Sunday, January 23, 2011

The Book Club Wars, 2: Depression, War and Peace


As we learned in Part One, the Book-of-the-Month Club had lost money during its first year of operation, largely because of the volume of returned selections. The Literary Guild prospered almost immediately but soon found itself in financial difficulty as the "Roaring Twenties" bubble burst, and the worldwide economic picture deteriorated . In 1929, Nelson Doubleday, son of the founder of the publishing firm of the same name, bought 49 percent of the Guild's stock.

The Depression Hits
As the Depression deepened in the early 1930s, the picture with respect to book clubs was about as follows: The clubs still worked on a subscription basis; most clubs favored editorial boards to choose book selections; subscribers received their books by mail. These were the general points of similarity pointed out by Selma Robinson in a perceptive article in The Century Magazine. The differences between the clubs, however, are equally vital to this account and significant, as well.

The Book-of-the-Month Club purchased books from publishers after publication, originally receiving up to a 55 percent discount from publishers. This mounted rapidly to 70 percent as club membership grew. BOMC members paid full list price and agreed to accept selections or the substitutes described in the BOMC News.

The Literary Guild, on the other hand, bought its selections directly from manuscripts, then rented publishers plates at fixed rates and manufactured copies to its own specifications and requirements. Later, this would mean printing beyond immediate needs to have books for distribution as free premiums. The Guild sold its selections to members at prices below publishers' list prices.

Ever jockeying, the two book club behemoths vied with one another in a search for new gimmicks or innovative offers to bring in new members. The Guild, for example, solicited librarians for subscriptions, offering three Guild selections with each two-year subscription to magazines such as Redbook. As a conciliatory gesture to booksellers, it toned down its advertisements that had needled booksellers by stressing the disadvantages of bookstore browsing. Instead, at least for a time, the Literary Guild, like the Book-of-the-Month Club, emphasized the delights of home reading.

Usually way ahead of the Guild in initiative and inspiration, in at least one respect the BOMC took four years and three months to catch up with its principal competitor. Not until July of 1930 did the BOMC get around to manufacturing its own editions or joining the publishers' press runs, thus achieving even greater profit than the 70-percent publishers' discount had previously yielded.

By the end of 1931, the Guild had established a fixed rate of two dollars per book. Early in 1932, the book trade witnessed a surprising partnership--surprising because of all the brickbats that had been hurled back and forth in years past. Bookstores began to handle Literary Guild subscriptions. The Guild sent its monthly selections in quantity to booksellers who then mailed them out on approval to individuals who had signed up as Guild subscribers through the store. Books could be returned to stores within a week of receipt and to the Guild by the 15th of the following month. Of the customer's $2.00 payment, only $1.20 went to the Guild; the dealer kept the balance.

Now it was publishers' turn to worry about this new merchandising gimmick, especially when it was revealed that the regular trade edition as well as the special Literary Guild edition were both to be sold through the same retail outlets. The ABA continued to protest against some of the activities of book clubs, particularly the offering of free books, which they felt would inevitably reduce bookstore sales of the same title. Not to be outdone, the Book-of-the-Month Club would add its own bookseller plan in 1934. Whereas the Guild had allowed the retailer to deal with the customer throughout the transaction, the BOMC insisted on handling its own fulfillment. Eventually, it would change its working arrangement with booksellers in 1939 to the arrangement being followed by the Guild.

The year 1932 witnessed the birth of some new clubs and the demise of old clubs, including the Free Thought Book Club and the Business Book League. There wasn't much to laugh about in the depths of the depression, yet humor books sold well. Publisher Robert McBride started the Laugh Book Club to distribute six books of humor during the year, all of which members were obliged to take. The Dollar Book Club was also formed that year for the specific purpose of remaindering Literary Guild selections.

By 1934, many changes had taken place in the book trade. The subject of book-club competition with retail outlets usually figures in most publishers' decisions to release a book for book club use, so the Book-of-the-Month Club agency plan's experience is worth examining. In spite of excellent promotional efforts, the number of BOMC subscribers through bookstores was never very high. This suggested that book club members did indeed come largely from areas not served well, if at all, by bookstores.

The results of an experiment conducted by the Literary Guild in 1935 are interesting. In that year, the Guild made a mailing to the charge account list of Boston's Jordan Marsh department store, and obtained 1,500 new subscribers. An analysis by the store revealed two remarkable statistics: Only 2 percent of those who enrolled in the Guild had been book buyers in the store's own book department. Six months later, 15 percent of the new Guild subscribers had begun to charge the purchase of books at the store's own book counters--at regular retail prices.

