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.
image by brewbooks