Guest post: “A business model that works — even if we hate it”

1.29.07 | | 10 comments

Editor’s note: The following post was written by frequent AMV commenter Preston McConkie. His viewpoints do not necessarily represent those of individual AMV bloggers or AMV as a whole. ~Wm

Serious authors tend to be dignified people. There’s a reason this forum largely ignores Richard Paul Evans as an author, and I suspect it’s because he’s a marketer more than a writer; his success is far out of proportion to his literary ability. The same can be said for many authors, but the Association for Mormon Letters exists for increasing the quality of LDS literature, and business discussions on A Motley Vision center around how we get that better product to the readers.

But as long as we’re talking marketing and distribution, let’s give Evans a look. He values success and finds a way to get it, and he hasn’t hurt anyone (I classify The Christmas Box the way the Hitchhiker’s Guide to the Galaxy classifies Earth: “Mostly harmless”). And now Mr. Evans has come up with idea I think we can learn from.

I don’t belong to any multi-level marketing company, but through the ministrations of an enthusiastic relative I’ve been introduced to Bookwise, an MLM that’s a couple of weeks from being publicly announced. It was started by Mr. Evans. It’s entirely Internet based. You pays your $30 monthly fee and you gets one book a month from a list of books the company has negotiated discounts for from wholesalers. Additional books can be purchased for 30 percent off cover price.

The point is to build a huge base of buyers and wield bulk purchasing power. It’s like a book club, except that book clubs propagate by direct mail and traditional advertising. This one’s spreading fast, by word of mouth, because it isn’t a local reading club whose members are only motivated by love for literature. Pelf is involved. Not only do married women do most of the book buying and reading, they frequently like the chance to earn money on the side without dumping the kids at a baby sitter’s.

In addition to its discounting scheme, Bookwise promises to introduce another innovative feature, obviously inspired by Evans’ experience in bulldozing his way into the national book market. In the early-mid 1990s Evans leveraged Simon & Schuster into picking up The Christmas Box after it had already turned it down once. But first, in 1993 he self-published and used his own advertising firm to buy billboards and radio ads to make The Christmas Box the equivalent of Taco Bell’s Famous Bowls (“Welcome to KFC/Taco Bell. Would you like to try one of our Famous Bowls?” “Um, never heard of ’em. What’s so famous about ’em?” “Oh, they’re not really famous, they’re just called Famous. It’s a trick. Get it?”).

Through pure marketing, Evans turned a schmaltzy pamphlet into a regional bestseller. S&S then made it a national bestseller.

Evans has been largely ignored on AMV’s marketing and distribution discussions, despite being one of the two most successful LDS writers (when measured by volumes sold and dollars earned). Perhaps we consider Evans rather shameless; but if so, he is also willing to think and act boldly and innovatively.

Consider this inventive feature of Bookwise (which, again, I do NOT belong to): a plan to introduce fledgling authors. A reading panel at Bookwise will invite manuscripts from previously unpublished authors, screen them for company standards (I don’t know what they’ll be) and post them as free e-books for their members to read. Interested members will then mark whether they liked the book and would buy it if it were available. The idea is then to approach major national publishers with this data, saying, “We have 20,000 people who’ve reviewed this book and said they’d buy it.”

This could be a model for a purely LDS-oriented MLM, and it could provide cheap market research that could revolutionize the kind of books that get published by the big player (notice, no ‘s’ after ‘player’). Evans’ MLM is spreading pretty fast through the Mormon Corridor, So. Cal. and Virginia. But Bookwise isn’t a specifically LDS-oriented company. Remember, Evans is too monetarily ambitious to orient himself only to the limited LDS market. However, he has found it makes a handy a jumping-off point to greater conquests.

Now, recalling a comment I made to S.P. Bailey’s post on whether DB is a monopoly, to compete with DB’s audience would mean doing something it doesn’t do, and doing it well. What if there were an LDS-oriented, completely web-based MLM that offered all the gifts and art that Deseret/Seagull carry, plus books they don’t carry? What would it take to get someone to print up a hundred sets of the Journal of Discourses? Those volumes were out of print for ten years, then a year ago an Idaho printer ran between 50 and 100 sets and they were all sold before the plates got inked, at $550 a set. The day they were delivered, several sets popped up on eBay with minimum bids of $1,000.

Just having a set of the JDs available through an LDS-oriented MLM and nowhere else would be worth the cost of re-typesetting every volume, assuming whoever has access to the original plate images isn’t sharing them. And even if it wasn’t profitable it would be a great loss leader, though I think there are lots of books in the public domain that could be sold very profitably, considering the low costs of digital publication. There’s never been a set of JDs in paperback, but why not? We have the Book of Mormon in paperback.)

