Maverick Book Publishers Debut Marketing System

If it works for Mary Kay, Amway and Herbalife, the corporate fathers of Medallion Books reasoned, why not “incentivize” the process of reading?

The term might make Webster do back flips in his grave, and the concept, Medallion vice president Andrew Ettinger said in an interview here, is definitely “quite iconoclastic.” But the idea of a book distribution system that bypasses retail outlets in favor of direct sales, mail order and network marketing was enough to prompt Medallion’s Canadian backers to ante up what Medallion President and Chief Executive Officer John Neubauer says is “about $5.8 million” in current capitalization.

“We’ve invented nothing,” Neubauer said on the phone from Los Angeles, days before his company’s first books were slated for distribution. “All we’re doing is applying it to a different market.

“Improving readership and the availability of good reading is our goal,” he said.

As for Medallion’s initial list of 23 authors, the prospect of a novel royalty arrangement that promises payments every three months was among the primary enhancements to attract them to a Los Angeles-based publishing house that existed in theory only as recently as last September, and did not even have an office until last March.

“Enthusiastic?” crowed Los Angeles literary agent Doris Halsey. “The authors are deliriously happy so far.

“This is it,” said Halsey, agent for “I think six or seven” of Medallion’s forthcoming books, due out early in July. “It’s absolutely fired my imagination because the great complaint of writers is that even if they are published, they appear on the stands for perhaps four or five days if they are printed in paperback; that if they go on tour, the books are not in the stores; and that it takes forever for them to see their royalties.

“This is a pioneering way to do business with books,” Halsey said, “and I for one am willing to try it.”

A veteran of more than 20 years in publishing, Andrew Ettinger embraced Medallion’s idea of subscription/commission reading and book purchasing with much the same zeal.

“When I heard this thing described to me last September over a lunch in Los Angeles,” Ettinger said, “I leaped at it.”

From the first, he said, “I was both elated and excited.” And then, “I kicked myself.” The idea seemed so obvious. “I thought, ‘Why didn’t I think of that?’ ”

Not everyone was quite so eager. “Initially, people thought we were nuts,” said Ettinger, who was visiting New York to meet with authors, agents and publishing people, as well as to detour briefly to Medallion’s printing facilities near Scranton, Pa. “But once we explain, they get interested.”

Medallion consumers will divide into two groups, Ettinger said: the reader and the member. A reader is simply a mail-order book buyer, comparable, he said, to any catalogue purchaser. A Medallion member, using his Social Security number as his identification code, fills out an application form and agrees to spend a minimum of $15 per quarter. For this amount, the member may “sponsor” other members or readers, and receive commissions on their orders. The process, Ettinger said, simply capitalizes on reader referrals, and, he said, “It has been known for a long time that word-of-mouth is the best way to sell a book.”

With an initial projected membership data base of “5 million after the first of the year,” Ettinger said “we are convinced that after the system is in place, readers are going to become members.”

Familiar Pyramid Ring

While Ettinger, for one, likes to point out that “in a sense, this is showing New York (publishing concerns) that there is another way to do things,” Medallion’s highly computerized sales method does carry a somewhat familiar ring. The success of certain direct-buy beauty-product, home-maintenance and health-care marketing plans has also left this approach open to a chorus of criticisms and complaints.

“The two terms we never use,” Ettinger said, cringing slightly, “are pyramid or chain letter. “

Yet Medallion has elements of both, Neubauer concedes: “The legal name for this type of construction of a marketing business is pyramid. “ He stressed, however, the obvious differences between Medallion’s products and those offered by other established subscription-order businesses.

“I think there can’t be a product more pure than a book,” Neubauer said. “A diet business or a shampoo may promise you something. It would be . . . different if we were offering you something that will make you thin and grow hair.”

In any case, Ettinger said of the structure of his company, “this thing has been checked nine ways to Sunday.”

And besides, as both Ettinger and Neubauer like to observe when this aspect of their business is under scrutiny, this method of book buying and selling is not entirely untried. “If you go back in history, somewhat,” Neubauer said, “the first books were sold only by the publisher.”

“In (Colonial) Boston, in particular,” Ettinger said, “publishing was originally the domain of the printer. For a reader to get a book, he would subscribe to the publisher.

“I learned this,” Ettinger said, “and I said ‘My God, we’ve come full circle, back to where it all started.’ ”

As a one-time literary agent, editor and former executive with Prentice-Hall, Simon & Schuster, Pocket Books and Pinnacle Books, Ettinger prefers to focus on Medallion’s relationship to its writers. “If you have ever talked to authors,” he said, “you know their biggest beef with publishers is that they don’t get paid on time, and not as much as they said they would.” Particularly in his recent years as an agent in Los Angeles, Ettinger said, “I really began to hear horror stories from authors.”

With advances that ranged from $4,000 to “near $50,000,” Ettinger said, Medallion attracted its first roster of writers from Europe and the East Coast, but mostly from its home base in California. Along with speeded-up royalty payments, he said, Medallion offered a quicker turn-around time than most conventional publishers.

“We can get an author into a cash-earning post very quickly,” he said. “Right now we are looking to publish a book that’s not even finished. But we like it so much that we are making a commitment to publish it in October. Except in the case of world-shaking events, this just is not done in publishing.”

Six of the books on Medallion’s maiden list are first novels, a fact that agent Halsey hails as a positive sign. “The markets are getting narrower, not wider, in conventional publishing,” Halsey said. “Unless you are a big-name author it’s tooth-and-nail for a newcomer to break into publishing.”

One thing Medallion cannot provide, however, is the joy of browsing through a bookstore. Its catalogue may expand to a magazine, Ettinger said, but Medallion Books will not be offered in bookstores.