Home » Big Publishing, Non-US » Lighter release schedule hampers Hachette UK in third quarter

Lighter release schedule hampers Hachette UK in third quarter

8 November 2018

From The Bookseller:

Hachette UK’s revenues were down 6.7% in the third quarter of 2018, due to a lighter release schedule and decline in sales in its education segment, its parent company Lagardere has reported. The fall in sales in the UK has been attributed “mainly” to an absence of curriculum reform, which also affected France and Spain’s performance.

David Shelley, Hachette UK’s c.e.o., conceded overall the third quarter had “fewer major releases for HUK”, but pointed to “some unexpected bestsellers and strong backlist and e-book sales”. He also said Hodder Education’s results “tracked the market, which was muted in September due to distance from the last curriculum change”.

The dip is comparably better than it was in the third quarter of 2017, when sales dropped 13.5% following the success of Harry Potter and the Cursed Child (Little, Brown) the previous year.

. . . .

Of the publisher’s performance in third quarter 2018, Shelley commented that digital publisher Bookouture had enjoyed “a very good summer with sales in the UK up year on year and significant growth coming from the UK and Australia” while John Murray Press enjoyed its second best ever month in August.

Link to the rest at The Bookseller

Big Publishing, Non-US

34 Comments to “Lighter release schedule hampers Hachette UK in third quarter”

  1. “fewer major releases for HUK”, but pointed to “some unexpected bestsellers and strong backlist and e-book sales”

    Maybe if they had better contract terms and more slots …

    And even overpricing them people are getting the ebooks, how much longer before they admit Amazon was right?

    • Maybe if they had better contract terms and more slots …

      Better contract terms increase their costs. More slots increase costs.

      Perhaps increasing output will lead to better performance, but increasing costs via contract terms doesn’t.

      Competition among authors continues to put downward pressure on contract terms.

      • And sometimes you have to spend money to make money.

        If they reject a book (or the writer rejects the crap contract) and the writer self publishes it and it does well they get zero – or it might even cost them more as that indie book steals the eyes/time of the readers that aren’t reading one of the publisher’s books.

        • Sure. Investment is how firms make money. But, before spending the money, they need good reason to think it will yield a profit.

          In terms of a book where 1) the author refuses a contract, and 2) the book becomes an independent best seller, that’s one low probability outcome.

          The other far more likely outcome is the independent author does not become a best seller on Amazon. And since nobody, including independent authors, can tell us what book will become a best seller in the future, the publisher would have to take on lots of books at higher costs based on the very low probability that one in the collection will be come a best seller.

          That’s a very poor business decision. How many slots do they add? How much will it cost, over all books, to spend more on authors?

          We might also ask why they should change their entire business on the chance that one unidentifiable independent author will knock on their door?

          In the meantime, authors continue to compete with each other for the available slots, and keep offering more for less in hopes of landing a slot. That’s why contract terms are unfavorable. Just like widgets. Books aren’t special.

          Here’s a test we can all do at home. What independent book sold so many copies that it would have been worth it for a publisher to change his whole business on the possibility that the author might have submitted to him.

          • Your streatching. The justification for publishing giving low advances to new writers and taking most of the profits was that from the publishers point of view it was a gamble, where they invested in many new writers and only a few became profitable. The profitable ones had to cover the duds.
            The hypothesis is that not enough new writers are coming forward for the publishers to find the lucky few. The pool is getting smaller.

            • That is no hypothesis but a confirmed fact. The BPHs have been bemoaning the lack of “quality manuscripts” openly for five years now.

              The big impact, though is on the other end: consumers.
              For three years now the same BPHs has been bemoaning the “underperformance” of the front list. Which isn’t to say the Kings and Pattersons aren’t selling. They’re just taking longer to move the same amount of copies because consumers have learned to wait instead of stampeding during the launch window. Last year they had to extend the payola window on several of the big name titles, bumping the followup releases.
              Lower release window peaks + longer sales window = lighter release schedule.

              • That is no hypothesis but a confirmed fact. The BPHs have been bemoaning the lack of “quality manuscripts” openly for five years now.

