‘The ebook is a stupid product: no creativity, no enhancement,’ says the Hachette Group CEO

19 February 2018

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.

. . . .

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.

 

Publishing’s remarkable resilience is amazing: Hachette UK’s David Shelley

18 February 2018

From LiveMint:

In 18 short years, David Shelley has gone from being an editorial assistant and then publishing director at independent publisher Allison and Busby, to becoming chief executive of Hachette UK last month—a career that’s nothing short of phenomenal. Along the way, the Oxford graduate in English literature has also been the CEO of Little, Brown and Orion.

Shelley is seen as one of the hottest young talents in global publishing and has worked with authors such as J.K. Rowling and Mitch Albom. A passionate advocate for publishers adapting to the digital environment, Shelley also oversees Hatchette UK’s inclusion initiative, Changing the Story.

. . . .

Congratulations on your new position David. What are your plans now for Hachette UK?

I think one thing is really exciting: there is the potential for understanding consumers better. Very successful businesses like Amazon or Netflix are extraordinary in the way they use data, algorithms, artificial intelligence and machine learning. In book publishing, we’re just sort of starting on that. So I feel for me this is an exciting time coming to the job I’m doing. At the moment, we’re publishing a book, putting a cover on it and hoping for the best. I think it’s really probable that in the years to come, we will test a book before we publish it. We will also look to see what people’s reactions are. We ought to know how to describe a book in a way that excites people, and what cover to put on that really interests readers. We’re only as good as the authors we publish. On the other hand, we will be a brilliant partner for authors if we can get them to as many readers as possible.

. . . .

Opinions are divided within the sector about the health of the publishing industry. What’s your take?

I think that publishing is a little bit like farming. If you get a group of farmers together, they’re always going to disagree about the harvest or the market. I think it is the same for publishers. It often feels like something very big is happening—certainly in the UK, a few years ago, supermarkets started keeping books and this started destroying small bookshops. Now we have Amazon. I think these things come and go; the amazing thing about publishing is its remarkable resilience, and that’s because of people’s desire for long-form content, both fiction and non-fiction. If you look at book sales, then the value can go up and down but actually the number of sales remains very stable and strong. The industry probably needs to become more a part of the digital world. And that doesn’t mean just publishing e-books, but how we operate in the digital environment. We need to understand online retail very well, as well as the connection between offline and online retail. We are in a pretty strong place, with some challenges.

Link to the rest at LiveMint and thanks to Suzie for the tip.

Testing a product with potential customers before releasing it has been routine in the reality-based business world for 60 years, maybe more.

PG suggests the bar for qualifying as one of the “hottest young talents in global publishing” is extremely low.

Hachette to Honor Weinstein Books Contracts

10 October 2017

From Publishers Weekly:

Following a New York Times report exposing decades of sexual assault allegations against Hollywood producer Harvey Weinstein and his subsequent removal by the board of the company he co-founded, Hachette Book Group has addressed the future of writers signed to his book publishing imprint, Weinstein Books.

“Hachette Book Group will honor its contracts with writers who have come to us via Weinstein Books,” a spokesperson for the company told PW. “We will consider all of our options going forward, keeping support for our authors foremost.”

. . . .

Weinstein Books is a joint venture with The Weinstein Company, but its author contracts are with HBG, not Weinstein. Its authors include Morning Joe co-host Mika Brzezinski, who recently wrote on Twitter that she has “a three-book deal with Weinstein Books, through Hachette. I can’t go forward with those books unless Harvey resigns.”

Link to the rest at Publishers Weekly

The OP doesn’t provide the dollar total for the advances Hachette has paid to Weinstein. PG opines that any number of Hachette executives can’t forget that number. But, of course, supporting authors is always the most important priority.

Hachette launches The Future Bookshelf for underrepresented writers

28 March 2017

From The Bookseller:

Hachette UK has launched a new diversity initiative, a creative writing hub called The Future Bookshelf, to make publishing more accessible for writers who feel they aren’t well represented by the industry.

The initiative aims to “demystify publishing”, by guiding users of the website through the process of writing, editing, submitting and publishing, and will offer monthly tips and shareable infographics from its own authors and other experts.

