Bookspan

15 East 26th Street, 4th Floor
New York, New York 10010
U.S.A.
Telephone: (212) 651-7400
Fax: (212) 651-7124
Web site: http://www.bookspan.com

Private Company
Incorporated: 2000
Employees: 2,300
Sales: $401.9 million (2006)
NAIC: 454113 Mail-Order Houses

Bookspan is a New York City-based partnership between Time Warner Inc. and Bertelsmann AG, combining the media companies’ book clubs, including the venerable Book-of-the Month Club and the Literary Guild. All told, Bookspan operates more than 30 book clubs in four categories, direct marketing through the mail as well as the Internet to more than 8 million members. General interest clubs include Book-of-the Month Club and the Literary Guild, as well as Doubleday Book Club, Quality Paperback Book Club, Mystery Guild, and Black Expressions.

Bookspan’s Professional Clubs are dedicated to such subjects as architecture and design, computers, equestrian matters, nursing, teaching, science, and classic fiction and nonfiction titles. Lifestyle clubs include Children’s Book-of-the-Month Club; Kid’s Book Planet; Crafter’s Choice, covering knitting, sewing, quilting, and other crafts; Homestyle Books, focusing on entertaining, decorating, gardening, and collectibles; One Spirit, a club devoted to spiritual development and other personal growth issues; and the Good Cook, the United States’ only cookbook club.

Finally, Bookspan’s offers Male Specialty Clubs catering to men interested in history, the military, conservative politics, science fiction, and the works of Stephen King. This category also houses Bookspan’s Spanish-language book clubs: Mosaico and Circulo. Bookspan also offers the Zooba service through Book-of-the-Month, which ships to customers only selections from the reading lists they create themselves. In addition, Bookspan makes its direct marketing and fulfillment capabilities available to publishers and other companies through subsidiary Yes Solutions, and publishes books through the Madison Park Press Imprint.

BOOK-OF-THE-MONTH CLUB LAUNCHED: 1926

The oldest of Bookspan’s clubs, and the one that established the template for the others to follow, was Book-of-the-Month Club (BOMC). The man who founded it was Harry Scherman. Born in Canada but raised in Philadelphia, Pennsylvania, Scherman started out as an advertising copywriter, and in the course of his work learned the fundamentals of mail-order promotion. To satisfy his love of literature in 1916 he cofounded the Little Leather Library to sell books through the mail, targeting the multitude that did not have a bookstore readily available. The business failed to pan out. Undeterred, Scherman and his partners tried again with BOMC in 1926. The “club” required members to buy at least four books a year, but what set BOMC apart was that the available titles were chosen by a panel of judges, famous writers like Heywood Broun and Christopher Morley, who gathered for monthly lunches to debate the merits of new books and select what they considered to be the very best; these were then presented to club members for their “consideration.” Another BOMC innovation was the “negative option,” whereby members were required to inform the company if they did not desire to have a selection mailed to them.

With fewer than 5,000 members when the first selection was mailed in April 1926, BOMC enjoyed quick growth, its membership approaching 100,000 within two years. With size came clout. Instead of just offering convenience to members, it was soon able to provide discounts because it could negotiate price breaks with publishers and pass on some of the savings. BOMC held on during the Great Depression of the 1930s and thrived during World War II when Americans had plenty of money but because of rationing had little to spend it on besides books.

BOMC had nearly 900,000 members when the war came to an end, and during the postwar years the company expanded in a number of areas, including magazine subscription and records offers. The book club business grew the through acquisition of Henry Holt & Co.’s Non-Fiction Book Club and the launch of the Travelers Book Club. In the 1950s BOMC added a book club aimed at children called Young Readers of America. The company soon faced increased competition from a multitude of rival books clubs as well as the emergence of inexpensive paperback books, which cut into sales. Revenues receded in the early 1960s, but a heavy investment in promotion helped BOMC, in 1966, to crack the 1 million mark in membership for the first time in its history.

BOMC continued to grow in the 1970s, expanding through the acquisition of such book clubs as the Cookbook Club in 1971 and a year later the Dolphin Book Club, dedicated to boating. In 1975 the Quality Paperback Book Service was launched. Time Inc. acquired BOMC in 1977. Under its new corporate parent, the company established an original publishing division in 1982 and in 1987 acquired the History Book Club and a pair of smaller book clubs.

BOMC PANEL DROPPED: 1994

Changes in the marketplace in the 1990s soon threatened the viability of BOMC and all other book clubs. First the national bookstore chains spread across the country and were able to offer steep discounts. Then online booksellers like Amazon.com, joined by Barnes & Noble which had both a wide network of stores and Internet-selling capabilities, began to make discounted books available to people who had once catered to the book clubs because of the convenience and price or due to their own isolation. Moreover, consolidation in the publishing industry resulted in a blockbuster mentality and a handful of authors dominating the bestseller lists. As a result, BOMC and the other clubs were bidding ever higher amounts of money to obtain the rights to a select number of titles. With a narrow field of books from which to choose, the BOMC panel of judges did little more than validate a foregone conclusion. BOMC sacked its venerable panel in 1994. While over the years the judges had picked a number of award-winning books, in truth they also bypassed such classics as The Grapes of Wrath and The Sun Also Rises.

