Did Amazon Cage The Goldfinch Publisher? Here’s What the WSJ Didn’t Tell You
Jeffrey Trachtenberg of the Wall Street Journal weighed in on the Amazon Hachette dispute yesterday, and he has a rather unusual take on the situation.
As he sees it, Hachette Book Group’s revenues were up in the first 6 months of the year so Hachette must not have been seriously harmed by the ongoing contract renegotiation with Amazon:
But the dispute hasn’t crippled the publisher. The Hachette Book Group generated about €226 million ($300 million) in the U.S. and Canada in the first half of the year, up 5.6% compared with the same period of 2013, according a filing made by French parent Lagardère. Among the factors Lagardère cited for the gain were sales of "The Goldfinch" and "The Silkworm," written by J.K. Rowling under the pseudonym Robert Galbraith.
What I find most interesting about Mr Trachtenberg’s spin on this topic is what he leaves out.
For example, he neglects to mention that HBG’s ebook revenues dropped from 34% of net sales in the first half of last year to 29% in the first 6 months of this year, a sign that Amazon did have an impact on Hachette’s revenues.
He also neglects to mention the reason that Lagardère provided for that 5.6% increase in revenue. While Mr Trachtenberg made it sound like the revenue increase came from book sales, Lagardère attributed the increase to a slightly different source.
Here’s what Lagardère said in the press release for their last financial report (the actual financial report includes a similar statement):
In the United States, activity was up (+5.6%) thanks to the integration of Hyperion (acquisition of a catalogue) and the takeover of Disney’s distribution activity. Note, too, the good performances in General Literature, with the publication of The Silkworm by R. Galbraith (J.K. Rowling), several reorders of The Goldfinch (D. Tartt) and Lone Survivor (M. Luttrell), and the release in theatres of the movie adaptation of The Monuments Men, which supported the sales of R. Edsel’s book published by the Group.
In other words, Lagardère attributed the revenue increase to the late 2013 acquisition of Hyperion from Disney, a deal which was first announced in June 2013. That is kind of an important detail, is it not?
I certainly think so; IMO it changes the entire tone of the situation. I think it clouds the situation, making it difficult to claim that "the dispute hasn’t crippled the publisher" and that "Amazon hasn’t caged the Goldfinch publisher".
Just to be clear, I am not saying that Amazon is crushing Hachette; I am merely saying that Mr Trachtenberg is wrong in giving the impression that Hachette is doing just fine in spite of everything Amazon has done.
That claim is probably not true. (I only wish it were true; it would demolish much of the criticism of Amazon’s actions.)