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Penguin E-Books Sales Revenue Doubles

27 February 2012

From Digital Book World:

Revenue from e-books was up 106% at Penguin Group to £127.4 ($201.9) in 2011, driving profit company-wide up 8% while overall sales were relatively flat.

E-book sales represented 12% of all Penguin revenue worldwide in 2011; in the U.S., e-book sales accounted for more than 20% of Penguin’s revenue. While overall revenues at the company were up 1%, profits were up 8%, according to a statement from the company, suggesting that e-book sales deliver a higher profit margin.

. . . .

Another big-six publisher, Simon & Schuster, showed a similar pattern in its 2011 results. According to a February 15 statement, publishing revenues were relatively flat (down 1%) while operating income was up 31%. The company attributed the numbers to “strong growth in the sale of digital content, which more than doubled from 2010″ and offset declines in print.

. . . .

At Penguin’s parent company, Pearson, digital also drove profits. Digital revenues were up 18% in 2011 to £2 billion ($3.17 billion) and represented a third of all revenues at the company. Overall revenues were up 6% and operating profit was up 12% to £942 million.

The company expects that digital revenues will exceed revenues from print publishing in 2012, it said in a statement this morning.

Link to the rest at Digital Book World

Big Publishing, Ebooks

16 Comments to “Penguin E-Books Sales Revenue Doubles”

  1. The hard thing about reading this is that despite protestations to the contrary, traditional publishers are making a fortune on ebooks. Authors have been told that ebooks are just as expensive to make as paper books, which is why royalties are so low, and yet …

    It isn’t true.

  2. What is clearly shows is that St. Joe’s much-vaunted death of the Big Six just isn’t going to happen.

    • I’ve been thinking that for a while, Mark. Except–things could change if the bigger name authors (and even more mid-list) jump ship because of ebook royalties. Either the Big Six are going to lose their big names or they’re going to have to pay higher royalties, which will cut into profits.

      • Exactly. There will be authors who cling to the bitter end as the ship sinks, but there will be others who realize they could be making a crapload more if they struck out on their own (as so many have already started to realize). I mean, J.K. Rowling is selling her e-books herself, and it really doesn’t get any bigger than that. Publishers will either have to start cutting profits (which their corporate overlords will never allow) or find another way to entice authors to stay. And I don’t think they have any great plan in that regard – if they did, they’d already be doing it.

  3. The likelihood of bigger names jumping ship is low.

    The point Konrath and co conveniently overlook is that for those authors who sell well, their publishers can get them places where as indies they simply cannot compete. In book-stores, on shelves, for example, not just as POD. And on e-platforms worldwide, not just on the big American vendors,and certainly not exclusively with one store.

    One cannot help but note that the other JK, Ms Rowling herself, one of the few people who could afford to have her book printed and distributed to book-stores in serious numbers, chose not to.

    The Big Six will continue to change and adapt, just as they have been doing for the past few years. despite assertions to the contrary but the print-is-dead brigade. They will change, and will make more money than ever before as production costs tumble and waste is eliminated.

    And yes, royalties will increase too. The idea that the Big Six have their head in the sand over what is happening in digital publishing may make amusing reading, but has no bearing on reality.

    If that were true the Big Six would not have any ebooks out at all. Instead they are investing heavily and increasing market share month on month.

    • I can’t agree, Mark.

      When a survey of publishing executives representing companies responsible for 75% of all trade book sales in the US announced at the most recent Digital Book World conference shows that only 28% of publishing executives think their companies will be better off in the future as a result of digital than they were in the past compared with 51% in last year’s survey, that doesn’t say much for that future.

      There are far too many traditionally-published authors who are complaining about substantially declining advances to suit the all-is-well scenario. Authors who have become accustomed to living off their advances are being placed in a serious financial squeeze and that’s not improving.

      Plus, publishing revenue growth was terrible for 2011 and 2011 profits only improved over a very bad 2010. Watch for more lay-offs from Big Publishing as 2012 advances.

      Plus, something I see among my clients, but can’t discuss in detail, is successful authors who have been conventionally-published for a long time and receiving new contract offers are bucking at the truly horrible contract terms that have become the industry standard.

