Simon & Schuster reports increased profits thanks to digital sales
May 5, 2011 | 12:07 pm
We’re all used to the idea that publishers are struggling to stay afloat in this brave new e-book-and-pirate-infested recessionary world. This is why they can’t pay greater royalties on lower-marginal-cost e-books, and why they want to keep their e-book prices high so consumers don’t come to devalue e-books (or to protect sales of hardcovers, whichever explanation you prefer).
But every so often publicly-held corporations are required to let the public know how they’re doing, and Simon & Schuster just announced that, thanks to e-books, its recent revenues are up considerably.
For the three months to 31st March, Simon & Schuster’s operating income before debt and amortisation (OIBDA) more than doubled to $7m. The publisher said it was driven by lower shipping, production and returns costs because of the increase in digital sales.
On FutureBook, blogger Agent Orange notes that this makes publishers’ refusal to increase royalty rates on e-books look even more transparent.
The conglomerates dog in the manger approach to the issue of e-books is doing them no favours. The day is fast approaching when a truly major international author will realize they are going to be greatly better rewarded by being published by Amazon because they will offer them a sensible share of the revenues they generate.
I would say that it also suggests publishers may be a little too worried about piracy—judging by those reports, at least one of them is still doing fine even in the middle of a recession—and that if they were to fiddle with their e-book prices a little to find a more optimal (which is to say, lower-priced) position on the price-demand curve they could do even better.
Which in turn suggests that perhaps publishers aren’t quite so likely to be driven out of business by the new way of doing things after all.