Home » Big Publishing » PRH’s Markus Dohle on the Power of Print

PRH’s Markus Dohle on the Power of Print

31 August 2016

From Shelf Awareness:

“Also gratifying is the strength and stability of our physical book sales. You will recall that we never bought in to the gloom and doom about the future of print. Instead we said that print would always be important, even as digital became more so. We made significant improvements in both, and the care we’ve taken with our physical supply chains, operations, and distribution centers is especially paying off now as consumer demand for physical remains robust.”
–Markus Dohle, CEO of Penguin Random House

. . . .

Sales at PRH in the first half of 2016 fell 10.7% to €1.5 billion, or about $1.67 billion, largely because of “an expected decline in e-book sales in the U.S. and U.K. due in part to new retail sales terms.”

Link to the rest at Shelf Awareness

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16 Comments to “PRH’s Markus Dohle on the Power of Print”

  1. Smart Debut Author

    If renegotiating terms with a single retailer can knock PRH’s sales and profit down 10%, then the article’s title is a smokescreen. It should really read:

    PRH’s Markus Dohle on the Power of Amazon

  2. The power of his print isn’t what it used to be (and far from what he wishes it was.)

    “Sales at PRH in the first half of 2016 fell 10.7% to €1.5 billion, or about $1.67 billion, largely because of “an expected decline in e-book sales in the U.S. and U.K. due in part to new retail sales terms.””

    Of overpricing their ebooks, so their own dang fault.

    • I’m interested that he specifically admitted they expected their ebook sales to fall. And since he is talking about $ amounts, he admits publicly that they fully intended to reduce the amount they made from ebooks. I wonder how their corporate overlords feel about that?

      • They just want books to sell until they can get out from under their paper-mill stock. Their problem is they wanted to reduce their sales through Amazon to save their book store links/control. But while they could agency their ebooks to slow them down, they can’t/don’t dare agency their paper/hardback books because then the bookstores can’t offer discounts either.

        And of course indie writers are gulping up all the ebook sales trad-pub is leaving on their overpriced table, and starting to make inroads on their paper books as well.

      • Yes, they fully expected ebook sales to drop.
        The Randy Penguin was the last of the BPHs to negotiate ebook terms and they had already seen the effects of the new terms on the others in the cartel.

        They still signed up for it.

  3. Does anyone else remember when Markus Dohle said:

    “The question is if publishers know how to find the right retail price… This hasn’t been our job in the past.”

    Markus, I still give you credit for not price fixing but you have have had six years to either find the right price or leave it in the hands of retailers who do know. You have done neither.


  4. Two posts in a row about power.
    Words have meaning. “Power” was chosen for a reason.

  5. I have no idea why they think it is smart to market my ebooks at prices people won’t pay. When the price was briefly lowered to $9.99, they sold. Now? Nope. Only a handful per reporting period. I get why they may not want to help me (I’m just a lowly writer), but why are they hurting themselves?

    • They still have power in the realm of physical books based on two factors:
      1) They can produce books on web presses at a much lower cost per copy than indies can using POD technology.
      2) They can distribute to practically any brick and mortar book sales outlet.

      These advantages are not as strong as they wish there were.

      The cost of producing books by POD has been dropping. Ten years ago it was not possible to sell a POD title for the same or less than a traditionally produced book. Today POD indies can have price parity with traditionally produced books. POD is still a young technology and the price of POD production continues to drop while the mature technology of web presses is largely stagnant. In five years it will be possible for POD indies to undercut traditional prices.

      The traditional publishers do have some room to lower their prices on physical books, but it’s not just greed that keeps their prices high. With more links in the production chain they have more expenses than indies. The cheaper POD becomes relative to web presses (including the shipping and storage expenses inherent in large print runs) the more traditional publishing will feel the squeeze. POD doesn’t need to reach price parity with web press production for the publishers to start hurting.

      Neither is distribution the trump card it once was. For an individual author it isn’t a benefit. The publisher being able to reach every brick and mortar outlet doesn’t mean your book will be on the shelf in every store. Publishers don’t deal in individual authors, but even for them brick and mortar distribution isn’t a magic fix.

      Brick and mortar distribution has inherent inefficiencies that drive up costs. Online sales of physical books is more efficient. While publishers can benefit from this efficiency, so can POD indies. On a third party online seller’s site, the traditionally published product and the indie product are indistinguishable at first glance. Even if the traditional publisher’s ebook pricing strategy succeeds in turning costumers from ebooks to physical books, the customers may not choose the publisher’s physical books. (At the moment it’s a fairly safe bet as traditional publishers dominate physical books by number of titles. At the moment.)

      Also, brick and mortar shelf space is shrinking as some physical sales shift to online.

      Publishers are championing physical books over ebooks because it is the last corner of the field where they hold some advantage. I suspect they have vastly miscalculated their ability to force costumer purchase decisions.

      • The first book in my Book Bub email today was a kids’ fantasy from Scholastic. $1.99. “Okay, great price,” I thought. Saw that it was the first in a trilogy. Book two is $4.99. “Okay, that’s on the higher end of what I personally like to pay for ebooks, but still well within a reasonable price range.” Book three, $11.99. *facepalm* Guess who’s not going to bother starting that series.

        • Something possibly related… I still browse the spinner racks at dollar stores. I’ve noticed that they carry a lot of books that are the second or third in a series, but almost never the first.

          I’ve wondered if they were lowballing the later books in hope of persuading the readers to track down and pay full bore for the first one.

        • I’ve found myself doing this on Amazon when I see a very low-priced book: I check to see if it’s standalone or a series. If a series, I go see what the prices are for the 2nd, 3rd, etc.

          If the pricing is reasonable throughout (no more than 4.99), I’d risk book one.

          If the price takes a huge rise after book one or book two, I skip the series. I won’t buy the 99 cents first book if books two or three or four are more than 6 or 7 bucks.

  6. Their print sales are so “strong” that in the UK their print sales grew around 6 percent…in a pbook market growing over 9%.

    Their UK ebook unit sales were down over 16%. That is one sixth of the previous year sales.

    Despite the decline in revenues and units and underperforming their preferred market, they still managed to maintain their 12% profit margin. How? Well, “thanks to the merger”. They fired enough staff to meet their financial target.

    That is one strong business, alright.

    Mind you, those nuggets are courtesy The Bookseller, official mouthpiece of the euro tradpubs. They didn’t even try to spin that.


  7. Lately PRH’s paperback quality has been abysmal. Truly horrible. Ink bleeding from the other side of the page, poor paper stock quality, muddy covers. embarassing and stupid and self defeating. It’s like the company lost 40 IQ points when it merged.

    • Well, those mega mergers are good jump off points for the competent, who understand it looks better on the resume to leave voluntarilly (occasionally with incentives) than to wait to be designated redundant.

      Another typical trait of those mergers is that by the time the dust finally settles, the combined company is about the same size as the bigger of the two pre-merger. With its attendant market share. Or less.

      Dominant players love it when the next biggest competitors waste time and effort with mergers. It gives them just one distracted competitor to deal with.

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