                Publishers public statements are now Gospel? Confirmed fact? When did that happen? How about their claim that they are necessary to curate and sustain our literary culture? How about their claim that if independents were any good they would have been traditionally published?

                Complaints by publishers are hardly confirmation of anything. They are commercial speech in a market where it’s easier to blame fiction suppliers for poor performance than publicly acknowledge they no longer provide a necessary service. They once did.

                • I’m just taking them at their word when their word confirms other sources. Like the reports from agents and from conferences like the RWA where the publisher booths look like ghost towns.
                  It doesn’t matter how they (or you) justify it.
                  Just that they admit they’re seeing less desirable manuscripts.
                  There’s no shortage of submissives but if they publicly gripe about the quality of what they do get it probably explains why they have a lighter release schedule.

                • We do indeed hear publishers, agents, RWA folks, Cowboy Bob, and RinTinTin saying the supply of books to publishers has diminished.

                  But, what reason do we have to believe the quality has fallen? How do these statements rise to the level of confirmed fact? We should now take them at their word? Why? We don’t take them at their word for any of their other words.

                  Could we not make a simpler case that the quality of books has risen, and is providing tough competition? That idea is hardly confirmed fact, but I’d suggest it has equal standing to the notion that publisher quality has fallen.

                • Anonymous: the lack of quality is by their standards. Which are based on high early sales. Because in their eyes, slow sales can’t *possibly* be due to anything they did or failed to do.

                  Like this bit of woe:

                  https://m.signalvnoise.com/our-book-launch-was-botched-and-its-been-crazy-at-work-trying-to-fix-it-99b68fb775d5

                  Thus the gripes; they see less manuscripts and the ones they get and put out fail to match previous years sales rates so they are, by their definition, of lower quality.
                  It’s actually interesting to see the world filtered through their goggles.

                • Because in their eyes, slow sales can’t *possibly* be due to anything they did or failed to do.

                  I’d say their eyes are just as good as ours or any other market observer. But, they are delighted if we actually believe the stuff they say.

                  Look to the objectives of the opponent, not the objectives we want him to have. Look at behavior, not words. They are on the way out of fiction, while independent authors are desperate to have them stay and pretend it’s 1985 again.

            • Your streatching.

              Stretching? How? In terms of contract terms it’s simple economics. As supply increases, prices fall. The price in question is what publishers pay authors. The supply is the number of books submitted into the traditional system.

              The number authors are competing for a scarce resource. Available publishing slots. Authors have always competed for thee slots, and the way they lower their pffer price is by giving more for less and less.

              That’s not a justification. It’s what we observe in zillion of industries all over the world. Books aren’t special.

    • Lighter release schedules by the BPHs is on purpose.
      It’s not for lack of submissives but rather to concentrate sales on the annointed bestsellers.

      They’ve given up on throwing stuff against all walls to see what sticks.
      Now they’re only throwing stuff at three walls. The Fourth Wall remains untouched.

      • “The Fourth Wall remains untouched.”

        And we will take it (and start coming around the corners for the rest of it! 😉 )

  2. So sales were down 13.7% last year and then declined another 6.7% and they blame it on the government for not buying enough school books. They brag that their Hodder Education line was right in the middle of the pack that was sliding downhill, so that’s okay.

    One shining spot is a niche division that does ebooks and print-on-demand, which they built on the bones of Harlequin UK. They pay 45% of net receipts. Not a bad rate but you can certainly do better as an Indie. It doesn’t sound like Bookouture is providing much for that large a bite of money- just ebook and POD formatting, cover design, and maybe a dash of editing with a sprinkle of marketing. They are trying hard to hide the corporate connection on Bookouture’s website. Big Corporate trying hard for an edgy-indie vide.

    Got it.

    Sounds like they need to hire some better writers for their quarterly reports, unless this was meant to be a horror story for their shareholders.

    • This is the *good* spin.
      You should’ve seen the first, raw draft. 😉

    • What was interesting was the reason for the drop in education sales. An absence of curriculum “reform.”

      Whenever a school authority starts talking “curriculum reform,” I know that what is really meant is “make sure a lot of new textbooks are purchased, so that I get my regular kickback for the year.”

