Simon & Schuster, Penguin Random House Don’t Want to Talk About Their eBook Sales

Simon & Schuster, Penguin Random House Don't Want to Talk About Their eBook Sales ebook sales Publishing In past years the Big Five/Six touted their ebook sales as a percentage of total revenue. You sometimes had to dig for the details, but they were there to be found.

That changed this week. Something tells me that they aren't quite so eager to let us in on just how poor their ebook sales have been since they regained control of their ebook prices in early 2015.

Over the past week three of the Big Five publishers have posted either quarterly, half-annual, or annual reports, and only one even came close to telling a complete story about its ebook sales.

First up is CBS Corp and the few nuggets they shared about Simon & Schuster in the second quarter CBS financial report. Revenues were down overall, and so were ebook sales as a share of said revenues (from 24% last year):

Publishing revenues for the second quarter of 2016 were $187 million compared with $199 million for the same prior-year period. Digital revenues represented 23% of Publishing's total revenues for the second quarter of 2016. Best-selling titles included End of Watch by Stephen King and Foreign Agent by Brad Thor.

Publishing operating income of $26 million for the second quarter of 2016 was up 4% from $25 million for the same prior-year period, as the revenue decline was more than offset by lower production, selling, and inventory costs.

That is literally everything that CBS was willing to say about ebooks, and if you think that is sparse then you should see what Pearson said about Penguin Random House.

This is the entirety of PRH's report on ebook revenue stats (aside from a few useless factoids):

Penguin Random House had a solid performance in the first half of 2016 with reduced demand for e-books following last year’s industry-wide digital-terms changes offset by the phasing of further integration benefits.

I am not joking; that's it. eBooks aren't even mentioned in the transcript of the investor conference call.

Apparently PRH is so embarrassed by its ebook stats that they aren't even going to give any figures.

I bet Lagardère wishes they had thought of that, because the slides for their year-end financial report show that ebooks, as a share of revenues, peaked in 2013:

Simon & Schuster, Penguin Random House Don't Want to Talk About Their eBook Sales ebook sales Publishing
click to embiggen

Lagardère's US revenues were essentially flat in 2015 (down 0.3%). Their overall book publishing revenues were up 10%, but that reflects activity in a half dozen different markets so it means less to us.

So there you have it; one publisher obliquely referred to declining ebook sales, another provided minimal stats. and a third which revealed just things have gone awry since the return to agency.

Do you suppose it's too soon to pressure Amazon for new contracts?

image by mikecogh

Nate Hoffelder

View posts by Nate Hoffelder
Nate Hoffelder is the founder and editor of The Digital Reader: He's here to chew bubble gum and fix broken websites, and he is all out of bubble gum. He has been blogging about indie authors since 2010 while learning new tech skills at the drop of a hat. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

11 Comments

  1. Fjtorres30 July, 2016

    Pressure Amazon for new contracts?
    With what leverage?
    At this point Amazon can simply insist they live to the letter of the existing contract til midnight of the last day. And they should.
    It’s not as Amazon is seeing lower ebook sales.

    Reply
  2. PRS30 July, 2016

    I here the ammunition manuf. association is going to name the BPH “customers of the year” for all the rounds they burn up shooting themselvs in the feet.

    Reply
  3. PRS30 July, 2016

    That’s “hear.” 🙁

    Reply
  4. Will O'Neil30 July, 2016

    They should save a few of those bullets for those who have been setting their e-book pricing policies, which could scarcely be more insane if they were set by Donald Trump. They clearly have no idea of the psychology of the e-book buyer.

    If they lowered e-book prices significantly below those of the PB edition, but still at a level where their gross margin was greater than that on the HB edition, they would (1) switch some customers from HB/PB to e-books, increasing total net revenue; (2) cause other customers to enter the market who would not buy a print book, further increasing net revenue; and (3) reduce the number of used copies appearing on the secondary markets at knockdown prices, thus moving some customers to buying new e-book editions instead, still further increasing net revenues.

    Amazon has the data necessary to fine-tune the price for optimum revenue, and I’m sure they’d be happy to share it for a modest fee. Or the publishers could pretty easily figure it out for themselves. If you look at this like a businessman, rather than a self-deluding fool of a slave to “publishing tradition”, there is no downside to such a move.

    Reply
    1. Nate Hoffelder30 July, 2016

      I think the ideal price point for backlist ebooks is slightly above the average used book price for each title.

      This would kill the used book market.

      Reply
      1. Will O'Neil31 July, 2016

        The market price is not the average asking price but the actual transaction price, which will almost always be at the low end of the (usually wide) range of asking prices. Those who ask high prices may sometimes sell at their price to customers who are weak on price discovery skills but the larger portion of trades will go at the lower end of the price scale. The existence of bookfinder.com ensures this. For many books this means that the price to kill the used book market is not much above shipping costs for many books. Thus when I published a Kindle edition of my espionage thriller The Libyan Kill I priced it at $2.99. There are listings at significantly higher prices but I speculate that these are from shops that primarily sell to walk-in customers.

        Reply
        1. Nate Hoffelder31 July, 2016

          Yes, but I was discussing pricing an ebook to attract buyers who would otherwise buy a used copy. I’m not talking about using a print book to attract those buyers but an ebook which has minimal costs.

          Reply
  5. Laurence OBryan30 July, 2016

    Great post, Nate. The real problem for trad publishers, and the fork on which they are skewered, is that if they drop ebook prices significantly there could be a huge shift away from printed books.

    The executive who suggests this in any trad publishing company will be shown the door soon after. Printed books is the cornerstone of the publishing industry employing huge numbers of people in manufacturing, distribution, book stores and the pulping industry.

    Expect a modest decrease in prices, plenty of publicity for trad writers and a long slow, hard fought, retreat over the next ten years. More consolidation and a move away from the ivory towers in Manhattan will be the signals that the decline in market share is accelerating.

    Reply
  6. […] of publisher ebook revenues, and Big Five publishers either posting falling ebook revenues or refusing to talk about the category at all, I thought today would be a good day to to return to the topic of […]

    Reply
  7. […] than of the quarterly reports from the first part of the year (the ones where the major publishers don't want to admit just how much their ebook sales have […]

    Reply

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