From Scroll.in:
With over 17,000 new titles each year and sales of $2,826 million in 2016, the Hachette Livre Group of companies comfortably sits among the Big Five English language publishers, alongside Penguin Random House, Simon & Schuster, HarperCollins and MacMillan Publishers. Headquartered in France, its authors include John Grisham, Enid Blyton, James Patterson, Robert Ludlum and Stephen King. While its India subsidiary just completed 10 years of operations in India, the parent company has been in business for almost two centuries.
. . . .
The Chairman and CEO of the Hachette Live Group since 2003, Arnaud Nourry, was in India recently to celebrate a decade of Hachette India and spoke to Scroll.in about their strategy and the future of publishing.
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Is Europe still your largest market? Which are the emerging markets with the most potential that you see right now?
One-third of our business is in the French language across France, Belgium, Switzerland, Canada and other French-speaking countries, 25% in the US and English-speaking Canada, 20% in the UK, India, Australia, New Zealand and Ireland, 10% in Spanish, and another 10% in the rest of the world.. . . .
In 2014, Hachette famously took on and won against Amazon in deciding who gets to control ebook pricing – them or publishers. Looking back, has that victory helped?
When I took the job of Chairman and CEO of Hachette in 2003, I studied what had happened in the music and video industries, or in the present, take the example of the magazine industry. I realised that they made two mistakes. The first was to delay the digitisation of their product, which helped piracy to emerge. The second mistake was that they didn’t keep control on the price point of their creations, so they were unable to protect their turnover, the revenues of their singers or writers.So, in the year 2006-2007, when ebooks came to our market, I was absolutely convinced that when we jumped into the ebook market, we needed to keep control of our price. This wasn’t just coming from thinking of our revenues. If you let the price of ebooks go down to say $2 or $3 in Western markets, you are going to kill all infrastructure, you’re going to kill booksellers, you’re going to kill supermarkets, and you are going to kill the author’s revenues. You have to defend the logic of your market against the interest of the big technology companies and their business models. The battle in 2014 was all about that. We had to do it.
It’s not that we’re against ebooks. People have to pay a price that is about 40% lower than the print price. And it works. The ebook market has gone down a little bit, not much, from say 25% to 20% in some countries. There is still a readership for ebooks but at a price that keeps the ecosystem alive. That’s absolutely key because the music business has lost half of its turnover in ten years. I love music but books are about culture, education, democracy, so it’s even more important to keep the diversity in book publishing, more so than music publishing.
It’s been a little over ten years since ebooks came to the market in the form of Kindle. You mentioned a small decline – do you think the market has plateaued? Are there formats other than ebooks that publishers should be looking at?
There are two different geographies to look at for this. In the US and UK, the ebook market is about 20% of the total book market, everywhere else it is 5%-7% because in these places the prices never went down to such a level that the ebook market would get significant traction. I think the plateau, or rather slight decline, that we’re seeing in the US and UK is not going to reverse. It’s the limit of the ebook format. The ebook is a stupid product. It is exactly the same as print, except it’s electronic. There is no creativity, no enhancement, no real digital experience. We, as publishers, have not done a great job going digital. We’ve tried. We’ve tried enhanced or enriched ebooks – didn’t work. We’ve tried apps, websites with our content – we have one or two successes among a hundred failures. I’m talking about the entire industry. We’ve not done very well.I’m convinced there is something we can invent using our content and digital properties beyond ebooks but I reached the conclusion that we don’t really have the skills and talents in our companies because publishers and editors are accustomed to picking a manuscript and creating a design on a flat page. They don’t really know the full potential of 3-D and digital. So we acquired three video game companies in the last two years to attract talent from different industries and see how we can nurture one another and how we can go beyond the ebook on digital. We need to offer different experiences to our consumers.
. . . .
Do you really think their role is limited to discoverability and advertising? In term of impact, while not being direct competitors to traditional publishing, they are also providers of content and free content at that. Is that something for publishing to factor into their long-term plans?
