Home » Big Publishing, Ebooks » Simon & Schuster, Penguin Random House Don’t Want to Talk About Their eBook Sales

Simon & Schuster, Penguin Random House Don’t Want to Talk About Their eBook Sales

31 July 2016

From The Digital Reader:

In past years the Big Five/Six touted their ebook sales as a percentage of total revenue. You sometimes had to dig for the details, but they were there to be found.

That changed this week. Something tells me that they aren’t quite so eager to let us in on just how poor their ebook sales have been since they regained control of their ebook prices in early 2015.

Over the past week three of the Big Five publishers have posted either quarterly, half-annual, or annual reports, and only one even came close to telling a complete story about its ebook sales.

First up is CBS Corp and the few nuggets they shared about Simon & Schuster in the second quarter CBS financial report. Revenues were down overall, and so were ebook sales as a share of said revenues (from 24% last year):

Publishing revenues for the second quarter of 2016 were $187 million compared with $199 million for the same prior-year period. Digital revenues represented 23% of Publishing’s total revenues for the second quarter of 2016. Best-selling titles included End of Watch by Stephen King and Foreign Agent by Brad Thor.

Publishing operating income of $26 million for the second quarter of 2016 was up 4% from $25 million for the same prior-year period, as the revenue decline was more than offset by lower production, selling, and inventory costs.

. . . .

This is the entirety of PRH’s report on ebook revenue stats (aside from a few useless factoids):

Penguin Random House had a solid performance in the first half of 2016 with reduced demand for e-books following last year’s industry-wide digital-terms changes offset by the phasing of further integration benefits.

 

Link to the rest at The Digital Reader and thanks to Karen for the tip.

Big Publishing, Ebooks

30 Comments to “Simon & Schuster, Penguin Random House Don’t Want to Talk About Their eBook Sales”

  1. I need a translator:

    “reduced demand for e-books following last year’s industry-wide digital-terms changes offset by the phasing of further integration benefits.”

    What the heck does “phasing of further integration benefits” mean?

    And in case they didn’t get the reader-bulletin: your prices on ebooks are too damn high!!!

    • “Phasing of further integration benefits” means the money that they saved by merging Random and Penguin and laying off redundant employees.

      • Thanks. 🙂 Had no idea “integration” there meant “merger.” And I tend to think of lay-offs as unfortunate, not beneficial. Clearly, I don’t have an MBA. 😀

  2. Ah, ‘agency’, the gift that just keeps on giving (the qig5 heartburn.)

    We should be seeing another blurp from Mikie saying Amazon forced agency on the qig5 and that it’s all Amazon’s fault.

  3. So revenues are down, but what about profits? They raised eBook prices to force people to buy higher margin paper books, especially hard bound. Did that work for them?

    • It seems not from http://www.thepassivevoice.com/2016/07/aap-sales-february-sales-jump/ as most of AAP sales is the qig5.

      ETA: Yes, the story bragged of a spike, but the overall view is not good for them.

      Maybe they should have asked Amazon what the best price-point to sell their ebooks was …

      • Self-published authors have benefited from the decision of traditional publishers to keep the cost of most trad-pubbed ebooks relatively high. If a hot place freezes over and the retail cost of most trad-pubbed ebooks sinks and hits those “sweet spot” price points that self-published authors have been benefiting from so far, this will change the game in fundamental ways, and not to self-published authors’ benefit.

        • True, but they’ll most likely call it a ‘deep discount’ and pay little or nothing to their pen of writers.

          Also doing so would require them to admit they were ‘wrong’, and we know how much they hate eating crow.

        • They would first have to be willing to accept a major drop in revenue in their quarterly reports. And probably their net profits. Those high prices aren’t just out of spite: some of the added gross is needed to maintain the execs in the style they’ve grown accustomed to.

          In other words: their overhead has to shrink first.

          If they were to cut prices without cutting overhead first the resulting drop in revenues would have all the execs out on their rears faster than you can say “guy from germany”.

        • I agree with Allen. The large traditional publishers will not pay their authors well. They cannot pay them as much as indies make at the same price point as they have extra expenses. They will not pay them as the big publishers we have now seem to really not understand why anyone other than them should get any money.

          Baen as usual is the exception. They charge a little more than the average indie price point. They take a much smaller cut than other publishers. They make their money on volume and any disadvantage their authors have on per sale income is probably compensated by higher sales driven by Baen visibility.

          The big publishers are much less efficient than Baen and much greedier. If the big publishers become price competitive with indies in ebooks (which violates their wood pulp sacrifice cult) I can’t see them paying their writers more than one-half what indie authors make per sale. The big publishers do not excel at selling midlist titles. Why would midlist authors choose half-pay and all the other ways publishers mistreat them?

          Will we see more Baens? A big publisher would need to trim overhead (and greed) to get the margins small enough to lower prices and pay writers reasonably. A startup would need to build sufficient volume for the small margins to support the publisher side. You’d need big capital to start big. Hey, look, those Amazon Imprints look rather Baenlike.

      • Paper books are less profitable for publishers, not more. That $16 trade paperback is probably $8 to them, before returns, etc. Throw in coop to get good placement, printing costs (for the sold books plus the unsold and returned ones), storage, shipping, etc., and even a $6 ebook is far more profitable.

        Their problem is print is where they have a chokehold on access, and they’re deathly afraid to see that go away. If they could do the same thing with ebooks, you’d hear nothing but a nonstop drumbeat about how paper is obsolete, harms the environment, etc.

      • @ Allen

        “Maybe they should have asked Amazon what the best price-point to sell their ebooks was …”

        Why ask the question when the answer would only be ignored?

        • Twas of course a joke on my part. Had they actually wanted to sell ebooks they’d never have gone agency on them.

