Book-of-the-Month Club, Inc. History

Address:

1271 Avenue of the Americas
New York, New York 10020
U.S.A.

Telephone: (212) 522-4200
Fax: (212) 522-7125

Wholly Owned subsidiary of Time Warner Inc.
Incorporated: 1926
Employees: 750
Sales: $250 million
SICs: 5961 Catalog and Mail-Order Houses

Company History:

Book-of-the-Month Club, Inc. (BOMC) is probably the most famous name in the history of book clubs. Since it was founded in 1926, the company has distributed over 570 million books to members across the United States. In addition to its flagship club of the same name, BOMC operates several other book clubs, including the Quality Paperback Book Club (QPB), the History Book Club, and the Children's Book-of-the-Month Club. BOMC also offers less structured arrangements called continuity programs. These include the Stephen King Library, Books of My Very Own, and The Great Commanders. The BOMC clubs had a total of well over three million members in 1993, a year in which the company shipped 22 million books. BOMC also operates its own publishing division, which specializes in re-issues of classics, out-of-print works, and other books not generally available at bookstores. BOMC is a subsidiary of multimedia giant Time Warner Inc.

The founder and driving force behind the Book-of-the-Month Club during its first few decades of operation was Harry Scherman. Scherman, who was born in Montreal and raised in Philadelphia, began his career as an advertising copywriter. Working for the J. Walter Thompson advertising agency, Scherman learned the essentials of mail-order promotion. His mail-order expertise, combined with his love of literature, led Scherman to co-found a mail-order book firm called the Little Leather Library with colleagues Robert Haas and Maxwell Sackheim in 1916. After a handful of prosperous years, the Little Leather Library fizzled. Scherman and his partners were nevertheless convinced that the idea of selling books through the mail was a winner, and in 1926 they tried again with BOMC. In April of that year, the club's first selection was sent to 4,750 original members. By the end of that year, the club's membership ranks had swollen to 46,539. Because much of the American population did not enjoy easy access to bookstores in the 1920s, BOMC grew quickly, as did many of the imitators that sprang up in the late 1920s and 1930s.

The company's operating premise was that most book lovers do not read as many books as they intend to. By agreeing to purchase at least four books a year, club members could choose a hand-picked group of books that they would receive by mail. The concept was immediately popular. By December 1926 the company had net sales of over half a million dollars. Membership approached 100,000 by 1928. The club held its own during the worst years of the Depression, then soared again in the second half of the 1930s.

In the early years of the company, convenience was the main advantage the club offered to its members; books were sold at full price, with postage costs added. Eventually, however, books selected by BOMC took on a certain prestige, and books offered by the club saw their bookstore sales rise as well. Soon BMOC was ordering books in sufficient quantities to persuade many publishers to give the company price breaks. The discounts were then passed on to club members, who were targeted through advertisements in magazines and weekly book review sections of newspapers. Readers were encouraged to send for further information. BOMC did not begin soliciting memberships directly on a regular basis until about 1939.

During World War II, with other commodities in short supply and cash in abundance, Americans bought more books than they ever had before. Between 1939 and 1946, BOMC's circulation grew from 363,000 to 889,000. Although the world was at war, peace was established between BOMC and the nation's booksellers, who had been harsh critics of book clubs and their role in the industry. An arrangement was forged in which booksellers became intermediaries between the club and its members.

The company also experimented with providing other services outside of its core book business to its customers during the 1940s. In 1943 BOMC made its first Christmas card offer. Reproductions of famous works of art became an occasional club item the same year. In 1948 magazine subscription offers were initiated. BOMC also purchased the Non-Fiction Book Club from Henry Holt & Co. that year and integrated it into its own operation. Other new services added around this time included the Travelers Book Club and a subsidiary called Practical and Educational Books. Some of these trial services were failures. One that was particularly successful, however, was Metropolitan Miniatures. These sets of art reproductions were offered in conjunction with the Metropolitan Museum of Art. By 1951, circulation for Metropolitan Miniatures had exceeded 100,000; 500,000 sets of the miniatures had been distributed by 1956.