In 1935, a left-wing book club was formed. Calling itself the Book Union, it was "a nonprofit organization devoting its efforts to consolidating an audience for proletarian literature." This group rather capitalistically charged a membership fee of one dollar a year, and enjoyed a modest success until 1939.

More book clubs appealing to Catholic readers made their appearance. Sheed & Ward, a Catholic publisher, announced the birth of their own book society intended to feature the company's publications. A club calling itself Spiritual Book Associates proposed to supplement the Catholic Book Club's literary selections of Catholic interest with books of purely religious and spiritual value.

New developments in the activities of the major book clubs signaled their growing wealth and power. For example, in 1936, the Book-of-the-Month Club announced annual fellowship awards for writers who gave clear indication of more than ordinary talent but who had not received adequate recognition. The following year, the Literary Guild made arrangements for department store book departments to sell subscriptions for it. As before, the customer dealt directly with the store, but now it was the Literary Guild that handled the mailing. What was unusual about this plan was that it allowed for the purchase of any four books in the store, not necessarily book club selections. The Guild was challenged immediately and charged under the recently passed Miller-Tydings Act with engaging in conspicuous price cutting.

Congress Steps In
The rules of the game for business everywhere were changed in 1937 by a law passed by Congress--the Miller-Tydings Act, which tried to eliminate price cutting by legalizing contracts for the maintenance of prices on certain standardized or trademarked items. Consequently, in their contracts with booksellers in 1937 and 1938, publishers included clauses protecting the selling prices of their new books and often of old titles as well.

A New York City department store, R.H. Macy & Company, took advantage of a loophole in the enabling legislation that exempted book clubs from such restrictions. Macy's circumvented the law by starting its own "book club." With its regular book department prevented from discounting books or using books as loss leaders, Macy's Red Star Book Club (a red five-pointed star was Macy's emblem) to take advantage of the law that had exempted book clubs from pricing restrictions.

By purchasing four books at list price from a selected list of titles stocked by the store, "members" could accumulate credit slips entitling them to a 25-percent discount on a fifth book chosen from among all the books in the store. There were no dues in this club, but the time limit within which the four purchases had to be made was set at one year.

A host of department stores followed Macy's lead with book clubs of their own, raising the discount to 30 percent and causing Macy's to match the higher figure. New independent booksellers and even the established book clubs became apprehensive over this new threat. The Book-of-the-Month Club responded to it by giving members a dividend book for every two books purchased, instead of the previous dividend book for every four books purchased.

For their part, publishers began to drop the book-club exemption clause from their contracts. Now they had two possible courses of action: (1) they could refuse to submit books to the clubs, or (2) they could exclude from price protection the books selected by the clubs for distribution. Most publishers adopted the latter course, but not without trepidation as they weighed its effect on marketing, particularly of potential best sellers.

Two questions remained: Would the clubs be less interested in books open to general price warsthat is to say, books on which booksellers could also engage in price cutting? On the other hand, would booksellers shy away from ordering titles that were not price-protected because they were book club selections? The Book-of-the-Month Club offered something of an olive branch by agreeing to eliminate from its advertisements any reference to the list price of books used as premiums. Again, the excitement abated.

The Book-of-the-Month Club also worked out its own Bookshop Cooperation Plan, which was proposed and debated in the pages of Publishers Weekly. Under the plan, "the bookseller would sell a BOMC subscription at a profit to themselves, just as they would with any series of books and would wholly control the accounts of those customers who had become book club subscribers."

Books of the Month were to be purchased by book dealers from the Club at a 30-percent discount off the Club's regular retail price. Dealers also would sell from their own stock any of the books recommended by the Club. Premiums earned by subscribers were to be delivered to the dealer by the Club, with delivery charges the only cost.

In 1937, book publisher George Macy started the Heritage Book Club, a subsidiary of his Limited Editions club, for mass-produced imitation limited editions selling for $2.50 a copy. It was, in other respects, a less-expensive version of the Limited Editions club. Four years later, he organized the Reader's Club--not to be confused with a club later launched in 1950 under the same name by Sears, Roebuck & Company to offer books more sophisticated than those offered by their Peoples Book Club. Its aim was to choose books published in recent years that deserved a wider audience than they had received. Subscribers agreed to buy six books a year at $1.00 each.

George Macy was no stranger to the book-club world; in 1929, the 26-year-old Macy had organized the Limited Editions Club, a cross between the old-fashioned book club of a bygone era and a modern book club. Subscribers, limited to 1,500 in number, paid a whopping $120 a year for ten books ($108 if they paid in advance). An unusual feature of the Heritage Book Club: It did not require members to purchase every selection. Individual volumes could be bought separately at a cost of from $3.00 to $5.00. These clubs were continued in operation by Macy's son, Jonathan.