It will also hold an open submissions period from 1st – 7th December this year for writers who are both unpublished and unagented and “feel the industry doesn’t adequately represent people from their background or with their experiences”. They may be authors of either novels or non-fiction.

. . . .

“Publishing has long suffered from a perception that it is a closed shop. But things are changing. There is increased room for diverse new voices. Authors from non-traditional backgrounds and communities bring colour and stories from all over the world – there is a new appetite in the publishing industry for this sort of work. I was delighted to be asked to contribute to The Future Bookshelf initiative as I am a living breathing example of how the winds of change are sweeping through the industry. Helping Hachette nurture other writers from similar backgrounds gives me immense personal satisfaction … I am truly excited to see what comes out of the box.”

Link to the rest at The Bookseller and thanks to Dave for the tip.

Hachette UK sales up 11% for 2016

9 March 2017

From The Bookseller:

Hachette UK’s parent company Lagardère has published its annual results, reporting sales in the UK grew by 11% in 2016, helped by Little, Brown titles Harry Potter and the Cursed Child and Fantastic Beasts that helped to offset the full-year impact of a return to the agency agreement for e-books.

The annual results provide further detail following Lagardère’s Q4 financial results in February, when the same two books were credited in contributing to 17.5% sales growth for Hachette UK in 2016’s fourth quarter.

. . . .

Lagardère Publishing improved its operating margin by 0.2 points to 9.2% and this increase in profitability was attributed to three things: profitability gains in the US, due to “disciplined cost management”; the performance of Partworks in Japan and Spain; and the impact of Harry Potter and the Cursed Child and Fantastic Beasts in the UK, which it said “more than offset the decline in digital revenue in the UK”.

Link to the rest at The Bookseller

PG suspects “disciplined cost management” includes smaller author advances.

Hachette UK reports 17.5% sales hike in fourth quarter

10 February 2017

From The Bookseller:

Harry Potter and the Cursed Child and Fantastic Beasts and Where to Find Them, both published by Little, Brown, helped Hachette UK to see “strong” 17.5% sales growth in the fourth quarter of 2016.

Harry Potter and the Cursed Child, which in the third quarter drove Hachette UK sales up 30% after its release at the end of July 2016, was credited by Hachette’s parent company Lagardère in bolstering business growth for the whole publishing division in 2016 by 11% while Lagardère Publishing’s revenues in 2016 rose 2.5% like-for-like to €2,264m (2015: €2,206m).

However Hachette UK c.e.o. Tim Hely Hutchinson commented that the “outstanding” final quarter of 2016 was thanks to “sales across the board”.

Revenues for Lagardère Publishing in the fourth quarter (end September to end December 2016) were down by 1.4% at €619m like-for-like (2015 Q4: €631m) “as expected” owing to an unfavourable comparison effect linked to the success of Astérix in the fourth quarter of 2015 that was only partly offset by the United Kingdom’s “good performance”. Sales in French division were down 6.4%, while US sales were down 12.4%.

Link to the rest at The Bookseller

Hachette UK to target diversity in senior management

15 November 2016

From The Bookseller:

Hachette UK is to target diversity in its senior management team with its Diverse Leaders Future Mentoring Scheme, designed to give up-and-coming stars from non-traditional publishing backgrounds the skills and confidence to rise up in the business.

The measure is one of four being launched in Hachette’s Changing the Story programme, which aims to make it “the publisher and employer of choice for all people”, regardless of age, disability, race, gender, sexuality or socio-economic background.

Places on the scheme will be limited and the selection process will be “rigorous”, concentrating on diversity and potential. Each successful candidate will be paired with a Hachette UK Board member who will have received professional mentoring training to ensure that this “intense” programme of one-to-one mentoring is “fruitful and rewarding” for mentors and mentees alike.

. . . .

Sharan Matharu, editorial assistant at Hodder & Stoughton, said: “Our aim is to get young adults excited about different aspects of publishing and to raise awareness of the industry in those to whom publishing might not seem an obvious career path.”

Link to the rest at The Bookseller

PG wonders if this initiative will help eliminate Big Publishing’s common practice of pushing out older and higher-paid editors in favor of younger and cheaper versions.

