Bertelsmann Shuts its German Book and Music Club Business
Marking the end of an era, German media giant Bertelsmann has shut down its German book and music club business, saying the division will be rolled up completely by the end of 2015.
The Bertelsmann book club was set up in 1950 by company founder Reinhard Mohn who saw an opportunity in post-war Germany to sell books at a discount to the country's swelling aspirational middle class.
By publishing editions 4-6 months after their original release, Bertelsmann was able to avoid German price-fixing regulations on books and offer best-sellers at a major discount. The model was a huge success. Bertelsmann's book club had more than a million members by 1954 and the division's profits laid the foundation for the company's expansion into publishing, music rights and television.
Bertelsmann is now one of Europe's leading media companies, with revenues of $22 billion last year. It's subsidiaries include American Idol and X Factor producer FremantleMedia, publishing giant Penguin Random House, music rights group BMG and leading European commercial broadcaster RTL Group.
Bertelsmann's book business continued to boom until the arrival of the Internet and Amazon. In 1992, the Bertelsmann Club had more than 7 million members in Germany. By 2005 that had fallen to 3 million. Currently, the number is less than a million.
"The decision to close our German-language club and direct marketing business wasn't an easy one,” said Fernando Carro, head of Bertelsmann's club operations. “But despite intense attempts to further develop the business, the club's business model is no longer economically viable in the German market."
In addition to shuttering its club business, Bertelsmann will close its club book stores, of which only 52 remain. Bertelsmann still operates a book club business in Russia and Ukraine and has a 50 percent stake in a similar club operation in Spain.