The War Years
During 1942 the Book-of-the-Month Club expanded its publicity operations to include a syndicated weekly book column for newspapers. Edwin Seaver, publicity director of the club, and Mrs. Robin McKown wrote the column as well as scripts for radio programs either put on by the club or supplied to organizations and schools that requested them. By September of that year, the BOMC set up a separate Educational Department under Charles S. Steinberg to coordinate outside activities of this kind. In November, the BOMC began syndicating daily illustrated action strips based on the current selections of the Club. It also supplied newspapers with separate panels of illustrations drawn from striking incidents in the books.

In spite of restrictions on materials and manufacturing imposed during the war years, a surprising number of new book clubs got started. Among these was Walter J. Black's Detective Book Club, the second such club in this specialized area. Its forerunner, the Detective Story Club, was one of the very oldest of all book clubs. For $1.89, Black's club offered one volume containing three full-length mystery stories; members were required to buy four or more such volumes during the year. The Club's special editions were only available to members.

With limited funds. George Braziller started the Book Find Club in 1942. According to its prospectus, the Club aimed "to find a good book, a book which has meaning in these critical times." Such a book might be a first novel, a book on the bestseller list, or a book by an established writer "who had never reached as wide an audience as we felt he deserved." The Book Find Club operated no dividend program and maintained no editorial board. Four books in the first year at $1.35 per volume were the minimum purchase requirements.

In their Fall 1943 catalog, the mail-order merchandising firm of Sears, Roebuck & Company announced a new venture: a book club of their own in cooperation with Simon & Schuster and the Consolidated Book Publishing Company. Subscriptions could be bought through the mail or through local Sears catalog centers and Sears retail outlets then just beginning to spring up. Members were entitled to a gift book with every four selections purchased at $1.65 each. This club intended to concentrate on printing cheap editions of bestsellers that had been on the market for six months or more. Called the People's Book Club, it differed from other book clubs in a number of significant respects.

It did not advertise, except in Sears catalogs. It picked its selections after monthly polls to determine the reading tastes of members. Finally, it hoped to cause less of a stir in publishing and book selling circles by bringing books to people in rural areas where libraries and bookstores were few and far between. To test the correctness of these assumptions, one year after its inception the People's Book Club sent a postcard questionnaire to members. The results showed that they were indeed rural dwellers with a preponderance of high school graduates.

Not to be outdone by Sears, Montgomery Ward announced in its Spring 1946 catalog that it would sell subscriptions to the Literary Guild and the Dollar Book Club by mail. Subscriptions would also be handled at its local catalog stores. By now, the Literary Guild, calling itself in its advertising "the world's largest book club," began to sponsor its own radio program, an idea that was dropped shortly thereafter.

With the ending of the war, 1946 witnessed a vast upsurge in the number of new book clubs: The Executive Book Club "formed by and for businessmen," the Non-Fiction Book Club (essentially the old Scientific Book Club in a new guise after it was taken over by Henry Holt's Science Book Club), the Family Reading Club, the Progressive Book Club, the History Book Club, and the Jewish Book League all date from this period.

A 1946 study by Henry Link and Harry Hopf for the Book Industry Committee of the Book Manufacturers Institute told the management of the various book clubs one fact they already knew only too well--namely, book clubs were plagued by a high rate of turnover in membership. This study undoubtedly had an effect on changes introduced by the Book-of-the-Month Club the following year. Monthly selections offered were increased to seven in number--one new title and six established titles. Next, annual mailings were increased from 12 to 13, a move they claimed would make it easier for subscribers to fulfill their membership obligations. The BOMC believed the increase would overcome objections that too much emphasis was placed on too few books. This figure was later raised to 14 by the Book-of-the-Month Club and other clubs, and at least one club, the Playboy Book Club, raised the number of mailings it made each year to 16. Today, annual mailings of clubs can number up to a staggering 19 per year.

New book clubs that entered the field in 1947 included the Thomas More Book Club and the Fiction Book Club. This was far from the picture envisioned by Selma Robinson in 1930 when she predicted that the number of clubs would be reduced to three or four giants, comparable to other mail order operations. During 1948, the Book-of-the-Month Club purchased Holt's Non-Fiction Book Club and absorbed its 11,000 members. It also formed a short-lived Travelers Book Club to cooperate in a plan to supply railroad passengers with good reading matter on long trips. The year 1947 also saw a close cooperation between the Literary Guild and Macy's Red Star Book Club. This allowed a Macy's customer who subscribed to the Guild through the store to apply dividend certificates toward the purchase of any book in the store.

