An innocent story with dramatic implications
It’s a holiday weekend in America, but they’re working in the UK. A story posted by The Bookseller today really caught my eye.
It says that Hachette UK is seeing “nearly half” of its sales taking place online. The report, built around data provided in an annual letter by CEO Tim Hely Hutchinson to authors, reports that ebook sales are about 25% of Hachette’s sales. That implies that a third of the print sales (another 25% of the total) are taking place online.
Furthermore, Hutchinson reports that ebook sales for fiction are at 30%, with “some genres and authors” at over 50%! If you assume that the ratio of print sales online remains a third for those subsets, you calculate that for fiction overall online sales are about 53% and for some genres and authors they are close to two-thirds!
This is the first time I’ve seen (or noticed) a breakdown that is “online versus offline” rather than “digital versus print”. I’ve argued for sometime that online versus offline is the more meaningful distinction in sorting out the power equation between publishers and Amazon. (And that’s why we’ve got both Amazon and Nielsen talking about that very topic at our Publishers Launch Frankfurt conference.)
The chances are that Amazon has 80% or more of the online sales in the UK (NOOK, which takes approximately 20% of the ebook sales in the US, is much less powerful there.)
This is earthshaking. I am not sure enough people in our business are seeing it that way. Or maybe they don’t talk about it much because it’s scary and there’s not much they can do about it. I didn’t see the letter, just the report of it, but Hutchinson’s expressed concern was that the total value of print and digital sales is showing a tendency to decline over time. There was nothing in the article and appears to be nothing in the letter about the implications of the sales ratios it reveals, but start with two things:
1. Amazon can pay double the royalties of a publisher on ebooks without breaking a sweat and, frankly, can do the same on print books they sell themselves. Do the math. That means they can often sign an author and deliver as much revenue from just the sales they deliver themselves as a publisher does with the whole UK market.
2. If you were an intermediary delivering half of somebody’s sales — in any business — wouldn’t you demand a better deal than anybody else gets by a considerable amount?
I wouldn’t presume what the Hutchinson letter reveals is unique to Hachette. This is a powerful sign that the changes we’ve seen in the book business over the past few years are merely prologue.