BOMC membership, which totaled 1.5 million in 1988, eroded significantly in the 1990s, dipping to about 700,000, due primarily to the growth of online booksellers, as an increasing percentage of the public bought home computers and gained Internet access. By this time the book club business had been consolidated into three main players: BOMC with 4.5 million members in all of its clubs, Bertelsmann’s Doubleday Direct with 4.8 million total members, and Rodale Press, with its six clubs. In 1999 Time Inc. entered into talks with Bertelsmann about creating a joint venture to combine their book club interests. In this way, they would be able to cut costs by combining distribution and warehousing.

COMPANY PERSPECTIVES

Bookspan, a partnership between Bertelsmann and Time Warner, is the parent company of Doubleday Entertainment (the leading marketer of book clubs and merchandise via direct mail and e-commerce in the U.S.) and Yes Solutions (a preeminent provider of creative, media and logistics services).

The cornerstone of Doubleday Direct was the Literary Guild, which over the years had skewed more toward commercial fiction that appealed to women, while BOMC became better known for literary nonfiction and catered to more of a male audience. Literary Guild was founded in 1927 by Samuel W. Craig and acquired by Frank Nelson Doubleday in 1934, four years after he established the Doubleday One Dollar Book Club, which later took the name Doubleday Book Club. The German media conglomerate Bertelsmann AG then acquired Doubleday & Company in 1986. Doubleday Direct was formed to house the various book clubs. A year before talks began with Time Inc., the unit expanded further through the acquisition of Newbridge Communications, adding such clubs as The Nurse’s Book Society, The Discovery Channel Book Club, and The Reader’s Subscription.

Negotiations to bring together the assets of BOMC and Doubleday Direct were finally completed in March 2000. The joint venture, which subsequently took the name Bookspan, was 50 percent owned by both Time and Bertelsmann, with Doubleday Direct and its chief executive officer, Markus Wilhelm, selected to manage it. He took charge over a new company that operated some 50 book clubs with a combined membership of 8 million customers, generating about $900 million in annual revenues.

Even before Bookspan was created, the principals of the venture were taking steps to better compete in the changing book market, primarily by embracing the Internet rather than fighting it. Because online booksellers were appealing to a wide audience, they opted to focus on narrow interest groups, creating online book clubs to cater to them. Doubleday Direct formed Black Expressions, featuring African American literature, and Venus, a club devoted to erotica. Other niche clubs that were developed and then launched as part of Bookspan were Mango, targeting 20-something women, and Rhapsody, a mass market romance novel club. Bookspan’s traditional book clubs also added Internet capabilities. In addition to ordering selections online, members could also use chat rooms to discuss books, and post articles and pictures of craft projects. In addition, Bookspan began marketing through online ads and the sending of media-rich emails.

Even as Bookspan was looking to rejuvenate the book club category with new media techniques, BOMC in 2001 decided to return to its heritage, reinstating its panel of prominent literary judges, which many BOMC members indicated that they missed. BOMC also hoped that the panel might provide a much needed marketing distinction. Hence, a new panel was created, composed of authors Bill Bryson, Nelson DeMille, Annie Proulx, and Anna Quindlen.

Much of Bookspan’s online business was conducted under the rubric of Booksonline, established by Doubleday Direct in 1999. Because there was so much overlap between Booksonline and the catalog operations of Bookspan, a reorganization was undertaken in 2001 and the two divisions were combined into a single group that handled the editorial and marketing functions for all of the clubs. In this way, a club gained more flexibility in budgeting between print and online marketing. In the meantime, Bookspan continued to launch new niche book clubs, including Mosaico for Spanish-language books, some of which would be translations of popular English titles such as the Harry Potter books; Traditions, a Jewish book club; and Insightout, catering to a gay and lesbian audience.

Bookspan in 2002 moved its operations to a renovated, 135,000-square-foot facility in Garden City, Doubleday’s longtime home. At the same time, Bookspan continued to consolidate its warehousing operations to realize some of the cost savings promised by its creation. In May 2002 the company eliminated 350 jobs at one Pennsylvania plant while adding 200 new positions in another.

Bookspan appeared to have enjoyed a successful start. The company reportedly added 200,000 new members each month in 2002. Moreover, book clubs in 2002 accounted for 19.2 percent of all books sold in the United States, a significant increase over the 18.1 percent in 1995. Unfortunately, book sales in general were stagnant, growing just 0.1 percent from 2000 to 2001.

KEY DATES

1926:

Book-of-the-Month Club (BOMC) formed.

1927:

The Literary Guild launched.

1934:

Doubleday publishing house acquires Literary Guild.

1986:

Bertelsmann acquires Doubleday.

2000:

BOMC and Bertelsmann form Bookspan.

2002:

Renovated Garden City, New York, facility opens.

2003:

International Book-of-the-Month Club established.

2006:

Madison Park Press publishing imprint launched.

