An interesting Publisher’s Weekly article came across my Twitter feed late last week: Profits Fall 48% at Penguin on 4% Sales Decline. I tried running some figures, and it doesn’t quite add up:
- A 4% decline to £441 million implies last year’s sales were about £460 million.
- A 48% decline to £22 million implies last year’s profits were about £42 million.
- That means profits declined £20 million on a sales decline of £19 million!
The above numbers suggest that margins cratered, overhead soared, or a combination of the two. The CEO partly blamed the decline on a lack of blockbuster titles (“none of them were Fifty Shades of Grey”) and “softness in the more profitable backlist business.” To me, both of these points were interesting:
- Both Fifty Shades and The Hunger Games were called out as “[siphoning] sales from other titles.” Correct me if I’m wrong, but didn’t these both start out as indie works?
- A lot of mid-list authors like Joe Konrath have reclaimed their backlists from publishers, and are doing quite well selling both old and new titles as eBooks, for reasonable prices.
If my assumptions are correct, then Amazon is the least of publishers’ problems, no matter how they want to spin it.
A final point: the article mentioned that eBooks now make up 19% of Penguin’s sales. Spin that.
Speaking of Amazon and indies, not all seems to be chocolate and roses there, either. According to iReaderReview, which is usually insightful when the lead blogger isn’t indulging his admitted anti-Apple prejudice, suggests that Amazon is gaming the best-seller lists to downplay $1 books.
In 2011 $1 books were beginning to really take over. … In 2012 this suddenly [ground] to a halt. Lots of indie authors have covered this and talked about a shift to ‘Top Grossing’ instead of ‘Best Selling’.
If this is indeed what’s happening, I must admit to mixed feelings. Sure, at $2.99, everyone makes more per-unit. One point that iReaderReview makes, over and over again, is that the combination of eBooks and easy self-publishing puts enormous downward pressure on prices. As an author, I’d much rather get $2.10 per sale than $0.30. On the other hand, I’ve often said that 99¢ is an impulse buy for most people. If I knew I’d get seven times the volume, I’d definitely go for it. But with 99¢ books largely disappearing from the best-seller (or top-grossing) list, it doesn’t sound like the 99¢ titles are selling in the numbers needed to overcome the higher-priced titles. I’ll definitely play with pricing once I recoup my (small) expenses associated with White Pickups (mostly the cover art), just to see what happens.
And, with any luck, I’ll be so busy working on Pickups and Pestilence that I won’t be obsessively checking the sales figures every time I turn around…