Quick Overview
See how a subscription website aiming to be the “Netflix for books” overcame the issues of cataloging, inventorying and shipping expensive, heavy physical products. BookSwim co-founder and CMO George Burke tells Insider how refining their target audience helped them develop a profitable business model, and how they used blogger and media relations to land tons of free coverage to drive traffic and subscriptions. Plus, he describes how they’re getting good traction promoting gift subscriptions on social buying services like Groupon.
Company Snapshot
Founded: 2007
Funding: Entirely self-funded
No. of Employees: ~10
Business Model: Hybrid (90% subscriptions, 10% book sales)
No. of Members: 10,000+
Headquarters: Newark, NJ
Subscription site: http://www.bookswim.com
Free ebook swap site: http://www.ebookfling.com
Target Market
BookSwim’s primary audience is upper middle-class women (80% of subscribers are female) who belong to book clubs and are in the market for new and best-selling mass-market book titles.
The secondary audience is older readers who can’t easily get out of the house to visit a bookstore or a library.
The site recently launched a separate, free membership site targeting ebook owners who want to swap their digital titles with other eBook owners.
Content Model
BookSwim bills itself as a “Netflix for books” that lets subscribers borrow between 1 and 11 books at a time, delivered by mail to read at their convenience and return when they’ve finished.
Subscribers log in to a membership site to create a list of titles they’d like to receive — called a “pool” — from the BookSwim catalog of between 10,000-15,000 titles. The size of the catalog varies based on the best-seller lists and the titles BookSwim has available at that time.
The site focuses on lending bestsellers and popular titles likely to be in high-demand for subscribers. Those titles also tend to be in high-demand at libraries, where readers might have to get on a waiting list to get their hands on the title.
This model is an evolution of the company’s initial approach, which aimed to offer any book a subscriber requested. But shortly after launch, the team realized it wouldn’t be financially or logistically feasible to create a catalog of hundreds of thousands of titles.
“It was a disaster for us. When books are assumed to be free to members, it almost doesn’t matter what they add to their pool,” says Burke. “They’ll try anything, and that meant we had to buy it for our inventory even if we never knew if [that book] would be rented again.”
The team buys books for its inventory, which is housed in a third-party warehouse in Pennsylvania that handles all fulfillment and shipping. Books are mailed in postage-paid return envelopes for subscribers to send back when they’ve finished reading.
Anyone can browse the site’s catalog, which features separate pages for each book that uses ISBN numbers, author names and book descriptions sourced from either the publisher’s website or from Amazon.com or the Barnes & Noble website (with whom BookSwim has affiliate deals). These open-access pages also help boost the site’s SEO.
“It’s really simple for us to add a new book to the site. No editorial is needed. We don’t even have people who select which books should be in catalog — it’s just based on sales rank.”
The site also features a proprietary recommendation engine that suggests books that subscribers might also like based on previous reading history and other members’ pools.
BookSwim is entirely focused on hard and soft cover book rentals. But in January 2011, BookSwim began testing a digital content strategy by launching free membership site that lets users share their ebooks. EBookFling.com, which is still in Beta, lets members register and upload a list of ebook titles they are willing to share with other members. Then, they can create a “wish list” of titles they’d like to read, so members can contact each other via email to swap titles.
The site supports sharing of Amazon Kindle and Barnes & Noble Nook formats, and members can have access to shared titles for 14 days, per the existing Amazon and B&N sharing agreements. EbookFling is just a facilitator — the site does not own or distribute any ebooks itself.
Revenue Streams
Subscriptions make up 90% of BookSwim’s revenues. The remaining 10% of site revenues come from book sales.
EbookFling is still in Beta, but one planned revenue stream is to charge users $1.99 for a rental credit if they want to borrow other members’ ebooks without listing their own titles.
1. BookSwim subscription pricing
BookSwim offers four main subscription tiers: $23.95/month for three books out at a time; $29.95/month for five books out at a time; $35.95/month for seven books at a time; $59.95/month for 11 books at a time. They also offer a “limited” plan that lets subscribers borrow one book a month for $9.95 plus $3.99 in shipping.
Burke admits they’ve never formally tested pricing, but have adjusted the lowest regular subscription tier based on internal and external business factors. For example, the site launched with a higher base price of $26/month for three books because the team didn’t want to be inundated with subscribers and be unable to fulfill book rental requests. After securing an outsourced fulfillment partner they lowered the initial tier price to around $20/month, but recently had to raise it $3 dollars to offset increases in Postal rates.
#2. BookSwim book sales
If a subscriber requests a book that’s not in the BookSwim catalog, the site offers a link to purchase the title at Amazon.com or Barnes & Noble. As affiliates of both companies, BookSwim gets a commission on sales generated through those links.
The site also sells books directly from its inventory by offering subscriber the opportunity to keep any book they’ve rented and charging them for the title on their next monthly subscription bill. They also use the Amazon.com marketplace to sell used books that are no longer in top condition and unsuited for rentals.
Marketing Tactics
Pre-launch blogger outreach
The site did no paid marketing prior to launch. Instead, Burke searched for bloggers who wrote about books and either contacted them directly or commented on relevant posts to mention their plans to launch a Netflix-style book rental site.