          Gee, how many years are their current contracts with Amazon good for? (And any bets one or more of them quietly drops agency? If it isn’t the first one with a new contract they will be doubly screwed when they’re stuck with agency and the others aren’t!)

    • The print books are lower margin, not higher.
      That is part of the reason why Agency is hurting both their gross and their net.

      They’ve been propping up reported profits through consolidation (layoffs), squeezing authors, and shifting mmpb releases to trade paperback but there are limits to how far they can take those games.

      It sounds like they’re reaching them.

      • And I can only think if they squeeze authors more than they already do, that will motivate more to go indie. There is a point where even the most Stockholmy Syndromized author will feel too much pain and insult at the royalties (and lack of them).

  4. Don’t these reports provide information to the shareholders of these publicly traded companies? Isn’t this level of obfuscation skirting close to violating reporting regulations?

    • I would think most shareholders don’t care how exactly a company maintains profitability as long as they do so. Employee layoffs is a pretty common way to do it.

      • Shareholders care about all information about a company they own or may wish to buy into. Shrinking top line revenue is not viewed well unless an unprofitable business is being divested.

        Large companies aren’t always clear about specific subsets of their business, and there is no reasonable way to require them to be through regulation. What exactly is an important detail and what is not?

        • Both companies for which my husband once worked (large, reputable ones you’ll IMMEDIATELY recognize if named), the moment they started with big lay-offs, they became no longer top-o-the-heap companies. It was a sign they were doing poorly, not a positioning for greater things. They are both much less relevant in their arena these days, overtaken by newer and more innovative companies, and one has been around nigh on a century and was once a recognized leader in its field.

          I see big lay-offs as a bad thing, surely for the employees, and likely for the company overall.

    • Simon & Schuster is not a publicly traded company, but a subsidiary of CBS. Publicly traded companies are not required to give detailed information about each of their divisions or subsidiaries, so long as they give accurate information about the company’s finances in the aggregate.

      Penguin Random House isn’t publicly traded either. It has only two shareholders, Pearson LLC and Bertelsmann, and you can be quite sure that those two have access to far more information than PRH ever releases to the public.

  5. Without the print promotion that carries over to eBooks, the publishers have no competitive advantage in the eBook market.

    There is no economic solution to the fiction publishers’ situation. Why? They are not needed to deliver books to consumers. When a cost center is unnecessary, it is eliminated.

  6. Ellen O'Connell

    I don’t know about others, but just this week I’ve looked at new releases from three authors I’ve enjoyed in the past. In each case the new book was $12.99, which had me staring at the Amazon product page for a moment before deciding, nope, I enjoyed the previous books, but not that much. I never considered buying the paper book instead since I don’t buy paper any more. Maybe I’ll look in the library, but probably not.

    There are only four authors I’ll pay those kind of prices for. It irritates me with them, but I pay it. Obviously a noticeable percentage of the ebook-buying market is reacting the same way I am to those high prices.

    • That has been me this past year. Wanting a book, looking at the ebook price, and going, “Never mind.” Did that this past week. If the price had been 9 bucks, I’d probably have bought it. IF it had been 7, I’d definitely have bought it.

      Rinse, repeat. My book browsing of new ebook titles in 2016.

      They go on my “wait for a sale or a cheap used copy” list. Or just get forgotten and never bought, really.

      • I’m with you two on that. There are no more “auto-buy” authors on my list.

        But I suppose the big publishers don’t care too much? If we don’t want to pay those prices, then we aren’t the target readership. Publishers can and do charge upwards of $13 for new releases in e-book and apparently people are paying those prices.

        When Seveneves came out, being priced at $16.99 in ebook didn’t stop it from hitting the Top 100. Similar stories for My Name is Lucy Barton, Morning Star, End of Watch, City of Mirrors, and many, many others. Customers are paying those prices.

        For those who refuse, there are indie books to buy. And there’s the library. Me? I’m still going through free classics from Project Gutenberg.

        • Sure, *some* people are willing to pay $17 for some ebooks.
          Just not as many as are willing to pay $10.
          It’s not a pure binary solution where everybody buys at $12.99 and nobody buys at $13.

          The issue is whether there are enough people willing to pay $17 (or even $13) for every author and the evidence says no.

          Whether by intent or not, by raising prices the BPHs are triaging their authors and pretty much killing the careers of the ones whose reader bases won’t buy at the higher prices.

          And it just might be intentional: with the BPHs’ focus on stockpiling rights they may be preparing for a new licensing-based business model where they actively publish less titles for discrete sale and bulk-license the rest for subscription services.

          • That’s a good point, Felix. I focused on the brand name bestsellers in my comment.

            So what about the typical debut author? Usually they sell another book or two but their sales don’t meet expectations, and then they quietly vanish. Part of that is a result to the price tag, part is due to discoverability, etc. It’s really hard to gain any kind of traction these days, especially at high prices that readers don’t feel like paying unless it’s Book 20-something in a series by Patricia Cornwell or Janet Evanovich.

            • Recent Author Earnings reports have ocumented the “success” rate of tradpub debut authors over the last decade.

              Not.Pretty.

              Faced with two equally intriguing titles from unknown quantities, one at $5 and one at $13, readers are in fact opting for the $5 buy.

              Hardly a surprise, right?
              Not something tradpub has been factoring in, though.

        • @ Paula

          Free is great, and I’m also working my way through the Delphi Complete Works series, all priced under $3, which actually include everything or very nearly everything each author wrote during her or his lifetime, well formatted, many with original illustrations, and all with active tables of content.

          Just a few examples: Charles Dickens, the Bronte sisters, Jack London, Jane Austen, Lewis Carroll, Arthur Conan Doyle, George Eliot, Mark Twain, and many, many other authors, poets, and artists (they have art collections, too).

          Great series.

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