Book clubs–of the Book of the Month Club, “get 10 books for a dollar” type, not the Oprah variety–were once an essential revenue stream for the book publishing industry, with millions of customers buying discounted books directly. But today, with deep discounts and wide selections offered by online retailers, book clubs have become much less important to the publishing industry. In a nod to changing times, Random House parent company Bertelsmann is now closing Direct Group, its book clubs and direct marketing division, effective June 30.
Over the past three years, Direct Group has sold off most of its international subsidiaries, including those in the U.S., UK, Italy, Spain, Australia, Asia, and France, and will fold the remaining ones into Bertelsmann or sell them off. Najafi Companies, the Phoenix-based private equity firm that is considering a bid for Borders, bought Direct Group North America, whose brands included Book of the Month Club and Columbia House, in 2008 and the French-speaking businesses in May.
Nick Bertolotti, senior media analyst at Credit Suisse, told the Financial Times, “Bertelsmann have talked about investment in emerging markets and in new media and they will certainly have more cash to spend in the next few months, having reduced debt and cut costs across the board.” The company is looking to buy music label EMI and is exploring education assets in Asia and India.
With the closing of Direct Group, Bertelsmann will encompass four divisions: Random House; European magazine publisher Gruner + Jahr; radio and TV division RTL; and business services group Arvato.
The book club business has shrunk drastically in recent years, and while some small clubs like the Progressive Book Club and Conservative Book Club have sprung up to appeal to niche political audiences, as of 2009 the Direct Group book clubs’ membership in the United States had shrunk by as much as 75 percent from its height.