New ventures presented the book trade with problems. A new type of organization appeared that bore the name "book club" but had none of the characteristics of a book club. These organizations did not make selections at all, but merely bought from publishers at standard retailers' discounts. They promised a 25-percent dividend or bonus on all book purchases. Subscribers received such bonuses in the form of a credit toward additional purchases.

Confronted with high overhead costs, these new clubs limited their advertising to small space ads designed to build up their mailing lists. The oldest and most active of the general clubs in this area, the Bonus Book Club, was organized in February of 1947 and began operation in May. The Dividend Book Club, started in September of 1948, required that the first book be purchased at list price. Then 25 percent of the total purchase was applied toward the cost of a fifth book. Started in March of 1949, the Art Book Club permitted members to deposit money in advance against which purchases could be charged.

Another Book Club War
In 1948, booksellers declared open warfare on book clubs. At the 1947 American Booksellers Association convention at the Hotel Astor in New York, the first to include a trade show for booksellers, the ABA had adopted the Give-a-Book-Certificate Plan, with which booksellers could cooperate on a voluntary basis. Using the Association's offices as a central clearing house, booksellers could redeem a certificate issued to a customer anywhere in the country. A free service to customers, the certificate was intended to encourage the giving of books as gifts.

Another venture was the American Booksellers Association's Leased-Books Project. For years, booksellers had complained that publishers granted extraordinary rights to book clubs. Now they decided to demand them for themselves. The ABA maintained that legally they had the same right to special terms as did book clubs. Under the Association's project, a committee was formed to request that three separate publishers (Doubleday, Harper and Houghton Mifflin) lease plates to the ABA so that it could print books of its choice. The publishers denied the ABA request, even though the three titles designated by the ABA later appeared as selections of one or another of the major clubs.

At its 1948 in Chicago convention the ABA passed a resolution "looking toward a coordinated approach to legal aspects of the book club problem." Howard B. Klein of Burrows Bookstore in Cleveland was appointed to investigate the possibility of filing suits alleging that agreement between publishers and book clubs represented unfair trade practices. He reported in an open letter to the book trade that the Federal Trade Commission (FTC) and the Anti-Trust division of the Justice Department had been asked to settle the rights and wrongs of the licensing of book club rights. In 1949, the booksellers association joined with the Cleveland bookseller in a formal complaint to the FTC about publishers' book club practices. Even usually sympathetic Publishers Weekly bluntly described it as "sicking the FTC on the publishers in an effort to stop book-club bargains."

Peace at Last
Four long years later, the FTC made a decision in the ABA-sponsored case in 1953 and settled the book club question once and for all. Trial Examiner Frank Hier affirmed the legal propriety of the publishers' practice of granting exclusive rights to book clubs. Exclusivity is the essence of copyright, he declared, and the licensee (the publisher) had the right to arbitrarily sublicense one and to refuse to sublicense another. The presence of two publishers in the field, each using different distribution methods, resulted in a duality of price whose impact might be felt by the retail bookseller. However, the mere existence of a duality in price was not a violation of the law.

At last, publishers, booksellers and book clubs could settle down to harmonious relationships in the making and selling of books. For all practical purposes, the series of Abitter guerrilla engagements between the warring parties was over. Curiously, when the participants calculated the time the bitterness had endured, it turned out to have lasted almost as long as the devastating Thirty Years War that engulfed most of Europe and brought episodes of famine and pestilence for centuries thereafter.

O.H. Cheney, in his monumental Economic Survey of the Book Industry, conducted for the National Association of Book Publishers in 1931 at the nadir of the Depression, perhaps said it best: "The book clubs became a menace because the book industry always needs a menace." He pointed out that the gaps left by the industry's inadequate distribution system had to be filled by some method, and the book club was just as logical as any other method--and more logical in theory than the bookstore was in practice.

What of the Future?As a calling, booksellers have always seen themselves as perpetually doomed. From the end of the Civil War until near the turn of the century, they complained about discounting and price cutting. They were equally bitter about publishers selling directly by mail and their use of commercial travelers in competition with retailers. In 1896, booksellers saw the bicycle craze as "demoralizing the equilibrium of the book trade." Not many years later, it was trolley cars, telephones and baseball games. These were followed by the movies, Sunday newspapers, magazine reading, radio, and finally television. Next it became the turn of computers or cell phones to play the villain as competitive diversions from books.

The growth of chain bookstores also meant formidable competition for independent booksellers. Independents and chains, as well as bookclubs, have been mortally wounded by discounters, such as Wal-Mart, Costco, Sam's Club and It remains to be seen what handheld electronic readers and downloaded books will do to the printed book.

There will always be a coterie of readers for whom no greater pleasure exists than the proverbial "curling up with a good book." Book clubs, if they survive at all, will probably be limited to those clubs serving partisan political tastes and specialized professional groups.

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