I don’t think we’ll ever be publishers who give content for free. It’s not something we’re good at. We’re good at selecting, curating, promoting and selling value-added content, which is kind of the reverse of what others do. I don’t think there’s any kind of competition with Google or Facebook. There is only one thing – it’s that the time spent reading books tends to decline everywhere and goes to social networks. So yes, we are competing for people’s time. It’s why we need to be more attractive in the way we deliver our content. But not beyond that. Even self-publishing, which Amazon does a lot and is sometimes pitched as competition, is the opposite of our business. Our business consists of saying no to three thousand manuscripts and saying yes to one. And self-publishing says yes to three thousand and doesn’t see the one that there should be investment and support around. But yes, because of digital, we are competing against all other forms of leisure. We do need to take that into account.. . . .
France, where Hachette is based and which forms your biggest market, has legislation restricting the amount a bookseller can discount a book. It stands at 5%. But what about a market like India where deep discounting is a big part of bookselling strategy? Do you think that’s just a way to develop an untapped market and eventually all book markets should reach a place like France? Or is there always going to be this difference in consumer behaviour across geographies?
The purpose of the law, which was voted in 1981, was to protect all the independent booksellers from the bigger players by preventing them from discounting and putting the small ones out of business. It worked very well. If you’re in a city in France, you can go to a newsstand, a bookstore, or order from Amazon and you’ll get the book for the same price. This being said, there is no such agreement in the US and the UK, where deep discounting flourishes and that also works. There are independent bookstores that specialise in backlists, curation, they still exist. That environment, in fact, helps sell more copies of one book, which in France is more difficult.. . . .
You just mentioned the continuous acquisition of smaller publishers. How does that affect the publishing and editorial landscape – when smaller publishing houses end up under the umbrella of a larger conglomerate, sometimes swallowed by it?
You’ve used a word I hate – conglomerate. I’m not a very good swallower. Acquiring a publishing company to swallow it is the stupidest thing you can do. Its value comes from the fact that it is a different imprint. Of course when you acquire an independent publisher, you’re not going to keep the accounting department, the IT department, etc., – that doesn’t make any sense. In most cases, these companies don’t have huge profits due to costs that bring them down. So we get rid of that and let them grow and develop their publishing list and have entire freedom.
Link to the rest at Scroll.in and thanks to Nate for the tip.
The ebook is a stupid product. It is exactly the same as print, except it’s electronic.
And, oh, BTW, it’s killing the Trad Pub/Big 5 business model. Yeah, totally stupid… LOL. 🙂
Even tradpub apologists get it:
https://publishingperspectives.com/2018/02/france-arnaud-nourry-describes-ebooks-as-stupid/
” But the worrisome part of Nourry’s conversation with Gill may not be in his colorful disdain for the basic ebook as “a stupid product” but in how some in the industry seem unsatisfied with a consumer desire that an ebook be, as he puts it, “exactly the same as print, except it’s electronic.”
What if that’s all the market ever wanted from an ebook? ”
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Yeah, what if it’s all a waste of time and money and most importantly, opportunity?
What if in chasing the pot of gold of “enhanced ebooks” they lose the one publishing market that is actually growing?
Btw, note Nourry is still pretending they “won” the 2014 catfight. Considering Hachette is the most Amazon-dependent and least profitable of tbe BPHs that “victory” looks pretty pyrrhic right now.
Oh Gawd!!! … there are so many … I’ll pick this one, ‘There is no creativity, no enhancement, no real digital experience’ … its a BOOK, you idiot, in digital form. Readers don’t want an ‘experience, they want to read words, strung together into coherent sentences that tell a story. THE END
Exactly.
The primary virtue of ebooks is they are pure story, massless, non-degrading, and most often cheaper. All the fun, none of the storage problems.
As for interactive storytelling? That’s been around for ages. They’re called video games. They’ve been around since the late 70’s. 40-plus years. We’re in the ninth generation of them by now.
Like I said, those guys don’t get out much.
He’s even stupider than that: on my Kindle, they do have enhancements. I can do highlighting without reaching for a highlighter pen. I can make notes that don’t mess up the page, but are stored for retrieval. And I can get definitions for words on the page if I come across an obscure one. One click gets me to the footnotes–no flipping about. And one click gets me back to where I left off in the texgt.
