From Digital Book World:
Sales are flat and margins are up at major U.S. book publishers, but how long can it last?
In the past two weeks, both Penguin and Simon & Schuster have reported their 2011 results with nearly no change in overall revenue. At the same time, profits are up at both companies.
There are many things that could account for that – operational savings like moving to a more efficient technology system or a cheaper office space, or realized cost savings from a restructuring several years ago, for instance. But I think it’s because of e-books.
As e-books sales rise by double and triple digit percentages year-over-year, and print sales slowly decline, overall revenues remain relatively flat. But because e-books give publishers a bigger profit margin, the flat revenue comes with an increase in profits.
. . . .
“Sales are down, margins are up. And that will last as long as they [publishing companies] can continue to pay authors the royalties they’re paying them [for e-books] and sell the books at the terms they’re selling them on,” said Mike Shatzkin, publishing consultant (and partner on the Digital Book World Conference + Expo).
. . . .
Booksellers may already be going after that additional profit. Rumors are that Amazon has already started renegotiating contracts with publishers. And last week, reportedly due to a stalled contract negotiation, Amazon stopped selling e-books distributed by the Independent Publishers Group, a large, Chicago-based book distributor for smaller publishers.
Shatzkin has a solution to this problem for publishers: Pay authors higher royalties on e-books.
Link to the rest at Digital Book World