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Leaked sales data report regarding Publisher Hachette


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#1 AQCrew

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Posted 12 June 2014 - 06:34 PM

Hachette Derives 60% of eBook Revenue from Amazon

 

From the Goodreads article: http://goodereader.c...nue-from-amazon

 

 

 

Amazon and Hachette are locked in a contract battle that may decide the future of the publishing industry. Amazon wants lower prices on print and digital titles so it can increase its profit margins, Hachette is obviously resistant to the entire concept. Amazon has disabled pre-orders of all Hachette titles and has implemented a five week shipping delay on a huge catalog of print books. A recently leaked investor slideshow sheds light on how reliant Hachette is on Amazon for their worldwide eBook sales.

 

Look at the reason why Hachette is claiming that they've hit a glass ceiling in terms of sales growth within the U.S.

 

 

 

 

Hachette acknowledges a slowdown in their growth in the US and stabilization in the critical UK market. This is primary due to authors self-publishing via Amazon Kindle Direct Publishing, Barnes and Noble Nook Press, and Archway Publishing. Authors simply aren’t relying on major publishers like they used to, and this factor is making Hachette hit the glass ceiling.


#2 Midnight Whimsy

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Posted 13 June 2014 - 02:38 PM

Way to play the "blame indies" card, Hatchette. The pool of authors looking for a publishing contract has hardly dried up. There's no shortage of authors that Hatchette could sign.

It would be more accurate to say that Hatchette can't compete or doesn't know how to compete in a rapidly changing market, where agile indie authors are pioneering the marketing techniques and strategies that work.

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#3 RC Lewis

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Posted 13 June 2014 - 06:03 PM

I don't know, MW. That might be true in some genres, but in something like adult Romance or NA—where indies are killing it—do you really think there are just as many good authors seeking traditional deals as there were six or seven years ago?

 

I don't really know a lot about this, but it makes a certain amount of sense in the abstract. Every reader is going to buy a certain number of books this year (or, rather, spend a certain amount of money on books this year). That's the pie. For a publisher to get a bigger slice of the pie—more of the dollars—they have to sway those dollars away from their competition. Lower prices is one of the most time-honored techniques for swaying dollars … balancing more purchases with lower revenue-per-purchase.

 

"Agile indie authors" have a huge advantage in their ability to dictate price and set it much lower than any traditional publisher does long-term. COULD traditional publishers sell their e-books for $2.99? And still cover their overhead and payroll, considering the slim profit margins of hard copies? An indie author isn't generally responsible for anyone's livelihood but their own, while publishers have employees … they're big machines that are trying to keep running. Could they switch over to POD for physical copies? Well, yes, but it hardly makes sense when many publishers are still getting a decent portion of their revenue out of brick-and-mortar bookstores (whether chain or local indies).

 

You can interpret it as "blaming indies," but I see it as simply acknowledging that indies are impacting the marketplace, drawing away pieces of the pie that used to get split almost exclusively among the (then) Big Six publishers. Do they need to find ways to adapt? Sure. Does that need to include caving in to Amazon's demands, essentially giving them a piece of the publishers' existing pie slice? I don't know about that.

 

Forgive me, but I get really tired of hints of "us vs. them" in these arguments. Traditional publishers aren't evil incarnate, and indie authors aren't angels and light. Strengths and weaknesses on both sides. Struggles to be found on both sides. Successes to be found on both sides.

 

As for Amazon vs. Hachette specifically, they're both businesses looking to do what's most profitable for each of them. Personally, I have my own biases about where the line of "reasonable business self-interest" gets crossed. Since I know I'm biased, I try to stay out of it.


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#4 AQCrew

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Posted 16 June 2014 - 09:39 AM

Great post, RC.

 

Unfortunately, the traditional vs. indie divide and subsequent arguments are here to stay, especially when publishers are specifically attributing the blame for being unable to grow their sales on indie authors (not price or the fact that they allowed themselves to derive 60% of their revenue from one single source).  There is no hinting there.  That's a blatant an expression of blame -- and definitely a wowzer did-they-just-say-that?! moment.   

 

Is it actually true?  To Whim's point, the answer seems certainly a bit more complex (again, price point, penetration of ebooks within the reading market, publishers failure to diversify their revenue sources, the relentless flood of discounted ebooks which undermine retail sales throughout entire publishing market) than relying on the blame game.



#5 Midnight Whimsy

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Posted 16 June 2014 - 12:57 PM

RC, I don't think there's any legitimacy in Hatchette saying they can't grow their business because of indie authors, any more than if they said they can't grow their business because HarperCollins sells books too, or any other competitor for that matter. Yes, indie authors are competing and taking market share, but a company can't point at a competitor's success and claim that's the reason they themselves are not succeeding. Not if that company expects to turn things around.