In some, I can click a link to see the actual location or person talked in the text. I can also click to have the book read to me.
I call those “enhancements.” And even without them, it’s still a book and that’s what we pay for, yes. 😀
I find it hard to believe they are really that ignorant.
I think it’s more that Trad Publishers simply don’t see what a big, fantastic opportunity ebooks are because 1) they are so tightly focused on their Paper Book-Widget Production (because that’s the way it’s “always” been done, don’tcha know?/sarcasm); 2) they’re only really looking for the next big hit; and 3) ebooks, specifically those that Indie Authors put out, are seen as a threat to their bottom line. If they were taking ebooks seriously, they wouldn’t price ’em so high in their desperate efforts to drive readers toward purchasing print. Making paper books has always been their focus, continues to be their focus, and will likely be their focus until the day their corporate masters shutter (almost all of) their publishing divisions because they’re doing nothing except bleeding money.
(I do think Tradpub will always be around, but not at the production levels they have today, and I suspect most of the current companies will die or at least shrink a great deal as wiser companies who treat all methods of publishing with respect rise to take their places.)
I think what these BPHs don’t seem to understand is that the format of a book is like music in a movie. It should be good enough to not be noticed. Readers want to get swept away in a book, so they want whichever format most allows them to do this. They don’t want to keep getting distracted by the format itself constantly reminding them that they’re reading a book instead of living in a story. (I speak in fiction terms because that’s the vast majority of what I read.) Saying that readers want a “digital experience” is like saying that paper book readers would rather all books be pop-ups.
Yeah. It’s basically like the publishers are the Nutri-Matic Drink Dispenser from Hitchhiker’s Guide to the Galaxy, fixating on figuring out how to give customers something they don’t actually seem to want.
Par for the course, really.
The market prefers romance, adventure, thrills, STORY, and they insist on pushing litfic, the smell of dead tree pulp, CULTURE!
Because THEY know better.
Their base M.O. is relying on their gut feelings instead of simple market research. So what if the customers don’t want to pay for “enhanced” ebooks? They’ll keep on throwing money in the hopes of coming up with a magic bullet that puts them back on top.
When you live in a competition-free top-down world you don’t learn much of the reality at the grassroots level. So you fumble around in ignorance, bumbling from mess to mess blithely unaware of the surroundings. Like a sleepwalker in a vintage cartoon.
I’m not convinced this CEO and other BPH top executives are so dense. This guy’s remarks are for public consumption, and I think do not reflect all the understanding the executives have. They would be stupid to reveal certain aspects of their understanding of the market.
He’s head of an existing BPH, not an author nor head of a retailer or technology startup. He’s there to get the best returns for the BPH, not to get the highest unit sales or keep lit’ture pure. What does he have and what is making him money? He has high overhead and from that a staff that manages to pick out enough large sellers so that at the prices they’re charging they make a good amount of money.
Where has that been failing? Primarily in genre fiction, most notably romance. Why is that? Because there is a lot of similar product, and high consumption where price matters a lot. Lower priced ebooks have taken over this market, and there is no way they can profitably be a middleman in that market. Probably no company can make much money as a middleman there. They’re aware of all that, and worry about other areas of publishing that could suffer the same way.
So what should he direct his BPH to do? Simply lower his ebook versions to $5 because the margin is so much higher than print and volume will make more money on that book? What results? The BPH advances the usage of e-reading because more people see a large economic difference in the choice, the ebook market becomes more predominant, authors decide to self- or Amazon-publish, or to look for higher advances from lower-overhead e-publishers. This leaves the BPH with quickly shrinking market position and profits. A takeover of the market by e-reading may or may not be generally inevitable, but the advance of such a takeover can be slowed, if not stopped, by other approaches, leading to higher long term profits. What is such an approach? Acquire blockbusters (big name authors, celebrity authors) which are relatively exclusive, put them out in print because promotion and distribution of print is their main strength, and give a nod to ebooks, but only at prices that do not lure print readers away to e-reading. Hence, agency pricing of ebooks at high prices.