INTERNATIONAL BOOK-OF-THE-MONTH CLUB LAUNCHED: 2003

Bookspan continued to add niche book clubs in 2003. International Book-of-the-Month Club, an idea put forward by Wilhelm, was launched to present, at least three times a year, a single title as a Main or Featured Selection to book clubs in more than 15 countries, translated into the native language of each country. The first selection was No Second Chance, a thriller written by American Harlan Coben. Also in 2003 Bookspan established a book club devoted to titles with a conservative political slant, which would take the name American Compass, and Bookplanet, a direct-mail club that targeted 6-to-12-year-old readers. Yet even as Bookspan was expanding its offerings, it was weeding out concepts that had failed to meet performance expectations. In 2003 newcomer Traditions was shut down, as were the more established Stage & Screen and Gardening & Landscaping clubs. In addition, Bookspan experienced a poor first quarter, leading to the layoff of 55 people, a number that included the editorial staff of the terminated clubs but also included cuts among the people who produced catalogs.

Bookspan added a second Spanish-language book club in 2004. Called Circulo de Lectores (Readers’ Circle), a name that Bertelsmann owned and was used in well-established book clubs in both Spain and Latin America, the new club staked out different territory than the more general interest Mosaico book club. Circulo sought to be more of a family-oriented Spanish-language book club, featuring books by both established and emerging authors, and including bestsellers, reference, self-help, and children’s titles. In addition Bookspan hoped to take advantage of Circulo’s strong brand name among immigrants from Spain, Colombia, Ecuador, and Venezuela. Another development in 2004 was the launch of the Zooba service from BOMC, allowing readers to create their own personal reading lists, akin to the queue concept made popular by Netflix.

While Bookspan was enjoying success with its niche clubs, general interest book clubs like BOMC continued to have a difficult time. By 2005 BOMC’s membership had slipped to 400,000, according to Bookspan executives, and the New York Times suggested that number might be significantly lower. In January 2005 the panel of literary judges was scrapped once again, and a number of initiatives were introduced to reverse the club’s sagging fortunes. Monthly mailings offered book selections tailored to a member’s past purchases and expressed interests, and the Booksearch Plus service allowed members to buy nonofferings at a discount, essentially allowing BOMC to act like any other Internet book retailers, and like them BOMC waived shipping charges on purchases of $25 or more.

In order to develop another revenue stream, Bookspan created York Enterprise Services in 2005 to take advantage of excess capacity in its Pennsylvania warehouse and distribution operations by offering direct-to-consumer fulfillment services—including the handling of catalogs, promotional materials, mailings, and shipping—to publishers and other outside companies. In January 2006 the unit took the name Yes Solutions. Some of its initial clients included toy manufacturers Hasbro and Lego, and the Sara Lee food company.

In an effort to rebuild its general interest book clubs, Bookspan tried a new approach in 2006 when it published a thriller by author James Grippando. The book, Lying with Strangers, would be available only through BOMC, Doubleday Book Club, and Literary Guild for six months. In this way, the book clubs hoped to produce an air of exclusivity and regain some lost luster. Bookspan’s editor-in-chief, Carole Baron, acquired the rights to the book and then launched a Bookspan imprint called Madison Park Press. Book development was hardly new for the book clubs, but Bookspan hoped to develop a stable of new writers under a high profile brand, and in the process become an attractive option for authors and their agents. Each title would be offered through a different Bookspan club.

In April 2007, it was announced that Bertelsmann had bought out Time Inc’s 50 percent stake in Bookspan and planned to integrate it into BMG Columbia House.

Ed Dinger

PRINCIPAL SUBSIDIARIES

Principal Subsidiaries: Madison Park Press; YES Solutions.

PRINCIPAL COMPETITORS

Amazon.com, Inc.; Barnes & Noble, Inc.; Borders Group, Inc.

FURTHER READING

Arnold, Martin, “For Book Club, It’s Back to Things Past,” New York Times, January 25, 2001, p. E3.

Carvajal, Doreen, “Two Book Club Giants Are Said to Be Poised to Join Forces,” New York Times, December 14, 1999.

——, “Well-Known Book Clubs Agree to Form Partnership; A Deal in Response to Online Competition,” New York Times, March 2, 2000, p. C2.

DeKok, David, “Bookspan Facility Touts New Mission with New Moniker,” Patriot-News (Harrisburg, Pa.), January 22, 2006.

Kirkpatrick, David D., “New Judges and Niche Marketing Are Part of a Comeback Plan,” New York Times, June 28, 2001, p. E1.

Milliot, Jim, “Bertelsmann Acquires Time’s Bookspan Stake; Wilhem Leaving,” PWdaily, April 10, 2007, http://www.PublishersWeekly.com

——, “Bookspan As Publisher,” Publishers Weekly, April 10, 2006, p. 6.

Schachter, Ken, “New Chapter,” Long Island Business News, March 7, 2003, p. 1A.

——, “Slow Sales Forces Book Club Titan Bookspan to Adopt Netflix Formula,” Long Island Business News, October 28, 2005.

Wyatt, Edward, “Book Club Takes Steps to Get Out of Trouble,” New York Times, January 12, 2005, p. E1.