Last March I did a piece on a company called BookWise titled BookWise: The Book Worlds First Pyramid Scheme. Out of the 400+ Book Patrol posts in 2007 none garnered the reaction that this one did. The comments received for the post were disproportionate compared to all other posts and they were all negative. Just recently I received this comment on the post:
“just by using the phrase “pyramid scheme” proves you really don’t know what you are saying some people live free, others live as slaves. I’ve made my choice”
From Wikipedia: A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme…It has been known to come under many guises. There are other commercial models using cross-selling such as multi-level marketing (MLM) [which is how BookWise classifies itself] or party planning which are legal and sustainable, although there is a significant grey area in many cases. (emphasis mine)
Well, was I wrong? Did I miss the boat on this one? Why such a negative reaction? It is not like I haven’t expressed a controversial opinion before. Am I living like a slave? Is BookWise a club for enlightened travelers and I’m on the wrong road?
Maybe it is possible to find value in paying $40 a month to get one $25 book that you could get 40% cheaper somewhere else and maybe if one reads all the freebies you get upon joining you will become rich but here, it seems to me, books are simply a pawn in someone’s marketing game.
To try and get to the bottom of this I had a book-loving friend join. Below is his take after 3 months as a BookWise associate.
Overview:
- BookWise is targeted at those who want “the most intelligent home-based business in the world.” That’s their tag line and key part of the elevator pitch.
- Toward that, BookWise offers regular online, podcast, and conference call information sessions for all members. The sessions include information on taxes, creating wealth, writing and publishing your own books, selling seminars, managing your network, author interviews, etc. These are included in the basic membership.
- Optional services to build and host a BookWise-formatted website were recently added, for an additional fee.
- The basic membership includes a commitment to a monthly book purchase at $35 (plus tax, handling, shipping). That book can be the default selection by BookWise or another one of your choice. If the BookWise default is selected, there is a monthly e-book and audio book included in the “bundle of benefits.”
- After the purchase of the first book (at $35), others can be purchased from the BookWise Bookstore at a discounted price.
- The BookWise Bookstore has a number of titles, but not a broad or deep selection in any subject area. Only a relatively few top tier titles are included. Many of the books are in the self-help, personal improvement genre. BookWise makes statements suggesting that they restrict listing books that don’t meet their standards (of violence? of morality? It’s not clear what criteria is used.)
- A sample of a few books showed that while the BookWise discounted prices were on average 20% below retail, they were still 20+% more than Amazon’s prices.
How a member makes money:
- A BookWise member can participate by buying the minimum $35 book each month and any others of interest at the discounted rate.
- Money can be made by re-selling these books at retail rates to friends or customers.
- But the primary BookWise emphasis is on their networked marketing program. This is a tiered program where a BookWise member signs up other BookWise members, who sign up other BookWise members, and so on. Up to 9 tiers deep. Each member who has members working for her (who have members working for them, …) in downstream tiers receives a small commission when new members join her organization and on each book sold by everyone in that organization.
- BookWise emphasizes that a lot of money isn’t going to be made until the original member’s organization is several layers deep and wide – and that takes time.
- Essentially, money is made through the exponential growth of the member’s organization. If one member recruits 3 members and they each recruit 3 members, the original member now receives a commission from the sales of the 12 people working under her. If those on the bottom tier each recruit 3 more members, then the one original member receives a commission from the sales of 39 people. And so on.
Impressions:
I joined as an individual member. No one solicited me to join their network (although I expected that to occur.) As long as I continued to buy the monthly $35 book – (actually over $40 with shipping) – I was able participate in the seminars, conference calls, writing workshops, and other tutorials. I could also buy any other books at the discounted price.
- Supposedly a small part of the revenue from each book purchased goes to a charity. It was not clear to me how that actually worked and who the charity was.
- I found the selection of books very limiting. There were very few books that I was interested in buying. There was minimal description of each book – for example, no information on whether it was hardcover or paperback, no year of publication, etc.
- It’s difficult to see how remaining as an individual membership would be cost effective. Given that the first book each month is more than retail price, a member would need to buy several books each month for the total to average below retail. (And it still would cost more than Amazon’s prices, with no additional services normally part of a retail purchase.)
- Clearly the way I could have made some money would have been to sign up lots of new members under me or find enough friends/customers that would by books from me at standard retail prices consistently.
Bottom line, I don’t understand the appeal to an individual looking for a home business. There are so many various ways that buyers can find books. BookWise doesn’t have a cost advantage, nor does it offer specialty or hard-to-find books. In fact, most of the inventory is fairly ordinary. The training and seminars seem good for someone looking to improve their skills. (One of their statements is that BookWise is a way to “not only build a home-based business but to improve personal intellect and well-being and build a better world.” ) Even with a network of multiple tiers in place, every person needs to be selling these books. And I don’t see how that’s going to happen on a large enough scale.
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