Big risk in that strategy, too. “Big name authors” are increasingly being made in the self-publishing sector – and cost a heck of a lot more to acquire. They’re already doing just fine without supporting the BPH overheads by cutting into their own revenues.
Political “celebrities” are pretty much a dead loss to BPH. Actually, almost all of them lately have simply been veiled campaign donations.
“Celebrity” celebrities do make money for them. They’ll probably stick with BPH, too – if there is anything they know how to do, and do well, it is throwing big release parties in NYC with “everyone that counts” attending.
But will the latter support all of their overheads? I don’t know – but would want to find out before putting any money into their stocks or bonds.
The biggest flaws in that grand plan are that publishers can’t seem to create as many of the big blockbuster books as they’re going to need to sustain what they’re doing, and they’re throwing away solid-selling midlisters because they don’t think those authors are making them enough money. If you take away the big blockbuster books on the level of the HP series or 50 Shades (there were none last year, as I recall), solid-selling midlisters are actually earning the publishers a good amount of money. Or would be, if the publishers didn’t price those midlisters’ ebooks out of a reasonable range.
Adult coloring books should not be the basis for a profitable year in the publishing industry.
This is not the first questionable interview by this CEO.
He really is this disconnected from the ebook market realities. You have to understand he is the CEO of the entire multinational and his entire career has been forged in the protectionist/price-fixed French market.
Also worth noting is Hachetre is smallest, least profitable of the BPHs. It has been assembled by buying up failing publishers like Warner Books and Perseus and discards like Hyperion.
Just last year, in the wake of the success of THE MARTIAN they breathlessly announced that they would be “greatly expanding” their science fiction line by, gasp!, Twenty titles a year!!
Those folks don’t get out much.
Well, you do have to consider that if they only publish 1 in 3,000, then 20 books is 60,000 submissions.
He really is this disconnected from the ebook market realities.
Do we have reason to think he believes what he told the interviewer? I have no reason to think he is any less capable of understanding the market than the average independent author. I suspect he knows much more.
Interviews and public statements are a tactic in a much larger game.
Their deeds match their words.
Proof enough.
Hmm. This guy reminds me of Dale Gribble from “King of the Hill,” who somehow never figured out Johnny Red Corn was having an affair with Nancy, Dale’s wife, even though their son looked suspiciously like Red Corn. I’m beginning to think that BPHs could not get a clue if they were in a field full of horny clues during the clue mating season and sprinkled their bodies with clue musk and did the clue mating dance.
In addition to the ignorance of why many of us love ebooks, there’s an ignorance (and arrogance) about that curated 1-in-3,000 book manuscript.
A friend of mine won several awards with an unpublished historical romance series and went through two agents, who tried but couldn’t sell the books. Why not? Editors said there was no market for 19th century American romance novels with no sex, unless they were geared to the religious market.
Finally my friend self-published. Her books took off, big-time. They spawned a host of imitators. They brought requests from traditional editors to acquire the series–too late–except for Amazon’s publishing arm, which eventually reached an agreement with her to publish on her own terms. The books are still going very, very strong and have revealed a large market that traditional publishers entirely missed.
I’m in the process of re-editing and republishing my large backlist (I’ve regained about 60 of over 100 titles). There’s an entirely new readership that missed these books over the years because of the way they were published. This is not to criticize my former publisher, just that traditional publishing often has to fit books into its model rather than “breaking out” the individual author, especially with genre books (in my case, romance and mystery).
There’s a tremendous amount about publishing that this executive has no idea exists. Sure, it’s a tough go, but being an author has never been easy. I’m just glad I have my fellow writers in various groups and on this site, who understand what’s going on.
That series sounds quite interesting – can you share the name of the first book so I can check it out?
I’ll also look for yours 🙂
The series is the Montana Sky series by Debra Holland. I believe she’s on Book 8.
My current series is Safe Harbor Medical Mysteries. I’m about to release Book 3, the Case of the Desperate Doctor. More info on me at http://www.jacquelinediamond.com. Thanks!
SAme here. I’m interested in your friend’s series. Title?
Mirtika, see comment above. Her name is Debra Holland and the series is Montana Sky.
