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Simon & Schuster Reported Profits Up, Sales Down in Second Quarter

15317210187_c96acb2ae8_bSimon & Schuster released its second quarter financial report today, and the news was both bad and good.

The publisher reported its fourth straight quarterly decline in revenues even as their profits grew. Sales were down $12 million, to $199 million, while profits were up $3 million, to $27 million, last quarter. Revenues for the first half of 2015 declined 5.6%, to $344 million.

eBooks made up 20.1% of sales in the quarter, versus 22.3% in the same quarter of 2014. That is a decline both in share and in volume (about $7.5 million), but I am sure that has nothing to do with Simon & Schuster’s contract with Amazon. Publishers Lunch quotes S&S CEO Carolyn Reidy as denying the connection, "What we do know is it hasn’t. We’ve done a lot of studies of this and our unit sales are absolutely holding. So we’re very pleased with the new arrangement, and the results of it. There can be effects from pricing changes, but now the pricing changes we’re doing ourselves."

Reidy also said that S&S regarded itself as flat, not down, compared to last year. Overall comparisons with the second quarter of 2014 were negatively impacted by the release of Hillary Clinton’s Hard Choices and other big print sellers, Reidy noted.

S&S via PW, Publishers Lunch

image by ActuaLitté

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fjtorres August 6, 2015 um 7:02 pm

I thought HARD CHOICES was a money loser for S&S, falling far short of the $14M advance.

Timothy Wilhoit August 6, 2015 um 7:12 pm

I get a feeling of deja vu when I read a headline like "profits up, sales down" concerning S&S. No, it’s not really deja vu. Since I’m cynical about the likelihood of them suddenly becoming more efficient, the way they are saving money will come back to haunt them. The old ball of yarn will finally run out, given time.

Jesslyn Hendrix August 6, 2015 um 7:54 pm

Oh god, publishers are so, so dumb. When you raise ebook prices….

I’ve got a few choices.
Get a library card and wait for it to be available on ebook(I do this in the case of grossly overpriced Kindle books)

Buy cheaper books, look for more indies, self-pubs, Kindle Unlimited and cheapies (also doing this)

Get pickier. My autobuy series is probably less than 1/3 of what it was in past years. I’ve skipped more than a few books that i would have purchased in the past. i may get them via the library, but i may not. Either way no moola for you out of my pocket.

Guys. If someone has to pay $14 or $15 a book, how many do you think they’re gonna buy in a month? I might inadvertently blow my book budget on too many $9.99 and $7.99 titles, but you bet your butt that I’m not doing it on a $15 book

LS August 6, 2015 um 11:01 pm


Ebook Bargains UK August 7, 2015 um 4:35 am

Raising prices on frontlist ebooks people are willing to pay a premium for is eminently sensible. Dropping prices on backlist titles readers might not otherwise shell out for is equally sensible.

Five years ago we were all promised the Big 5 (or 6 as was) were dead in the water because they couldn’t compete.

Five years on they all seem to be doing remarkably well. Not least because revenue does not automatically equate to profit. As S&S show, revenue down, profits up.

Backlist titles that earned out long ago and now bring in profits at prices every bit as competitive as the average indie title, but with better brand recognition, is one reason why.

Josie Litton August 7, 2015 um 8:01 am

Sales down, profits up. In other, totally unrelated news, author income has tanked.

Short term, what S&S and the other tradpubs are doing works fine. The corporate masters are happy and so are the analysts, which is all that really matters if you’re a publishing exec.

But as authors flee tradpub or just never opt for it in the first place, an entire new competitive sector is growing rapidly. Some say that the BPH have no idea how to deal with indies but I think it’s more that they’re structurally incapable of doing so while continuing to please the aforesaid masters and analysts.

Tim Wilhoit August 8, 2015 um 12:43 am

It was a bit mystifying to read as Reidy denied any correlation between the revenue drop and increased e-book pricing. How could the revenue drop when units sold remain the same? Then I noticed this passage from the PW story: "S&S CEO Carolyn Reidy said sales of digital audio remained particularly strong in the second period, helping to offset a modest decline in e-book sales." Ah. The lost e-book sales roughly translated as increased audio sales. Seems they aren’t getting nearly the same revenue per unit from audio as the e-books. Shocking.

Gosh, I wonder why their audio sales have increased by 40% this year? Easy. If I don’t want to pay a higher price on the e-book, sometimes I will "purchase" the audiobook instead. It doesn’t cost any more money because one credit = one audiobook.

By PW’s numbers, it seems the percentage of their total revenue from 2Q2015 was 20.1% e-book, 3.9% audiobook and the rest from paper. Historically, that seems pretty high for the audiobook portion.

BTW, the savings from "lower production and distribution costs" isn’t likely to be repeated for very long. Bean counting often costs more in the long run, kinda like filling a transmission with sawdust. Sounds good for a while, but it will lock up…usually after someone else buys it.

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