BOMC shipped out its 100 millionth book in 1949. During the first half of the 1950s the company continued to try out new services. The Children's Record Guild was launched in 1950, and Music-Appreciation Records, a classical music club for adults, was added in 1954. In 1952 BOMC established Young Readers of America, its first book club specifically designed for children. Young Readers was an instant success. Its first mailing generated over 70,000 subscribers. BOMC's Christmas card service also flourished around this time. In 1954 BOMC became involved in Books Abridged, a monthly digest of four condensations. Books Abridged did not prove to be profitable, however, and it was sold off a year later.

By the middle of the 1950s, BOMC was selling nearly five million books a year. The club's selections had included ten Pulitzer Prize-winning books and works from five Nobel Prize-winning authors. There were about 800,000 members of the company's various clubs by this time, slightly fewer than its 1946 peak total. In 1956 BOMC's 30th birthday was celebrated with the publication of a 40-page booklet by the New York Times that outlined the club's history. The booklet pointed out, among other impressive facts, that the number of books BOMC had placed in private homes exceeded by far the number of books in all public libraries and major universities in the United States put together.

BOMC launched yet another music project in 1958, a joint venture called the RCA Victor Society of Great Music. In 1961 Axel Rosin, Scherman's son-in-law, was named president of BOMC; Scherman stayed on as chairman of the board. Rosin had fled Nazi Germany in 1934, and later married Scherman's only daughter, Katharine. By the early 1960s the Scherman family controlled just under half of BOMC's stock, which was traded publicly on the New York Stock Exchange.

Although BOMC's membership continued to grow in the first half of the 1960s, the company's sales began to stagnate as the impact of increased numbers of retail book stores--many of which sold bestsellers at discount prices--was felt. Another important factor was the rise of paperback books. The proliferation of book clubs and the resulting competition was yet another cause for the slump. Between 1962 and 1963, BOMC saw its sales slip from $19.8 million to $17.6 million. To compensate for the shrinking number of books purchased by members, the company spent more money on promotion to beef up membership. As it dug deeper for subscribers, the company encountered a higher percentage of deadbeats, yet another drain on profits.

BOMC rebounded strongly in 1966. The company earned a profit of $1.7 million on $26 million in sales, and the club's membership count passed the one million mark for the first time. By 1967, 35 BOMC selections had won Pulitzers, including The Caine Mutiny by Herman Wouk (1952), Profiles in Courage by John F. Kennedy (1957), and The Guns of August by Barbara W. Tuchman (1963). BOMC maintained its book clubs, record clubs, Christmas cards, and art miniatures, and also introduced a couple of educational programs: Art Seminars in the Home, which consisted of two art appreciation courses developed by the Metropolitan Museum of Art; and two Reading Improvement Programs.

Rosin helped fuel the company's comeback with two bold moves in 1967. First, he created a stir by guaranteeing $250,000 for the right to make William Manchester's Death of a President a monthly club selection. The move paid off when the book sold 400,000 copies in the first month alone. Rosin hit another jackpot later in the year when he guaranteed $320,000 for the memoirs of Svetlana Aliluyeva, Josef Stalin's daughter. That deal represented the first time BOMC had paid for the right to distribute a book before its editorial board had even seen the manuscript.