Thank you so much!! And I like medical mysteries, too. 😀
Does anybody still want to claim that these clowns know what they’re doing?
I can see smartness still abounds out in the real world conglomos of our adulthood.
This seems to be the party line in the French book industry – – I heard much the same from their reps in 2013.
If they want to break their own ankles beneath them I can’t stop them, but it is irritating and explains why I can’t access the French books I’d happily buy in much later quantities if I didn’t have to hunt down speciality shops in my non francophone country, or deal with shipping costs.
*larger quantities
That is a stunning amount of ignorance about the publishing industry from a man who is in charge of a Big 5. I keep thinking they are putting on this fraud but in actuality, know the real numbers… the longer it goes on, the more I think they are just morons.
8-|
Breathtaking ignorance. Total denial. A fawning interviewer. Misleading use of data and statistics. Almost a template for a New York Times, Guardian or similar piece.
I prefer ebooks over print books because they are way more convenient and I don’t have a lot of space for books or bookshelves in my apartment, so I’m glad they were invented.
If you let the price of ebooks go down to say $2 or $3 in Western markets, you are going to kill all infrastructure, you’re going to kill booksellers, you’re going to kill supermarkets, and you are going to kill the author’s revenues.
The infrastructure margin is the independent author’s opportunity.
Precisely!
The lack of infrastructure,is the enhancement. It drives down cost, and increases the convinence for the reader. Properly exploited this could grow the book market. The novel has been the novel since at least The Tale Of Genji in the 11th century, the form is depending on writing & literacy , the technology that delivers the writing is a minor matter.
Nourry is interested in the survival of the infrastructure. Consumers are interested in product, and don’t care about how it is produced.
And independent authors? Observation shows they are happy to rip the economic heart out of the infrastructure and create a new one.
God Bless the free market.
He hasn’t figured out ebooks YET? Poor, poor man.
I like how his reason for Hachette’s declining ebook sales is that the ebook is supposedly stupid and boring, and not because of the publisher’s ebook pricing practices.
Sorry to hear that Hacette’s sales are declining in the ebook area NOT. My sales are increasing so I must be stealing customers from Hacette’s carefully curated, selected, promoted collection or this guy has his head in the sand…..
Rhetorical question.
How did someone this stupid get to head a company?
I know it was a rhetorical question but I’m going to reply anyway:
The Peter principle explains his rise.
The Dunning-Kruger effect explains why he sounds like an idiot.
Agree completely. And yet, they make a lot more money than I do as a writer. Hard to argue with financial success. I assume he’s storing it up for when the higher ups decide he’s toast.
The Peter Principle, which basically says a person will fail up until they meet their natural level of incompetence. Or that’s my memory of reading it thirty years ago.
These folks are just so unintentionally amusing, I can’t even.
Yup.
Formally:
The Peter principle is a concept in management theory formulated by Laurence J. Peter in which the selection of a candidate for a position is based on the candidate’s performance in their current role, rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and “managers rise to the level of their incompetence.”
https://en.m.wikipedia.org/wiki/Peter_principle
Large companies find the highest job an executive will fail at instead of the highest tbey can succeed at.
Explains everything about the BPHs and B&N.
It’s a ‘book’ without wasting any paper, dummy. And can be shipped without wasting the time or money of a truck and driver. And you need only retain one copy – that you can sell to as many people as wish to buy it, unlike you never guessing the right number of books to print without having leftovers – or running short.
The book is a stupid product: no creativity, no enhancement, just page after page with words printed on them.
Just more proof that Hachette and it’s so-called ‘leadership’ hasn’t two brain cells to rub between the lot of them.
No doubt there’s no computer anywhere near their CEO, he wouldn’t have any idea what one would use them for.
Adapt or sink there buddy boy.
…and without unnecessary gold-p!ating readers don’t want.
did you see my commentary, PG?
I did.
Here, anyway:
https://the-digital-reader.com/2018/02/19/ebooks-stupid-product-blinkered-ramblings/
Spot on.
This explains sooo much about the BPHs and their management.
So much for the theory that they are merely “managing inevitable decline” instead of actually causing it.
