Wednesday, April 11, 2007

Media Conglomerates Take Different Paths

On March 7, 2007, I did a post here in which I listed the seven mega media companies that are responsible for the majority of book releases each year. First on the list was Bertelsmann AG, which owns Random House, the largest book publisher in the world. Random House owns Ballantine, Del Rey, Bantam Dell, Crown Publishing, Doubleday, and Knopf.

Reuters reported yesterday that Bertelsmann had bought out Time Inc., its partner in Bookspan, their joint-venture that included Book-of-the-Month Club. According to the Wall Street Journal (WSJ), Bertelsmann will pay $150 million for Time's fifty percent share.

In a story on Tuesday morning, the WSJ reported the deal "would leave Bertelsmann as the only major operator of book, music and DVD clubs in the U.S. . . . The acquisition follows Bertelsmann's 2005 purchase of the Columbia House music and DVD clubs for about $400 million. The company bought Random House . . . in 1998."

The interesting thing to me about the WSJ article was the differing paths that the two media companies are taking. Time Warner, the parent of Time Inc., has been divesting itself of its book assets. In February, 2006, Time Warner sold its Time Warner Book Group to the French publisher Hachette Livre (last month the new owner changed the name of the Warner Book Group to Grand Central Publishing). In January, 2007, Time sold eighteen magazines, including Field & Stream and Popular Science to Sweden's Bonnier. The sale of Bookspan "all but ends the world's largest media company's presence in the book business." (WSJ)

On the flip side, Bertelsmann is putting its money on a very old-fashioned business model--the traditional bookclub--at a time when Internet book sales continue to grow.

I was fascinated by the following comment in the WSJ article:

Book and record clubs have shown surprising resilience in the digital age. More than 20 million people in the U.S.--members are typically women in their 40s--continue to subscribe to the clubs despite the popularity of, iTunes and other online platforms For consumers overwhelmed by the sometimes bewildering array of choices on the Internet, the clubs offer simplicity and value.

Michael Cader of Publishers Marketplace had his own take on the WSJ: "In exchange for a head's up on the release, the Journal offers up naive praise of the book club business that would make you think it's actually robust."

My mother used to say, "For every lock, there is a key." Consumer choice remains the largest trend in retail today.

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