“The strongest digital sales performance in years” – HarperCollins. “Robust growth in digital formats” – Hachette

From The New Publishing Standard:

The HarperCollins fiscal year runs to June 30, and this year fiscal Q4 (2020 Q2) saw a 3% drop in revenue from $419 million to $407 million. But profits were up 9%, to $47 million. As reported by parent company News Corp, for the full fiscal year revenue of $1.67 billion was down 5% on 2019, with profits down 15% to $214 million.

Bookstore closures of course played a role, but News Corp CFO Susan Panuccio reported a strong showing from the ebook and audiobook sector, describing it as “the strongest digital sale performance in years”, that helped offset the bookstore closures.

Compared to the same period 2019, digital sales were up 26%, with ebook performing best with a 31% rise, while audiobooks rose 17%. Together the two digital sectors made up 29% of HarperCollins revenue in Q2 2020.

. . . .

Meanwhile Hachette UK’s H2 2020 performance has been described as “sterling” by parent company Lagardère, with revenue down only 2.8% despite the  severe UK lockdown, with Hachette UK CEO David Shelley adding it was an “extremely strong” performance.

. . . .

Lagardère added that Hachette UK had seen,

robust growth in digital formats.

. . . .

The US by contrast performed well in difficult circumstance, leading Lagardère to observe the English language markets had better digital and e-commerce infrastructure.

. . . .

“Fast-paced growth in digital formats” also got a mention, with ebooks totalling 10.6% of Lagardère Publishing’s H2 2020 revenue, up from 8.2% in first-half 2019, with digital audio accounting for 5.3% of revenue, up from 3.4% in same period 2019.

Link to the rest at The New Publishing Standard

6 thoughts on ““The strongest digital sales performance in years” – HarperCollins. “Robust growth in digital formats” – Hachette”

    • They are choosing medium term profit over short term profit, figuring the NPV is higher going after the medium term. Managing decline can be very profitable. It shouldn’t be confused with managing growth.

      Without print, the publishers have no competitive advantage. If they concentrate on eBooks, they lose print sales, and that’s the end of their market power.

      The publishers produce a single content product, and distribute it in various mediums. Losing print also loses the cross promotion that greatly benefits the eBook sales. That’s something no eBook author really has. It’s a big advantage.

      • Nah.
        They’re just afraid of having to report a quarterly decline in gross income, even if accompanied by higher profits. This time it was unavoidable, forced on them, not a strategy.

        Plus they’re already spooked by the declining number and “quality” of manuscript submissions. Less monetizable dreamers are submitting and even the legacy authors are taking longer to deliver. They live quarter to quarter which is why the fresh produce gross is their primary metric.

        Non-BPH tradpubs may see the advantages of breaking with the “print uber alles” policies but the BPHs are going back to it as soon as the pandemic lets them.

        • Everybody lives quarter to quarter. Note the devastation a recent missed quarter is now heaping on zillions of businesses.

          The publishers have been following the same strategy of balancing eBooks and pBooks for many quarters. It’s a big linear programming model. It’s been steady, one quarter after another.

          They aren’t spooked. They see the market environment as well as any independent author, and better than most. They accept the decline in a segment of their business, and have implemented a strategy that lots of authors don’t like. The authors insist the publishers are dumb because they aren’t doing what the authors want. The publishers don’t care what the authors want.

          • They aren’t dumb just short-sighted and self-defeating.
            And their actions are actually great for authors. Or at least those willing to take control of their careers.

            If Indie, Inc has 25-30% of the market and dominates several sectors, it is thanks to the BPH policies.

            It isn’t the “best possible world” for Tradpubs,but it could’ve been. It should’ve been, if they had been willing to go back to direct to consumer years ago, if they’d accepted that a low margin product like pbooks can’t support a bloated supply chain, that either they started providing real added value and cutting others out of the chain or they would be the ones cut out.