They really don’t get it.
Instead of leveraging the high margin economics of ebooks, which consumers do buy, they still pine for over-complicated baroque “enhanced” ebooks that nobody wants and have never bought in volume when available.
How does one leverage the high margin of eBooks without losing paper sales?
By marketing paper books as an enhanced premium product for readers who prefer the “paper experience.” Make the more expensive paper product the “enhanced experience.”
There is still a thriving market in $200 buggy whips. See http://www.drivingessentials.com/essential_balance_whip.php
By doing digital first.
By only doing print editions of proven sellers.
By doing print as “special collector’s editions”, bound in rich corinthian leather and shrink-wrapped to preserve that new book smell of toxic aldehydes as long as possible.
By obsoleting their products before their competitors do it for them. Instead of crippling tbeir ebook sales to favor print, they needed to embrace digital as their primary format and slowly phase out print, starting with the lowest sellers.
Their decline is only inevitable because tbeir policies foreclosed any other outcome.
They did it to themselves.
That all represents an aggregate loss of paper sales.
Publishers produced and distributed paper better than anyone else. They did an excellent job. That was their competitive advantage. Consumers needed them if they wanted to read. Authors needed them if they wanted to sell.
With eBooks, they do not do anything better than anyone else. They lack a competitive advantage.
Cross price elasticity is what governs publishers mix and pricing of paper and eBooks.
Come on now!
Since when has the Manhattan Mafia cared about unit sales?
All their metrics are in terms of reader spend and gross dollar revenues! They’re all about the quick buck!
A strategy of positioning print as a premium, prestige format is perfectly in line with their pricing history and, as a bonus, reinforces the “validation by contract” traditionalist meme. As in, “any Tam, Dick, or Jane can self publish an ebook to sell for a buck but real authors are published in $50 leather bound, 24 pound paper, print editions that can survive a direct nuclear strike! Sniff!”
Digital for the declassee commoners and print as the aspirational product for connoisseurs. (And wannabes.)
They had everything lined up for *two* high margin, growth businesses they could dominate. All they had to do was compete under American law and modern business practices.
Instead they killed interoperable ePub and delivered the ebook market to Amazon on a silver platter.
Since when has the Manhattan Mafia cared about unit sales?
I don’t know. I am referring to dollar market share. However, that is normally correlated to unit market share.
All businesses, whether in Manhattan or Topeka, care about market share. As to when, they care about it all he time. They care about dollar market share, and they care about unit market share.
Cross price elasticity of demand dominates. The cross elasticity plus the shifting market share make an unfavorable external economic environment regardless of who is in charge.
What you and Democritus suggest is a loss of paper market share, when paper is the publishers’ competitive advantage.
No, it’s not a loss of market share because they would all be doing it. Collusion is their culture.
They would simply be converting low margin print sales to high margin digital plus high margin enhanced print books. Total unit sales might have even gone up. Total revenues would have gone up.
Plus, in that alternate universe they would have never alienated readers or allowed Indie, Inc to get legitimized. They would also have saved hundreds of millions in fines.
Between Apple and tbe BPHs fines totalled well over half a billion bucks. The BPH fines alone could have financed a massive marketing campaign for the enhanced pbooks.
No, it’s not a loss of market share because they would all be doing it.
Their collusion is a paper publisher’s golden opportunity.
Having given up their competitive advantage, colluders now hasten their demise by colluding without any way to stop enterprising publishers from producing paper.
The demand for paper will remain, regardless of what the colluders want. That demand will be met.
Unfortunately, conglomerates don’t do physical quality any better than they do curating. Sure, this year their collector’s item would be printed on 24-pound paper and bound in Corinthian leather. After next year’s round of cost-cutting, it would be on 20-pound paper bound in vinyl. By the time they actually send this year’s new authors their first royalty check, we’ll be back to fax-quality printing on a carelessly glued bundle of newsprint. Still priced at $50, of course.
No doubt.
You can always trust scorpions to be scorpions.
But that would be of their choosing, just as their present decline is of their own creation. There was nothing inherently inevitable about the current situation.