Digital audio, ebooks, and bestsellers bolster the industry against varied declines in print and education sales
As we roll into May, we’re now seeing the earliest tangible effects of coronavirus on the biggest publishers as they file their latest quarterly earnings reports (January–March 2020).
HarperCollins, owned by News Corp, saw profits increase on a modest sales decline of 2 percent. Their earnings report says the revenue drop was “primarily due to the difficult comparisons to the prior year, which had higher sales of Rachel Hollis’s titles.” Hollis is the bestselling author of Girl, Wash Your Face and Girl, Stop Apologizing, which were two of the top 10 print bestsellers in the US in 2019. An increase in HarperCollins’s audiobook sales helped boost overall digital sales by 3 percent compared to a year ago. In the current quarter, they say, “Online sales have been strong in recent weeks and ebooks have returned to growth.”
Bertelsmann, parent company of Penguin Random House—the world’s largest trade publisher—reports a first-quarter decline of 2.7 percent. CEO Thomas Rabe said, “The 2020 business year, with the economic fallout from the coronavirus pandemic, will be a challenge. We started the year well but have been feeling an increasing impact on our businesses since March.” The company expects negative effects on their earnings in the months ahead, but on the bright side, PRH is seeing increased demand for children’s and YA books, as well as an increase in online sales of print books. Moody’s forecasts that Bertelsmann’s full-year sales will fall 15 percent and that profits could decrease by around 30 percent—with a full recovery not occurring until 2022. (Note that Bertelsmann owns not just book publishing operations, but advertising and media businesses.)
Hachette’s parent company, Lagardère, reports that revenue declined by 12.5 percent during the first quarter. Sales were up by 5.6 percent in January and February, and then they nosedived 19 percent in March. The company anticipates a 45 percent sales decline in April and an overall profits decline of 35–40 percent for 2020. But in good news for US-based Hachette: Lagardère’s drop in revenue is mainly due to the situation in France, where bookstores closed during the second half of March. An increase in digital audiobook sales delivered 6.8 percent growth in the US, alongside the success of The Witcher series. Meanwhile, Hachette UK saw revenues decline by 5.5 percent.
For the first quarter, US-based Simon & Schuster has posted a 4 percent revenue gain due to digital sales growth. Adult books were up 8 percent, and digital audio rose considerably. Ebook sales were up 13 percent, with sales now running as much as 50 percent above this time last year. Late CEO Carolyn Reidy said, looking ahead to second quarter, “What is most heartening is that it’s down less than we thought would happen. … You could have envisioned being down a third of your sales, and that’s not what we’re seeing. I find that heartening and actually very positive.” Simon & Schuster did move up big titles by Stephen King and Jennifer Weiner, which has helped sales. The difficulty, Reidy said, is in selling the midlist and bottom of the list. Those books that require media attention were moved to the fall. Note that parent company ViacomCBS is still planning to sell off Simon & Schuster as soon as the market stabilizes.
Educational publisher Houghton Mifflin Harcourt saw a 2.4 percent sales decline during the first quarter as compared to last year. But it was a result of lost licensing revenue, expected to come later in 2020. Regardless, the company’s stock has declined significantly due to spending decreases in education when schools closed. HMH hopes for recovery in the fall with the new school year, but of course when and how schools restart is an open question. They say, “Our current assumptions are that businesses will reopen for selling and school districts will gradually resume purchasing during the second quarter of 2020 and most or all will become fully operational, either in person or virtually, by the third quarter of 2020.”
UK publisher Faber says print sales are down by a third year over year; however, digital sales are increasing. During a Twitter conversation with UK’s The Bookseller, CEO Stephen Page cited the BBC TV adaptation of Sally Rooney’s bestseller Normal People as offering revenue stability.
According to the UK’s Times, UK publishers’ sales are projected to drop by between 30 and 40 percent this year. Publishers Association chief executive Stephen Lotinga told the Times (subscription required) that the declines could get much worse if economic conditions fail to improve. UK publishers may be in more economic jeopardy than their US counterparts, as the UK industry depends on exports for more than half of its sales.
Bottom line: Big publishers are enjoying increased digital sales, with audiobooks as the bright spot and ebooks possibly gaining after a years-long decline. Bestselling series and authors can be a significant factor in steadying sales, as with Hachette’s The Witcher series (now a popular Netflix show), or Rooney’s Normal People.
Jane Friedman has spent her entire career working in the publishing industry, with a focus on business reporting and author education. Established in 2015, her newsletter The Bottom Line provides nuanced market intelligence to thousands of authors and industry professionals; in 2023, she was named Publishing Commentator of the Year by Digital Book World.
Jane’s expertise regularly features in major media outlets such as The New York Times, The Atlantic, NPR, The Today Show, Wired, The Guardian, Fox News, and BBC. Her book, The Business of Being a Writer, Second Edition (The University of Chicago Press), is used as a classroom text by many writing and publishing degree programs. She reaches thousands through speaking engagements and workshops at diverse venues worldwide, including NYU’s Advanced Publishing Institute, Frankfurt Book Fair, and numerous MFA programs.