            The pandemic?
            Yeah, it’s been tough for everybody.
            But the BPHs have been in trouble all century, with flat revenues and declining unit sales. And their response has been to smokescreen reality instead of tackling the real problems. And it didn’t have to be.

            They had the upper hand, they had the means, the had the content and the control of distribution but were too wedded to their old model to use them.

            Other businesses?
            Want to talk of them, really?

            Which one? Cars? The one where every major company is stopping production of most traditional passenger cars in favor of SUVs and and Crossovers of different sizes while rushing to obsolete the technology behind their bread and butter, to go electric and try to catch up with Tesla? (Because reducing carbon emissions globally is getting a big boost, not by legal force and political posturing, but by embracing technology and letting the free market do its thing.)

            Not close enough to books?
            Okay, how about video?
            The pandemic has stopped new production, frozen distribution of finished product, and threatehs the livelihood of the first line distributors. So what did the studios do, sacrifice high margin digital to prop up the already failing theaters? Heck, no. Theaters were eating up 50% of the gross and limiting studios’ ability to maximize revenues from the higher margin (85%) digital distribution channels. Universal went ahead and cut theaters out of the loop with a high profile movie and used it to pressure theaters into a better deal for the studio; a 17 day theatrical exclusivity window instead of 90 days. And Disney? Disney went one step better cutting theaters out of the loop completely (100% margin! Direct to consumer.) for their next high profile release, getting theater operators to pine for day-and-date, which used to be their “NEVER!!”.
            Even more ominous for theaters, the 70 year old Paramount Consent decree that ended the old vertically integrated studio system has been itself ended: studios can now own theaters. Again. Studios can once more go direct to consumer both digitally and via B&M. And since the theaters were in deep trouble *before* the pandemic they now have to agree to studio terms (no more 50%, no more 90 day exclusivity). No more tail wagging the dog.

            Direct to consumer.
            Digital first.

            Look around, it’s all over. Gaming has been doing it all decade. Today digital is 65% of all game distribution and it’s growing even bigger because digital’s inevitable sibling is already here and stepping up: digital subscriptions.

            Microsoft’s GAME PASS is just a couple years old and it alrrady has 10million subscribers, bringing in $1.5Billion a year. And they’re adding game streaming so the exact same game can be played on many platforms, for the *one* price.

            Seem familiar? Think Kindle Unlimited, Netflix, Prime…

            Yeah, lots of businesses live quarter to quarter, but they work to maximize net not gross. They favor high margin over low margin. They pay attention to consumer needs. They do market research *before* they create a product, not half-baked promotion *afterwards*. They obsolete themselves before others do it to them.

            BPHs aren’t living in the best of possible worlds.
            They are aren’t making the best of a bad situation and what they’re doing isn’t even bad for alert writers. To the contrary, everything they’ve done has fostered the growth of Indie, inc; they’ve driving the bulk of the next generation of authors to learn the skills to be independent, to go digital and go (more) direct to consumer. (Amazon is on notice. They *need* to be “not-evil”. Or else. Full direct to consumer is still an option. Look at APub.)

            What the BPHs do is *good* for authors and readers; it’s good for literary culture and good for commercial narrative literature.

            It is also bad for their own business.

            So sure, keep telling them they’re doing the right thing.
            It’ll hasten the transition. And they’ll be in no position to control the new market. That’s actually the best of all worlds…for everybody else.

            • They aren’t dumb just short-sighted and self-defeating.

              They are not looking at what some authors want them to look at. They very clearly see a segment of their business has no future, and they are managing it in away to extract as much as possible while protecting the balance sheet.

              They have no intention of controlling new markets. They are getting out, but taking as much cash as they can as they leave. Again, they are not following the path some authors think they should follow. They don’t care what authors think about it.

              Of course I will tell them they are doing the right thing. And I wish the best for those who now have the competitive advantage and will succeed them in meeting consumer demand.

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