      Probably yet another reason to fire whoever wrote this quarterly report – he or she let some honesty slip through the cracks.

  3. Educational publishing itself is I suspect not going to long continue as the cash cow it has been for these publishers. The whole area is itself crying out for reform. It is not immune to the pressures that apply to other areas of publishing.

    • I suspect you’re right. Our newest high school in town does things differently. It’s not alone from other schools elsewhere, but it is unique in our town. The kids don’t carry books anymore. Rather, they only have to worry about a single device that weighs almost nothing–a chromebook. All that they do is online using Google docs and other programs. We had our first parent-teacher conferences and learned a little more about the teaching. The kids research information on the internet and must verify sources. There are no textbooks. The class schedule is funky too with “modules” that can make the class lengths vary from one day to the next, although they are set on a schedule. It’s new and confusing for those of us from the generation used to class times being the same every day, but she’s thriving.

      The point I’m trying to make is that, as schools switch over to technology, the textbook publishers won’t be able to rely on those sales going into the future.

  4. Do people think these reports are issued without extensive review by lawyers, accountants, auditors, and managers? Fire someone? Who? For what?

    • These types shoot the bearer of bad news … 😛

      • That’s not how they work. They have to be very careful in acknowledging unfavorable situations due to SEC regulations. From their perspective, the author may have done a fantastic job. We don’t know what they do. The pig may have received an incredible make-over while still keeping the SEC at bay.

  5. Swings and roundabouts. Hachette US produced a “sparkling” performance.

    Meanwhile HarperCollins reports a 42% profits boost.

    https://www.publishersweekly.com/pw/by-topic/industry-news/financial-reporting/article/78521-hc-profits-soared-42-in-q1-of-fiscal-2019.html

    • The profits came from backlist, not frontlist, and particularly a movie tie-in.

      Revenue growth of 4% comes from audiobook growth and the tie-in.p spike; their report writer did a good job of hiding their underlying weakness.

      They’re doing a good enough job of treading water.

      • Back list is a huge opportunity for publishers. They appear to be taking advantage, and we should see an increasing share of their profits from back list.

        • Especially when the frontlist “underperforms”.

          It facilitates a nice feedback loop: weaker frontlist encourages relying a backlist, which drains resources from frontlist, resulting in a smaller new release schedule, resulting in a weaker frontlist, encouraging even deeper backlist and pointing to the expected endgame.

          It matters where the money comes from, at least for dreamers targeting the BPHs to get to market.

          Nothing unexpected, so far.

          • Which of course begs the question. Why have a front list? That is one of the possible endings of the road they are travelling down. A single office licensing backlist titles and raking in the royalties for minimal outlays.

            • Long term, that is indeed quite likely, particularly given the foreign ownership of most of the BPHs and their allergy to honest competition.

            • Sure. The objective of the fiction publishers is to take as much as they can out of the market for as long as they can. Back list is a great big flashing dollar sign.

              The guys managing that don’t have to deal with a front list at all. It’s a very different business. The balance sheet has to be protected. Back list is perfect for that.

  6. “That is no hypothesis but a confirmed fact. The BPHs have been bemoaning the lack of “quality manuscripts” openly for five years now.”

    So If this is true, Then the possibility for Better Terms exists, Else a Quality Manuscript will get away.

    We shall see if this works out, market forces might actually work in the authors’ favor eventually.

    After all, KKR and DWS all believe it’s best to be a hybrid author not a pure Indie or a pure Trade.

    • Quality manuscripts have been getting away for as long as there has been a slush pile.

      And market forces? The market has exploded in the independent authors’ favor. The biggest distributor of stuff in the world has rolled out the red carpet for them. That same market has dealt the traditional publishers one setback after another.

      Many of the current crop of independent authors are fighting the last war, looking back at how publishing used to work. That world is disappearing.

  7. The possibility exists, yes. Some more innovative traditional publishers have been doing this for some time. The Big 5 themselves do it for the latest celebrity memoirs or the latest Stephen King. For an unestablished author Discovery is the name of the game.

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