Scherman died in 1969. The chairman of the board position at BOMC remained vacant until 1973, when a realignment of the company's executive positions put Rosin in that post. He also retained his position as chief executive officer, while he was replaced as president by Edward Fitzgerald, formerly a vice-president. Meanwhile, BOMC continued to make slow but steady progress through the first half of the 1970s. Sales grew from $43 million in 1971 to nearly $63 million in 1975. By the mid-1970s, the core book club had about a million members, while the company's seven other clubs had a combined enrollment of about another 500,000. Although the main book club generated about 85 percent of the company's revenue, a number of new clubs were initiated during the early 1970s. The Cookbook Club was purchased from McCall's in 1971. A few years later the club's subject matter was expanded to include crafts, and it was appropriately renamed the Cooking and Crafts Club. In 1972 BOMC acquired the Dolphin Book Club, which covered boating and other nautical subjects. By 1976 Dolphin membership had grown ten-fold to 50,000. Other new programs included Fine Arts 260, which offered graphic arts and sculptures in limited editions, and The Meanings of Modern Art, a home study course begun in 1975. One of the most successful new clubs introduced around this time was the Quality Paperback Book Service (QPB), which featured large, high-quality volumes of popular titles in an array of genres. QPB has remained an important part of BOMC's operations ever since.

In 1977 BOMC was acquired by publishing and forest products company Time Inc. in a deal valued at $63 million. Because Time sold books by mail through its Time-Life Books, Inc. subsidiary, the merger was scrutinized closely by the Federal Trade Commission (FTC) for possible antitrust violations. Nothing came of the FTC's interest in the case, however, and BOMC continued to operate as a subsidiary of Time, which later became Time Warner Inc. as the result of another merger.

As part of Time, BOMC continued to look for ways to wring additional sales from its growing base of club members. In the early 1980s the company determined that there was money to be made by publishing books on its own or in cooperation with publishers, rather than only buying the rights from publishers to sell BOMC editions of their books. In 1982 BOMC established its own original publishing division. Its first publishing projects were reprints of such classics as All the King's Men by Robert Penn Warren (published by BOMC in 1982), William Shirer's Berlin Diary (published in 1987), and the Revised English Bible (published in 1989). The publishing division then moved on to anthologies and multivolume sets. BOMC also sought to grow through acquisition. The company purchased Harcourt Brace Jovanovich Inc.'s History Book Club and two smaller clubs for $25 million in 1987.

BOMC struggled during the early 1990s. Large bookstores operated by chains like Barnes & Noble and B. Dalton were able to consistently undercut BOMC on price, a significant reason for the downturn in the club's performance. In 1992 the company restructured its managing units. Under the new arrangement, control over the different clubs, which had previously enjoyed a high degree of autonomy, was centralized under a new layer of management headed by senior vice-president Neal Goff. The role of the editorial department, led by Brigitte Weeks, was changed to more of an advisory one. The editorial department would no longer make the actual decisions regarding club selections.

Another key change was the appointment of Juanita James to oversee the Book-of-the-Month Club and the Quality Paperback Book Club. James' expertise was in marketing, and as her influence in the company grew, new emphasis was placed on updating BOMC's use of membership information. Instead of treating all members the same, BOMC increasingly based its marketing on specific information about readers' tastes and buying histories. In September 1993, Weeks was fired as editor-in-chief of the club, a development that was interpreted by some industry observers as a clash between literary and marketing considerations. Although the existence of such a battle within the company was denied by president and CEO George Artandi, the trend toward a more commercially-oriented approach was clear. Weeks was replaced by Tracy Brown, the director of trade paperbacks at Little, Brown and Company. Soon after, James was promoted to senior vice-president of club management.

As the pressure to compete with bookstore chains increased, Brown announced in 1994 that BOMC's editorial board, a decades-old group that included respected authors and other literary figures, would be disbanded altogether. In explaining the decision, Brown noted that the pace of decision-making on book selection was accelerating so quickly that the company could no longer afford the luxury of soliciting an editorial board's opinions. Meanwhile, the publishing industry continues to undergo continuous transformations in the 1990s. It remains to be seen how this upheaval will eventually effect the roles of BOMC and the remaining handful of its book club rivals.

Principal Subsidiaries: Book-of-the-Month Customer Services, Inc.; Booksellers By Mail, Inc.; History Book Club, Inc.

Book-of-the-Month Club, Inc. History

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