly mailing without having to inventory more product--and they are considering that."
The Direct Approach
The largest of the religion direct-mail companies is Christian Book Distributors, which has 17 different catalogues. The company declined to release the size of its mailing list but reported that sales are up overall. CBD, too, has felt the push of the Internet, and last spring it unveiled a new, more advanced version of its previous Web site at www.christianbook.com. The company has hired an outside marketing firm to refine information culled from its customers' buying habits, both online and on paper. CBD now uses that information to send out routine "e-mail castings": promotional messages targeted to very specific customers, such as those who have bought choral, ministry or home-schooling products. Though it is too early to quantify results, consumer response has been swift; many people order within two or three days of receiving the e-mail, according to senior buyer Rick Brown.
Unlike Crossings, CBD has no plans to alter its paper catalogues or to turn its Web site into a Christian lifestyle destination, like Family Christian Stores' new iBelieve.com. "Community seems to be the edge that everyone is going for, while at the same time having the idea that they can sell their stuff," Brown remarks. "But we have always been about selling stuff. That is our philosophy, and I don't see that changing quickly." To that end, CBD recently added 60,000 square feet to its facility in Peabody, Mass., in the hope of increasing its fill rate. "If a customer orders something from us, we have to get it to them fast, because nowadays they are always only one click away from our competitors," Brown notes.
Is There a Problem?
If all is largely well, as both publishers and clubs and direct mailers now report, why the identity crisis? Aside from the undeniably rapid growth of online bookselling as a force to be reckoned with, other changes in the industry are prompting concern. Under the Bertelsmann-Time Warner deal, announced in December, Crossings, One Spirit and other book clubs that routinely feature at least a few religion titles have landed under the same corporate umbrella. Kristin Ventry, manager of book club and foreign rights for Harper San Francisco, says there is general concern among publishers that the merger will result in reduced competition for licensing, which could lead to lower author advances. "There will be no more playing one book club off another," she explains. "We have reached the point where there is only one big book club, and if you can get your book in there, that is good, but if you don't, there are only the smaller clubs to fall back on."
Nelson's Cothran disagrees; she believes the merger may ultimately benefit publishers because the merged book clubs will share such back-end functions as catalogue printing and marketing. That could mean a publisher's books will find their way into more clubs and be exposed to a larger number of consumers. "If they can increase their profit margin and be more successful, it can only be good for me because my books will sell more and my authors will get higher royalties," Cothran says. Crossings' Rapkin tells PW she is still uncertain about the ways in which the merger will affect business.
Some publishers think the line between book clubs and direct-mail companies is beginning to blur. If book clubs continue to slacken membership requirements, how will they be different from direct-mail companies? And as clubs and direct-mail companies become more Internet reliant, how will they be different from online booksellers? "The trick is, are we going to continue to license book clubs as they look more and more like CBD?" asks Bethany's Oates. "As we see one customer morphing and becoming like another, we need to be sure we treat everybody in that customer class equally. I think that is where the tough questions are going to come in."
And in spite of reports of health from the clubs and direct-mail houses, the threat from Internet-only booksellers is very real. Matlins reports that Jewish Lights' sales through Amazon.com doubled in 1999, to reach 10% of the house's overall annual sales. For the same year, Matlins estimates book clubs accounted for just under 5% of overall sales. Yet the clubs and the direct-mail houses can do for the publisher--especially small publishers such as Jewish Lights--something no Internet retailer currently can do: create a "buzz," a word of mouth that will result in spiked sales at brick-and-mortar bookstores. Matlins credits the placement of the collection The 11th Commandment: Wisdom from Our Children (June 1996) in one direct-mail catalogue with leading to an almost immediate spike in sales at bookstores that resulted in sales of an additional 3,000-4,000 copies. "We saw an immediate jump in sales every time they dropped a catalogue," Matlins recalls. "Book clubs and direct mail are definitely helping us to make a broader range of people aware of our brand and of our individual authors."
In fact, an executive at one small publisher with a frontlist of less than a dozen titles a year--who requested anonymity to preserve good relations with all of its partners--says that book club placement is so important it can shape acquisitions. "If we are on the fence about a title, we will send it to [One Spirit] and ask if they are interested," the executive says. "Their buy-in might very well affect whether or not we will acquire the book." Oates also reports sometimes considering book club interest during the acquisitions process. "You say to yourself, I can bid on this because I am pretty confident I can get it in a book club," which means Bethany House will have a higher advance to pay the author. Still, this kind of consideration is the exception rather than the rule, according to most publishers.
With all the excitement about e-retailing, are there plans among clubs and direct mailers to replace paper catalogues with Web sites? Not any time soon, Crossings' Rapkin thinks. "If that is what our audience wants, then like any other supplier, the marketplace dictates what we are going to do," she tells PW. "The thought of not having to spend incredible amounts on postage is very appealing, but it might be ten years from now." CBD's Brown pretty much rules it out entirely: "Those companies that have more than one channel to sell through are going to be more solid, and that gives us a bit of confidence". "Even [for] those big Web folks out there who have lots of money to throw around, that is still the only [sales] channel they have."
But not everyone is so sure. "I think in five years the book clubs are going to be pure Internet play," asserts Bethany's Oates; he adds that comparing Internet and book-club sales raises questions about where to spend future marketing dollars. "Should I be reaching consumers online or through traditional media? That is what I will be interested in knowing. Now when I look at my top title and see how many Amazon is buying, it is nothing like CBD before the Internet. It is coming up, but it is still small."
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