And what about the original biography of Heber C. Kimball by Orson F. Whitney, which you can’t even get through the Amazon used dealers right now. Or the biographies of any of those church leaders from the 19th century that have been out of print for decades and can only be found at rare book stores in Salt Lake or on the Net for around $100 each.

Then there’s stuff that’s not in the public domain, but where the publishers might be persuaded to license low runs of digital reprints, such as President Benson’s 1960 book Crossfire (published by a New York company) about his eight years as U.S. Secretary of Agriculture. It’s been out of print since 1976 and used copies cost between $70 and $120.

How about surveying professional Institute teachers and finding out what’s in their personal libraries? Seminary teachers alone would make a great market for direct-mailing catalogs of formerly out-of-print works such as the Comprehensive History of the Church (which has been in the public domain for one year now). Consider that Walter Disney became a feature filmmaker by tapping the public domain for his stories – free stories/histories that people already know something about would help anchor a new company, co-opting the identity of works that are absolutely mainstream LDS, unquestionably good reading, and NOT available from D-Book.

With such items as the core, you could start tacking on other books, things that wouldn’t threaten people’s faith but that would be genuinely entertaining and informative. Better stuff, different stuff than they can get at DB or SB&T.

The trouble we’ve been mulling on AMV is how to get people to come to you for books they don’t even care about yet because they are kept chained in ignorance by the dominance of the two great brick-and-mortar distributors (now just one, really. And forgive my parascriptural imagery). They maintained dominance by offering what others didn’t: DB had the strength of an exclusive product it could withhold from others; SB offered the same products at discounts. (The demand for DB’s exclusive product proved stronger than the power of the discounter.)

More than 90 percent of MLMs, I’m told, sell products you can’t get any other way (mostly exotic dietary supplements). Zango ain’t sold at Wal-Mart. If an online-powered MLM could offer both of the advantages that attract customers – exclusive products and pricing/shopping advantages – I could see it penetrating the LDS market and spreading far beyond the area served by Deseret Book stores.

Warm lists know no borders.

The question becomes, would we believe in our own product enough to think it’s worth selling missionary fashion? That’s a question I can’t easily answer because I hate MLMs with a flaming passion, as I suspect many of you do. But it’s still an idea worth chewing on, I think.

— Preston McConkie

10 comments: “Guest post: “A business model that works — even if we hate it”

  1. Kent Larsen

    Preston,

    I largely agree with the thrust of your post, if not many of the details. Over the past year I’ve become convinced that the LDS market needs alternative ways of getting books into the hands of readers, so I’m interested in any ideas that might make a difference.

    However, I too have doubts about the wisdom of any multi-level marketing system — mainly because they seem to put more layers than necessary between the producer and the consumer. Some MLM systems seem to attract people who want to put in minimal effort.

    But you haven’t given me enough information to evaluate Bookwise as an MLM (how many levels can there be? How much of each sale does each level get?), but the idea is novel enough that it might be successful, and, as you say, may be a model that can be emulated in the LDS market.

    You are also right that there are gems available in out of print books, many of which are in the public domain. [But, the Journal of Discourses are actually available at BYU's scriptures beta site.] I know of at least two small LDS publishers who do publish reprints of out-of-print titles. Of course, there are still many additional opportunities along these lines. But I doubt that any of these titles are likely to be very lucrative — they just aren’t likely to sell a lot of copies.

    But, I do agree that innovative thinking is not only helpful, but needed. A number of small LDS publishers are taking small innovative steps (I count my own efforts among them). I expect that at least some of the ideas you have and the efforts of these innovative publishers will yield some improvements in the market.

  2. Mahonri Stewart

    I also have a bad taste in my mouth about MLM (having had friends try to rope me into them in the past, only to then see my friends never get anywhere with it). However, I do think that thinking outside of the box is a good idea.
    I actually like the idea of publishing “public domain” LDS books. Paperback J of Ds– wonderful idea! As one who has bought a number of pricey, rare, used Mormon History books, I for one would have much preferred to buy a cheaper version.

  3. William Morris Post author

    More info about Bookwise available here:

    http://www.bookwise.com/main/faq

    I think it’s an interesting model. In fact, the idea of selling subscriptions to raise funds for publishing hearkens back to the very early days of publishing and the rise of reading.

  4. Kent Larsen

    Thanks, William, for posting the link to Bookwise’s faq. It does clear things up a bit.