Many of those bloggers in turn wrote posts about the site — and in some cases sparked debate about whether the service would be a “library killer.” Rather than avoiding the controversy, Burke engaged in the discussion, and the subsequent posts debating the pros and cons of book rental helped raise awareness of the site.
They put up a placeholder page on their URL to collect email addresses of prospects who wanted to be contacted when the service was live and received thousands of opt-ins.
Media relations to capitalize on “Transumerism” trend
Starting in 2009, the team shifted its media relations approach to capitalize on news reports about the rise of the “transumerism” trend — a movement toward renting or borrowing products, rather than purchasing them, with an emphasis on experience rather than ownership.
Working with an outside PR agency, the team promoted its VP Marketing, Eric Ginsberg, as an expert available to discuss the transumerism trend and landed high profile mentions on MSNBC.com, ABC News, and 11 local morning news shows during a 10-day media tour. Today, a Google search on “transumerism” pulls up three top-10 listings that include a link to BookSwim.
The site also maintains a “Media Mentions” page that lists more than 200 articles, blog posts and TV appearances that feature the service, along with links to the original story.
On-site conversion tactics
Direct visits to the website, driven by search and word-of-mouth referrals, drive most new subscriber signups. The site is optimized to get these visitors quickly to view subscription options.
The top of the homepage features a large billboard ad with a photo of a young woman reading a book and the tagline “From new releases to classics, your escape delivered. Unlimited book rentals shipped free.” A button overlayed on the image features the words “start now” and connects directly to a subscription plan offer page where the $39.95/month plan is highlighted.
Individual book pages in the site’s catalog are open access and indexed by search engines, allowing visitors to land on the site and read a details about the title. An ad on the right side of each catalog page features another image of a young woman reading, with the headline “Book Rentals Delivered” and bullet points highlighting features such as free shipping and no late fees. A large red button with the text “Sign up” connects directly to the subscription plan page.
Gift subscriptions
The site does a significant business in new subscriptions around Christmas/Hanukkah holiday season, which lead the team to develop a gift subscription offer that lets visitors buy gift memberships for their book-loving friends and family members.
They market gift subscriptions on a special section of the site where buyers can select a three, five, or seven books at a time plan for one, two, three, six or 12 months. Buyers also can choose set amount for a gift subscription, such as $25, $75, $125 or $200. Buyers receive a gift-code to pass along to the recipient, who must log in to the site to redeem the code.
The team also has promoted gift codes extensively on daily deal and group buying services such as Groupon, Living Social, and Gilt City.
“We see [gift subscriptions] as a way for to get a full-year or half-year subscription paid up front and to bring cash into the business,” says Burke. “It’s been extremely successful for us.”
Free trial
The site periodically runs a free one-month trial offer which they turn on whenever they feel like increasing the number of new members. However, Burke says that free trials typically only generate a modest boost in signups, so they’d rather focus on getting subscribers willing to pay up-front for the service.
Technology and Vendors Used
BookSwim is built on a custom website that handles its catalog, inventory management, and the subscriber recommendation engine. Other critical processes are handled by select third-party vendors, including:
First National Merchant Solutions: The site’s merchant acquirer for credit card processing, which Burke chose because it offers access to credit card Account Updater services.
http://www.firstnationalmerchants.com/
eBureau: Provides risk management and fraud prevention technology for the site’s credit card orders.
http://www.ebureau.com/
StreamSend: Email marketing software the team uses for member and past-member email outreach. (They do not do email prospecting).
http://www.streamsend.com/
Live In Five Public Relations: Outside agency BookSwim uses to coordinate media outreach
http://liveinfivepr.com/
About George Burke
Burke co-founded BookSwim with a college friend, Shamoon Siddiqui, using $6,500 of their own money (and have never taken any outside financing). Prior to launching the site, Burke was a web developer and internet marketer with a specialty in search engine optimization.
He credits the company’s chairman, former publishing executive Georg Richter, for helping him learn the intricacies of the book publishing world and the online subscription industry — for example, understanding the importance of credit card processing when running a recurring-billing service. “You learn by doing and when it’s you own money on the line you pay attention to it very much.”
Subscription Site Insider’s Analysis
BookSwim was smart to quickly refine its target audience and tailor the service to that niche. If the cost of creating or delivering your content to a broad consumer audience proves too daunting, then it’s time to rethink your approach to target your best prospects. The team also makes great use of blogger and media relations to drive traffic. Every subscription site should be looking for hot consumer trends that are relevant to their niche and then promote company personnel as expert speakers on the topic. Finally, the site offers another example of the power of promoting online subscriptions as a gift.
We’d like to see the site get serious about testing its pricing and membership tiers to focus on lifetime subscriber value. Operating purely on gut pricing instinct and reacting to external costs may have worked so far, but the team won’t know whether they’re leaving money on the table or missing the opportunity to step members up to a higher subscription plan without formal testing. The foray into ebook swapping is an interesting development, but we’re curious to see whether the company can monetize that membership site and develop closer links between the two sites to generate subscription sales BookSwim.