 

Indie authors have more flexibility when it comes to pricing, but only compared to big publishers' refusal and/or inability to be flexible. While the flood of super cheap or free indie books is considered a problem by many (I'm not sure on that one), there's no clear data that suggests readers will eventually refuse on the whole to pay a reasonable price for an ebook. The people who refuse now are the ones who previously shopped at second-hand stores; they are bargain hunters whether cheap ebooks exist or not. 

 

The money publishers make off ebooks is almost entirely profit (HC leaked some data on that awhile back), so there is no reason they can't lower their ebook prices from $13.99 to $6.99 or $5.99 to sell more units; they have no production costs as with hardcopies. In fact, some publishers have already begun to experiment with lower ebook prices. Some have been trying BookBub ads. Some have been trying digital-only imprints releasing several books a month to keep up with the fast-producing indies.

 

I have no idea if Hatchette is trying any of these. But if they are failing to keep up with the market, it's not the market's fault. If they are failing to keep up with their competitors, it's not their competitors' faults. While there may be a certain amount of cause and effect in play, when it comes to blame, that lies solely with Hatchette. Even if Hatchette's comment wasn't meant to be blame, as you suggest, the attitude behind the comment is the same: "It's not our fault."

 

As for the pool of authors interested in traditional publishers being detrimentally small, the large majority of self-published authors tried querying before they self-published, they plan to query after self-publishing, or both. Even if the pool is dangerously small, consider why indies are turning away from publishers -- largely due to the standard contract terms. There is nothing stopping publishers from opening up contract negotiations for copyright duration and reversion, non-compete clauses, royalty percentages, guaranteed marketing, author input on editing or covers, and so on. Virtual hordes of indies would come knocking.

 

M.W



#6 sharpegirl

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Posted 16 June 2014 - 12:59 PM

Except the article said the "primary" reason. Indicating that there are other, secondary reasons too even if they don't explicitly name them. Do I agree that it was a bit awkwardly worded? Sure. But wouldn't a self publisher be proud that you as a community has done so well on your own that a major publisher is seeing that they aren't getting as many awesome manuscripts because they're being self published? 

 

As for playing the blame game, aren't you doing the same thing by saying that Hachette was irresponsible by having a 60% revenue with Amazon? I mean, how do you expect them to control that? A publisher can't control how or where people buy books. You're ignoring that Amazon has a huge monopoly on the market and is using that monopoly to punish companies they don't get what they want from. Most publishers probably derive half of their sales from Amazon. That's why Amazon's tactics are so concerning to the publishing industry, because its monopoly gives it an unfair advantage so it can do things like this. 

 

In my opinion, the trade. vs self mentality is damaging and honestly, petty and unrealistic in this new age of hybrid authors. Sure, there are evangelists, so to speak, on both sides, that like to whip the communities up into frenzies and will tell you "This is the way to go!" or "No, this is the only way" and their voices are always the loudest, but in my experience, most people--trade and self published--who don't have that us vs them mentality are pretty cool and if it's a book they're interested in and professionally presented, they'll buy it. 



#7 Jennie

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Posted 17 June 2014 - 08:47 PM

Amazon has the majority market share, not a monopoly. That's an important difference. They have a little over 50% market share of all books sold *online* by the last count I can find.

 

I think what Crew is getting at is the fact that there was absolutely nothing stopping Hachette or any of the other major publishers from pioneering ways to sell their own books digitally, directly to readers. But they didn't and, as far as I know, still do not. And they resisted that trend until it was clear they had lost.

 

I think it's important to note that there are really two discussions going on here: Amazon as a retailer and Amazon as a conduit for authors. They're obviously related, but not exactly the same thing. It's interesting to me that Hachette isn't talking about Amazon's retailing habits in that quote. They are talking about the opportunity e-publishing has given authors across ALL sites. That's precisely what makes this quote so frustrating to me personally. I'm glad they recognize that their own royalty structures and benefits (marketing, editing, etc) are no longer cutting it for certain types of authors. I don't know if they proposed any ways to fix this problem, but I haven't seen many solutions coming from big publishers. I've seen a lot of complaining about someone else being more innovative and agile than they are at their own business, and that doesn't give me, as an author, a whole lot of faith in them.

 

I'm frustrated that Amazon is behaving the way it is towards Hachette because it hurts those authors. I just don't have much respect for companies that continue to blame other, more innovative companies for their own problems.


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