Fifty Shades of Economic Stimulus: How a Smutty Book Is Creating Jobs
When politicians talk about "job creators," they're usually referring to big industries and prominent industrialists, the kind of influential, large-scale world-changers who can hire or fire thousands of people with a flick of the pen or a tap of the keyboard. Recently, however, a single book has shown that job creation -- and economic stimulus, for that matter -- can come from some very odd quarters.
In the last six months, the erotic novel Fifty Shades of Grey has captured the imagination -- and dollars -- of millions of readers. As of this writing, the three books in the series have been on The New York Times' bestseller list for 25 weeks. They have sold more than 25 million copies and, according to The Wall Street Journal, have generated $145 million in revenue for their publisher, Vintage.
But Vintage and its parent company, Random House, (and its parent, Germany-based Bertelsmann) are just the tip of the iceberg when it comes to the beneficiaries of Fifty Shades' success. In its relatively short reign atop of the bestseller list, the books have shored up the bottom line for one major company, pulled another out of the doldrums, and launched a veritable cottage industry of themed merchandise.
From stockholders to workers to readers, the effects of Fifty Shades of Grey, the little smut book that could, have rippled across the economy, offering a useful glimpse at the ways in which unlikely factors can have a vast impact on the economic climate.
Saving Barnes & Noble
Barnes & Noble (BKS) was one of the first companies to feel the power of the Fifty Shades phenomenon. The largest book retailer in the U.S., B&N has spent the last few years dealing with the slow, steady decline of bricks-and-mortar book retailing. While it dodged the fate of Borders, which went bankrupt in 2011, it faced quarter after quarter of dwindling sales. To make things worse, online sales and e-books, the growth segments of the book business, are dominated by Amazon (AMZN).
With shelf space at a premium, B&N has increasingly relied on blockbuster books, the kinds of bestsellers that can quickly rectify a bad quarter. To a great extent, it has found its salvation in young adult offerings like Harry Potter, Twilight and The Hunger Games -- series that capture the interest of voracious young readers but also have a strong audience among adults.
Given its roots as Twilight fan fiction, it's not hard to see how Fifty Shades might have ridden the wave of the earlier series and redirected it for a more mature audience. Certainly, the books helped Barnes & Noble, which reported a 2.5% increase in first quarter revenues. In the company's earnings announcement, CEO William Lynch was quick to give credit where credit was due, noting that the company's retail stores "continue to benefit from market consolidation and strong sales of the Fifty Shades series."
Safe Sales
Barnes & Noble wasn't the only company to thank Fifty Shades for goosing its profits: Consumer products conglomerate Church & Dwight (CHD) also gave the book a nod in its most recent earnings announcement. The Fortune 1000 company, which owns Trojan condoms, introduced a new product line, Trojan Vibrations, earlier this year. The first explicitly sexual devices to be linked to a mainstream brand name, the product was a potentially dangerous move for the company. After all, even as sexually oriented ads have gone more mainstream (KY's "Yours + Mine" TV spots are a good, if determinedly nonsensual, example), discussion of sexually-oriented products has traditionally been a very touchy proposition in the U.S.
For Church & Dwight, however, the launch of Trojans Vibrations couldn't have come at a better time. The explicit sexual themes of Fifty Shades of Grey have spurred a mainstream market for adult bedroom toys, and the company is uniquely positioned to take advantage of the trend. As Church & Dwight CEO Jim Craigie acknowledged, the products' sales have "been aided by the popularity of the Fifty Shades of Grey novel."
This isn't hollow thanks: Craigie estimates that sexual devices may be a $300 million market category. And with no mainstream competitors, Trojans is in a great position to ride Fifty Shades to market dominance.
But What About Workers?
The gains for Barnes & Noble and Church & Dwight demonstrate how Fifty Shades has been a windfall for big businesses and their shareholders, but its benefits for people elsewhere on the economic spectrum have been less clear. Vibrations massagers are made in China, for example, and aren't likely to help the company's American workers.
That said, Fifty Shades has been a financial boon to a surprisingly large number of ordinary Americans. The series has made a huge splash in the informal economy, where designing and creating tie-ins for the book has become a booming cottage industry. Etsy, an online marketplace for independent artisans, currently has almost 3,000 Fifty Shades-themed products being offered by hundreds of entrepreneurs. Fans of the books can find Fifty Shades wine glasses, pendants, T-shirts, pins, candles, bookmarks, and other tchotchkes.
Many of these Etsy entrepreneurs were already in business before the books came out, but found that selling Fifty Shades products was a good way to boost sales. In fact, Sara Thorowgood, owner of Simply Sarah Crafts, started selling Fifty Shades products long before she read the books. When she first heard her friends discussing the series, she remembers, "I had no idea what they were talking about! But as more and more friends were talking about the book, I decided to do a test run with a couple of the designs." Since then, Thorowgood estimates, 20% of her sales have come from Fifty Shades-themed items.
Despite the healthy sales of her her Fifty Shades items, Thorowgood admits that the biggest benefit may be the impressive amount of traffic that they've driven to her site. Other small retailers agree: Denise Mancuso, proprietor of AJ Sweet Soap, notes that her Fifty Shades items have brought in a lot of customers who might otherwise not have visited her store: "Even if these particular soaps don't appeal to someone, I know they are generating traffic to my other items."
Some Etsy entrepreneurs even began their businesses because of the books. After reading Fifty Shades, jewelry maker Theresa Malaspina was deeply touched. "I was instantly pulled into the story and inspired by it," she recalls. "I started making a necklace for myself and decided to branch out from there." Today, Malaspina's store carries over 50 Fifty Shades items.
The question of who creates jobs -- and what can be done to help them -- will remain at the center of the national debate for some time to come. But as the Fifty Shades phenomenon demonstrates, sometimes a little variety can go a long way when it comes to whipping the economy into shape.
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Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.
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