      Additionally, the antitrust investigations of price-fixing by five of the Big 6 and Apple are serious matters and, I believe, will, along with accompanying class-action lawsuits, bite hard when they hit in a couple of years. Walking into that trap was a major error by publishing management and, I believe, is indicative of collective poor management skills.

      Barnes & Noble is managing a decline (long or short to be determined) in its physical book stores. Borders made mistakes that hastened its demise, but the underlying consumer trends that took down Borders are also negatively influencing Barnes & Noble. Unless Nook is purchased by someone with serious technical vision (cable executives need not apply) and deep pockets, it’s going to run out of money trying to compete against Amazon.

      Without a strong Barnes & Noble, Big Publishing is looking at Amazon as the only serious game in town. I doubt Amazon really planned for this, but indie authors have proved to be a real ace in the hole. Take a look at the Amazon best seller lists for 2011 and figure the number of indie authors on those lists will double for 2012.

      Amazon Publishing undoubtedly has very good access to data on rising indie stars and snaps them up with, among other things, far better contract terms than the Big Six is offering. Does that mean Amazon Publishing will capture all the great new authors? No, of course not, but the difference between profit and loss for a big publisher these days can be one or two blockbuster books. If Amazon Publishing grabs a few of those books, you’re looking at more layoffs, lower advances, etc., etc.

      • Amazon does well at taking rising indie stars who have done all the work and proven they can sell. It then locks them into Amazon-exclusive deals that shut them out of major sales opportunities elsewhere.

        Very arguable, therefore, whether the contract terms are that much better if it means your books aren’t going to be in the major book-stores around the world, and the ebook will only be on one platform, Amazon, which blocks numerous countries from buying and surcharges many more.

        Why would any author with a blockbuster novel want to shut out vast potential sales to go exclusive with one company?

        Sure those that do sign up all do very well on Amazon, but that’s because Amazon skews the promotion accordingly, at the expense of other authors.

        Nothing wrong with that – Amazon is a business just like the trad publishers are. But at the end of the day Amazon doesn’t care about us or our books any more than does the executive at the Big Six. We’re all just data for the algorithms and our books are just another commodity on sale in the Amazon shop-window.

        It’s a fantastic selling-machine in the US and UK, no question, but elsewhere it has yet to prove itself, and its credentials as a publisher have yet to be tested beyond the in-house market place.

        As for surveys of publishing executives, I doubt they’re worth the paper they’re printed on. For every survey of unnamed execs one can find statements from named execs who say just the opposite and are eagerly looking forward to the digital future they are investing in.

        • Mark – I’ve finished two Amazon Publishing contracts within the last week.

          With respect, you don’t know what you’re talking about.

          Client confidentiality prevents me from providing more details.

      • Authors who have become accustomed to living off their advances are being placed in a serious financial squeeze and that’s not improving.

        That’s the thing that makes me skeptical that these profits are sustainable. I mean, sure, big publishers are making more money right now, because they royally screwed their writers over e-books, but how long can that go on, especially now that writers have options? You can make ends meet by ripping people off in the short term, but in the long term, if people can’t afford to do business with you, they just won’t. Even if they’re bad businesspeople and desperately want to do business with you because you offer “prestige” or whatever, their house payments will dictate other choices.

  4. This is from the end of the article: “According to Publisher’s Weekly, Shanks, the company CEO, expects digital growth to slow in 2012.”

    Not selling to libraries means less sales. Oh but wait, shouldn’t there be more sales, since people will have to buy rather than check out the ebook for free?

    I can’t help but feel that those $11.99 to $14.99 ebook prices with their higher margins are used to prop up the print side. I have to pay more for my ebooks so they can afford to overprint books and then buy them back when they don’t sell.

    • Good point about returns, Diane. Fortunately there are enough high (or higher) quality ebooks be produced from sources outside the major houses that I don’t have buy from the majors any more to find what I’m interested in. Apparently I’m not alone. I saw something somewhere today (can’t find the link) that said sell through on many titles has dropped to between 30-40%. That’s not sustainable in the long term.

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