Hachette Book Group Revenues Down 12.3% in First Quarter 2015

hachette logoHachette is feeling the pain of its new agency contract with Amazon.

US-based Hachette Book Group's parent company Lagardère released its quarterly report today. While the news was generally good company-wide, the US division fared far worse than the other units.

Lagardère Publishing reported on Tuesday that total revenues increased 7.1%, to 421 million euros. Revenues were up 10.4% in France, down 4% in the UK, and down a whopping 12.3% in the US.

Edit: The Bookseller noted that Hachette's UK revenues were impacted by the VAT change ( retailers including Amazon had to start collecting VAT based on the customer's location, not the retailers).

The decline in US revenues were attributed both to lower ebook sales and to weaker sales compared to the first quarter of 2014, when Hachette had a number of big bestsellers including The Goldfinch, Grain Brain, and I Am Malala.

According to PW, last quarter's US revenues reflect Hachette's new contract with Amazon, which started in March. That contract was negotiated following a nasty months-long fight, and it includes agency ebook provisions which give Hachette control over ebook prices.

Because the new contract started in March, Lagardère  said revenues declined due to "a gradual disappearance of e-book discounts" and that this had "caused a slight loss in volumes at the end of the quarter".

eBook revenues made up 28% of US revenue last quarter, down from 34% during the same period last year.

Lagardère also reported a dip in ebook revenues in the UK (to 26% from 28%). Digital revenues accounted for 12.2% of total Lagardère Publishing revenues, down from 13.4% in the first quarter of last year.

So it looks like Hachette is feeling the sting of its agency contract, right?

I think so, but I wouldn't celebrate too loudly.

For one thing, Hachette is harming authors. Declining revenues means even less money for Hachette's creative accounting to not pass along to authors.

But more importantly, any feeling I might have at Hachette's results are tempered by the fact that S&S, which also has an agency ebook contract, reported only the mildest of declines in ebook revenues last quarter.

S&S ebook revenues declined by under 2% (less than a million dollars) last quarter. When we recall that the major publishers have reported larger fluctuations than that just from having an excess or dearth of best-sellers, that report undercuts the narrative that agency ebook pricing is a terrible idea.

If S&S can go agency and feel minimal effect, it will be difficult to argue that it was a poor business decision.

As a consumer, I hate agency with a passion, but as a business decision I judge it based on the impact to the pocketbook. In the case of S&S the impact has been minimal.

PW

image by brewbooks

About Nate Hoffelder (11579 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

1 Comment on Hachette Book Group Revenues Down 12.3% in First Quarter 2015

  1. Obsessing over revenues is not really irrelevant. What matters is actual books in whatever format that are paid for and if there is a margin on them.

    Anyone can sell ten dollar bills for nine dollars and have a ton of revenue. It’s meaningless.

    While the front list ebooks may have risen in price slightly through agency that’s only for front-list. Meantime the Big 5 are raking in the cash on cheaper mid-list titles, and raking in the cash on backlist ebooks that previously were simply OOP, unbuyable, and not bringing in any money at all.

    Subscription services in particular fulfill this role of monetizing a backlist previously in limbo, which is why HarperCollins and Simon & Schuster are so enthusiastic about them and why even Penguin Random House will one day bite the bullet and engage.

    Attributing one single cause to a fall in revenue when so many variables are at play is clearly nonsense.

    Readers buy more front list ebooks instead of front list hardcovers and revenue goes down but margins will be up because the production and distribution cost for the ebook is less.

    Different years have different results because of new/lack of new film releases, break-outs or lack of break outs, and all manner of other factors totally unrelated to agency.

    The publishing business goes on.

    More than five years after we were all assured the Big 6 were rearranging deckchairs on the Titanic, all that’s changed is they they are now the Big 5, and all doing rather well, revenue fluctuations not withstanding.

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