    I must say, it seems quite expensive, which makes me wonder if this won’t be another MLM scheme with all chiefs and no indians (i.e., everyone will be trying to build a business, with few customers who just buy books and aren’t trying to get rich.

    If you join Bookwise just for the books (not to make money), then you pay $30 a year ($40 the first year) and $35 a month (total $450). For this you get 12 free hardcover books (selected from the Bookwise catalog — you can’t buy just any book) and a 40% discount on additional purchases.

    The only way this sounds good, IMO, is if you are used to paying full price for hardcover books. Even moderately unknown hardcover books on Amazon.com get at least 20% off — so the list price of your $450 of books would have to be near $600 — or nearly $50 a book — for this to be a financial benefit.

    Bookwise is also billed and operates something like a bookclub — you essentially have to purchase at least 1 book a month (for your monthly $35 fee), and if you don’t make a choice quickly enough, they send you the default choice. All fine and good, except most of the traditional bookclubs that still have this requirement are dying — at least in part because customers don’t like this requirement.

    While, as I said above, I applaud the innovation here, I don’t see that this concept has what it takes to work. It doesn’t seem to me to be that different from the famous Book-of-the-Month Club, which has been loosing subscribers for years. The big innovation here is adding Multi-level Marketing to the mix.

    But if I understand their faq correctly, it seems like one of the more egregious MLM plans — up to EIGHT levels which each get their cut of each sale. And with pricing that isn’t very competitive to online alternatives, I can’t see this one going anywhere.

    Let’s hope some of Preston’s other ideas lead to innovations that have a better chance of growing, or that Bookwise can revise its pricing and MLM structure to make it more competitive. Or even that my analysis is wrong and Bookwise takes off as is.

    We do need additional ways of reaching the market.

  5. Preston McConkie

    As I understand it, once you get enough people signed up below you, the $30 fee disappears at Bookwise. This is obviously a motivation for being a Bookwise missionary.

    Although Book of the Month is dying, I wonder if some other book clubs are doing well. A good friend of mine belongs to Conservative Book Club, which as I understand has grown a lot and is prospering. They’ve done it by offering products from a niche that appeals to motivated readers who are willing to spend money to get the latest publications.

    In the LDS audience it’s conceivable that we would find a similarly motivated niche. I think it would also be possible to put together a book club without dues, where anyone who bought a book would be assigned a customer number. Buyers could write their own reviews/testimonials of the books and email them to friends (along with stock reviews provided by the club) and ask them to include their customer number when they made their own purchase. Each such referred purchase could earn the referring reader $2.50 off the full price of another book in the club’s selection; half a dozen such referrals would earn the referrer a new trade paperback.

    I just think networking is the solution to market penetration barriers, but we can’t rely on personal enthusiasm to do all the work. Incentive of some type is needed. Perhaps this model would be the cheapest, most self-sustaining method and would take away the distasteful elements of an MLM.

  6. Bill

    Who knows, maybe in a few years all those out of print volumes will be available on Googlebooks.

  7. Kent Larsen

    Preston, I think your model sounds very plausible. It removes the part of MLM that I don’t like (too many levels), but preserves the reward to individuals who pass information on and persuade others to purchase.

    I’m not sure this would actually be a bookclub (as opposed to a bookseller), but that may just be a matter of semantics.

    You are right that networking is a crucial part of most solutions needed in the LDS market — because of the lack of viable ways of reaching LDS consumers. And I agree that those efforts need to be rewarded.

  8. Kent Larsen

    Bill,

    You may be right, at least for those items that are in major library collections and are clearly in the public domain (Googlebooks is great for books in the public domain due to their age, but not for those in the public domain due to failure to renew their copyright).

    But there are difficulties with Googlebooks too. I’m not sure its ideal for the casual LDS user, and I don’t think Googlebooks helps build an LDS market. In addition, even in the US perhaps half of all active LDS members don’t even have Internet access, let alone use the Internet as a source for Church-related information.

    I’m not sure where that leaves things, but I think Googlebooks is a small part of the solution at best.

  9. Michael A. Banks

    It’s MLM, and MLM is generally geared to serve the “downline.” The pricing reinforces that idea. I would not be surprised is the ebooks and other freebies are worth about what they cost. The books can be gotten for the same or less.

    Overall, this looks like an instance of someone doing something simply because it hasn’t been done–and there’s a reason for that.
    –Mike

  10. Andrew Hall

    Preston McConkie, the author of this post, apparently passed away yesterday. Very sad.

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