Free BookMooch service puts novel spin on books

Like some of the luckiest people in high tech, John Buckman made a mint on his first company and now dabbles in passion projects.

But one of his latest companies may prove he's more than just lucky, at least if you buy the Silicon Valley adage: Strike it rich once, you're lucky. Twice, you're smart.

BookMooch, Buckman's 20-month-old service that lets people trade their used books for the cost of postage, is making a small impression on a giant online retailer, Amazon.com. Even though BookMooch is free to members, the site generates an estimated half-million dollars in annual book sales for Amazon because of a browser plug-in called the Moochbar, which matches members' book wish lists to Amazon's retail inventory. For every 25 books swapped on BookMooch, at least one person buys a new book on Amazon through the Moochbar. BookMooch collects 8.34 percent on each of those Amazon sales.

"We're making money by accident," said Buckman, who spoke recently at a technology luncheon near his home in Berkeley, Calif.

Apart from still-negligible sales, what should be more of a wake-up call to the book industry is how the site is tapping into the so-called long tail of book retail with a social, free service. The long tail, as the theory goes, accounts for as much as 60 percent of the goods sold in an industry, or all those unpopular works that find a home with only a few. It's said that the lion's share of Amazon's book sales come from works that have a low sales ranking.

What's more, within the next nine months, Buckman expects to have the inventory of books--distributed among its members--that would rival that of the largest book wholesaler in the United States. BookMooch now has an inventory of about 480,000 books among its 70,000 trading members, but at its growth rate it should rival Ingram Book Company's 1 million books by early 2009, Buckman said. BookMooch's decentralized warehouse of books serves the long tail the same way that centralized warehouses like those of Ingram's serves the top of the tail.

"This is meant to be a noncommercial business, with no ads and no fees. We're just trying to do something fun and huge--like be the biggest bookstore on the planet," said Buckman, who sits on the board of the Electronic Frontier Foundation and European equivalent, the Open Rights Group. "It seems to me we should be able to trade more books than Amazon sells."

BookMooch isn't alone in appealing to people's desire to trade books or consume in a more earth-friendly way. Novel Action, Bookswap.com, and Swaptree.com are just a few of the sites that let members trade books. And while none of them is rivaling the traffic that Amazon and Google Books garner per month, they are collectively proving there's demand in the long tail. Eco-online book retailer Better World Books, which resells used books and donates some of the proceeds to global literacy projects, recently raised $4.5 million in its first round of financing to grow its business.

Buckman is a true Internet veteran. In 1994, he founded the e-mail software company Lyris with his wife, Jan. During a recent talk, he said Lyris was originally designed for groups of like-minded people to easily exchange e-mail. But, he said, it eventually became known as a spam company when it started selling to larger marketing clients that would use the software to send mass e-mails to customers. For him, the company was "desperately difficult and boring to run."

Four years later, he sold Lyris to J.L. Halsey Corp., but continued to head it for seven more years. During the luncheon, Buckman said his goal was to earn at least $3 million from the deal so that he could live comfortably on the $90,000 in annual interest. But he ended up with $32 million after 11 years with Lyris, more than enough to fund Magnatune and BookMooch.

Influenced by Buckminster Fuller
Long inspired by the inventor Buckminster Fuller, Buckman wanted to change the world by creating a company for which people would want to work for free, if they could. That's when he turned his sights to the music industry.

In 2004, Buckman started Magnatune, an Internet-era record label that would take on the major labels. Designed in the Linux model, in which developers can help improve the back-end of the music site, Magnatune is a music label that signs largely unknown artists and lets Web surfers decide how much they want to pay for their music, starting at about $5 for a record. Magnatune splits the sales with the artist 50-50.

Despite the promise for artists, Buckman said that Magnatune hasn't taken off. After five years in operation, it now breaks even with four employees. One reason for the uphill battle, he said, is that much of the $12 billion in annual sales from the U.S. music industry comes from music licensing. And because those licensing deals largely get done between two friends at a bar in Los Angeles, Magnatune artists are left out of the big music label conversations.

"Big companies don't want to do business with small fish," he said.

However, he learned a larger lesson with Magnatune. He created the service with the same construct as old-media: push something out to people and they will consume it, he said. He failed at creating a participatory environment in which people buy into the service, or have a personal stake in it.

BookMooch accomplishes that by asking people to put up 10 books of their own to receive one point, which will allow them to get their first book for free. In that deal, the new member must be willing to send off three of their own books to other BookMooch members. Unlike Lala.com and Peerflix.com--sites which have fallen down on paying postage for members--BookMooch requires that members pay to send the book. People who have more points than they can use on BookMooch, known as power moochers, can donate their points to charity groups on the site.

So far, BookMooch members have swapped as many as 700,000 books. The average member swaps 3.5 books per month, up from one book per month a year ago. The most-traded books on the site, whose membership consists largely of older moms, include Memory Keeper's Daughter by Kim Edwards (traded 780 times) and The Kite Runner (traded 585 times).

It's a sizable accomplishment considering that the Berkeley-based company has only two employees, and the project is funded solely by Buckman.

"If you want to change the world, find a better way to do something and have everyone follow it," Buckman said. "I'm not looking to generate revenue because I already made my $32 million."

When asked if he would entertain a buyout offer of his company for another $32 million, he said he would definitely have a conversation.

Even if he doesn't strike it rich with BookMooch, he may do something more valuable...like prove there's another way to tap into the book business.