Harry Potter helps Hachette UK to 30% third quarter sales rise

10 November 2016

From The Bookseller:

The release of the Harry Potter and the Cursed Child playscript, published by Little, Brown, has helped Hachette UK to grow its sales by 30.1% in the third quarter, according to results issued by its parent company Lagardere. The release of the “eighth story” on 31st July to coincide with the showing of the play also helped Hachette UK achieve a sales rise of 8.3% for the nine months up to 30th September 2016.

The UK growth was attributed “partly” to the success of the playscript – which to date has sold 1,319,355 copies for £14.37m according to nielsen BookScan- and “partly” to the “solid performance” of its Education unit, especially at the secondary school level.

Tim Hely Hutchinson, c.e.o of Hachette UK, said: “Hachette UK had an exceptionally strong third quarter, driven largely by J K Rowling’s Harry Potter and the Cursed Child published on 31st July, with record-breaking sales through the quarter, resulting in our significant year-to-date growth and corresponding rise in market share.

Link to the rest at The Bookseller

Hachette to bring in new royalty statement system in 2018

18 October 2016

From The Bookseller:

Hachette will be bringing in more regular, clearer and more detailed royalty statements for authors by the end of 2018, the company has said in a letter to its authors.

Writing his annual end of year letter to Hachette authors sent out yesterday evening (13th October), c.e.o Tim Hely Hutchinson said: “After consulting widely with agents, we have commissioned a new royalties system to produce much better, clearer and more detailed royalty statements.”

. . . .

The news follows Hely Hutchinson’s interview with The Bookseller in April last year, in which he intimated that payments to authors would be made more frequently. “Actually, a fairly low proportion of contracts get royalty payments as the advances are often unearned, but I do think that more frequent (probably monthly) payments will come and we will invest in new royalty systems over the years to make that easier,” he said at the time. He also envisaged different types of contracts: one would be low advance, higher royalty, paying more often; another would be traditional high advance, lower royalty, paying  less often. “I’d like to be able to offer those packages and within three years or so we will be able to—if there is demand” he added at the time.

Hely Hutchinson’s letter also warned authors that times were “tough” for the book trade, despite recent publicity about an increase in print sales. He also expressed concern that controls on immigration shoud be given priority over free trade in the government’s Brexit negotiations.

He warned authors that the “well-publicised” resurgence of print was “not the whole story,” explaining that the sales had been skewed by the craze for adult colouring. The trade print market and publisher values had still fallen by 11.5% between 2011 and 2015, and by 27% for fiction, he said.

He further warned that the e-book market will have fallen by about 22% for Hachette by the end of this year from its peak in 2014. This he attributed to “the imposition of UK VAT at the full rate on e-books, changes in e-book trade terms and, to a smaller extent, self-publishing”. This drop was also reflected in the company’s results for the first half of 2016.

“For part of this time, growth in revenues from e-books made up for some of the shortfall, but that is no longer the case. So times are quite tough for trade publishers, even if they are sometimes mitigated by particular lovely successes,” he wrote. “This is probably a long-term trend, as more of consumers’ time and money is spent on the many new or recent digital platforms for information and entertainment.”

Link to the rest at The Bookseller and thanks to Diana for the tip.

PG says that the royalty statements he has seen from most publishers could hardly be more primitive.

Hachette Sues Seth Grahame-Smith

29 August 2016

From Locus:

Seth Grahame-Smith, author of Pride and Prejudice and Zombies and Unholy Night (among other titles), is being sued by Hachette Book Group for breach of contract. The publisher is suing to recover the $500,000 (plus interest) they paid for a book they allege the author never delivered.

Hachette and Grahame-Smith made a $4 million deal for two new books following 2010’s Abraham Lincoln: Vampire Hunter, with $1 million paid on signing: $500,000 for each book. They published Grahame-Smith’sThe Last American Vampire in 2015, but despite offering extensions on the second book’s deadline, it never arrived.

Link to the rest at Locus and thanks to Kris for the tip.

Following is a copy of the Complaint with a copy of the publishing agreement as Exhibit A.

PG was not involved in the negotiation of the publishing agreement, but will observe it contains some provisions detrimental to the author that PG typically recommends be removed or modified.

 


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