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THE WALL STREET JOURNAL
Big Book Club Asks, Habla Espanol?
AOL Time Warner Venture Targets Spanish Readers
By JEFFREY A. TRACHTENBERG and EDUARDO PORTER
September 27, 2002
The country's main operator of book clubs, faced with a book-selling environment in which finding new markets is crucial, is launching its largest direct mailing ever in a bid to lure Spanish-language readers.
Bookspan, owned by AOL Time Warner Inc. and Germany's Bertelsmann AG, is targeting the nearly 30 million Spanish speakers in the U.S. and Puerto Rico. The effort includes a mailing of more than one million pieces and an aggressive advertising campaign in Spanish-language magazines. Executives say they expect to attract at least 100,000 members to the club, called Mosaico, during the first year.
The effort comes at a time when the future of book clubs has been clouded by the Internet, which generates an estimated 10% of all book sales. In addition, the country's two mightiest book retailers, Barnes & Noble Inc. and Borders Group Inc., are pushing hard into the smaller communities the book clubs once dominated.
Back in 1926, when Harry Scherman launched the Book-of-the-Month Club, he believed rural America hungered for books it couldn't find in their local downtown. He added an ingenious (some say predatory) wrinkle -- the so-called negative option, in which subscribers have to cancel the next month's selection if they wanted to prevent its arrival -- and launched a hugely profitable business that became a cultural institution.
But the landscape has changed. Well-stocked bookstores are ubiquitous in suburban America, and mass merchants such as Wal-Mart Stores Inc. and Costco Wholesale Corp. carry the bestsellers. "Many publishers have gotten out of the direct-mail business," says John Kremer, editor of the Book Marketing Update newsletter, Fairfield, Iowa. "The Internet, particularly Amazon.com, has really hurt the book clubs."
Few know this more intimately than Bookspan, which was created two years ago when AOL married its Book-of-the-Month Club to Bertelsmann's Literary Guild. Bookspan, which claims 10 million members nationwide and operates 35 different clubs, is exploring every conceivable niche, from fly-fishing to cooking, in a bid to boost membership and find potential book buyers who feel underserved. During the early 1990s, the Book-of-the-Month Club boasted about one million active members; today it has 700,000. Likewise, the Literary Guild claimed 1.5 million members during the late 1970s; today it has about two-thirds that amount.
In his first major move after succeeding Thomas Middelhoff as Bertelsmann's chief executive during August, Gunter Thielen dismissed Klaus Eierhoff as CEO of the DirectGroup, Bertelsmann's book club and e-commerce division. The unit was the biggest drain on operating results for the first half of 2002, with a loss before interest, taxes, depreciation and amortization of 119 million euros ($116.3 million). Seth Radwell, president of Bookspan's editorial and marketing group, says the company will turn a profit this year.
Still, Bookspan's newest venture, Mosaico, is critical. The effort will offer books written in Spanish by such authors as Gabriel Garcia Marquez and Pablo Neruda, as well as translations of such pop titles as the Harry Potter books. Main selections will be offered at as much as a 25% discount to retail price.
The Book Industry Study Group estimated 905 million books were sold in the U.S. during 1999, while the National Association of Hispanic Publications estimated 48 million of those books were in Spanish. Still, there is little doubt Spanish-language books are on the increase: Borders, which opened its first outlet in Puerto Rico two years ago, has significantly increased its offering of Spanish-language titles.
But the market is developing slowly. Lisa Alpert, the editor of Bertelsmann's Random House en Espanol, says Spanish-language readers buy only one-third the number of books per capita as does the rest of the population. "It's a modest market that has yet to mature," says Marcela Landres, an associate editor at the division of Viacom Inc.'s Simon & Schuster that publishes its Spanish-language imprint.
Although retailers here carry much highbrow literary fiction from Latin America and Spain, the most popular genres in Spanish in the U.S. are self-help guides, tutorials and new-age writing. For instance, Random House's top-selling list includes three computer guides. The Spanish-language best-selling list, launched this month by the magazine Criticas, gave the top slot to "Los Cuatro Acuerdos" (The Four Agreements), which offers advice steeped in the lore of the Toltec Indians from pre-Columbian Mexico.
People in the industry expect initiatives such as Mosaico could boost the Spanish-language book market by providing an alternative distribution channel, reaching Latinos who might want to buy books, but don't normally visit bookstores. Bookspan executives say the success of Black Expressions, a three-year-old club that caters to African-American readers with nearly 400,000 members, encouraged them to focus on Spanish-language readers.
"We see ourselves addressing an underserved market by delivering preselected books they can't find elsewhere," says Bookspan's Mr. Radwell.