News Corp logoNews Corporation, that big bouncy Murdoch baby, demonstrated just how badly the Big Five publishers really need rescuing from Bezos’s brutal bullying bugbear Amazon – by delivering quarterly results well above expectations, buoyed in part by strong performance at publishing unit HarperCollins. According to the results release, News Corp’s performance for the first quarter of its 2015 financial year included “revenues of $2.15 billion compared to $2.07 billion in the prior year,” and “the majority of the revenue increase reflects strength in the Book Publishing, Digital Real Estate Services and Digital Education segments and the inclusion of the results of Harlequin following its acquisition in August 2014.”

The same quarter also saw “Total Segment EBITDA of $170 million, a 21% increase as compared to $141 million in the prior year,” and once again, “the year-over-year EBITDA improvement was driven primarily by strong revenue performances in the Book Publishing, Digital Real Estate Services and Digital Education segments.”

Reuters’ analysis of the results underlined the contribution from book sales: “Revenue from book publishing – which accounts for about 19 percent of total revenue – rose about 24 percent to $406 million in the first quarter, helped by higher book sales at its HarperCollins unit.” Analysts apparently had revenue closer to $2.09 billion.

This, of course, reflects the same kind of pernicious business environment that is driving fellow Big Five publisher Hachette into its back-to-the-wall death struggle against Amazon. And that compels publishers to underpay their oh-so-prized authors. O News Corp, it makes my heart weep bitter tears to see you brought to such a grevious pass …


  1. Paul, as card-carrying Amazon fanboy, you fail to get the point of this news. Yes, many major publishers are doing well. That means that either two scenarios are likely to follow:

    1. Those high profits give established authors leverage to call for higher royalties, particularly on ebook sales, and offer new authors get a better shot at being published, since publishers have more money to take risks. I call that the good scenario.

    2. Amazon uses its retail muscle and bullying (delaying book shipments) to grab a major share of those profits. Authors, new and old, won’t get a penny of that money. Most will go to grow other areas of Amazon’s sell-everything business model. You may differ, but I call that the bad scenario. I don’t own a single Amazon stock. You act like you’ve got your entire lifesavings invested in Amazon.

    Keep in mind that these two are mutually exclusive. More money for Amazon almost certainly means less for authors. I must have said it a hundred times, if you’re an author, Amazon is not your friend. Amazon has no friends but Amazon.


    Amazon’s agenda isn’t likely to benefit consumers with significantly lower prices either. I suspect it doesn’t want ebooks retail prices to get much lower, since that means every ebook retailer would be selling for less. It wants more kickbacks for itself. The hints I’m picking up are that Amazon wants publishers to pay for more visibility online. Their books will appear on more pages and closer to the top in searches. Smaller retailers like Kobo won’t be able to make similar demands and will fade or even go out-of-business.

    Those kickbacks are a huge negative for most publisher and independent authors. There’s only such much visibility on Amazon’s webpages to go around and putting a Simon & Schuster book near the top of a search result may mean a book from an ordinary author slips back one, two or more pages. By resisting those forced kickbacks, the Big Five publishers are inadvertently helping small publishers and independent authors. Product placement should be driven by popularity not kickbacks.


    Keep in mind that, given the cost of hosting and distribution, the natural royalty rate for ebooks should pay publishers and authors in the 70-80% range. Apple’s been doing quite well paying 70% for music for about a decade and costs of these services are coming down rapidly for much the same reason the cost of various cloud service are free or getting cheaper.

    Amazon, however, is sending some clear signals that it intends to pay no more that 50% royalties. That’s what it told German regulators. That’s what it has already said it would pay its crowdsourced authors. Since those authors are signing away a host of their rights for five years, that 50% is likely to be what Amazon considers high-end royalties. If you refuse to sign away those rights and also publish with B&N and the iBookstore, Amazon almost certainly intends for your royalties to be in the 35% range. And note that’s already what Amazon pays for ebooks priced outside the range $2.99-9.99.


    In short, if Amazon wins its battle with the Big Five, the most likely scenario is:

    1. Those large-publisher kickbacks give Amazon enough advantage to drive most competitors out of the market.

    2. Owning even more than its current 60-70% of the market, Amazon can drive royalties down to the 35 to 50% range. You’ll starve yourself and work two years on that $9.99 ebook to earn from $3.50 to $5.00 per sale. For mere pennies, Amazon will process a credit card transaction, download a file, and then pocket from $5.00 to $6.50. You might call that fair. I don’t.

    3. With the major publishers reluctantly buying all the visibility, your ebook will virtually disappear and sell poorly. Even searching for it by title may display similar books from major publishers but not your book. That’s not hypothetical. I’ve seen Amazon do precisely that. I had an Amazon lawyer defend that practice in a conversation with me.

    Those who follow Teleread are free to choose, but a do think that there’s something to be said for setting aside our bigotries and envies about large publishers and favoring the Big Five in this dispute.

  2. @Michael — I’m glad to see that I’m not the only one who sees Paul as an Amazon fanboy. When I see his name as the article author, I often don’t bother reading any further because I already know that it will be praising Amazon and bashing everyone else.

    Also, Michael, you make excellent points. Alas, in the online world there are basically two camps: Amazon fanboys and everyone else. Those in the former camp will never be moved — Damn the facts! Full speed ahead!.

    Amazon deserves a lot of credit for its early years. It did “save” publishing when it became a powerful counterforce to B&N and Borders. But as it grew it became less savior and more threat, especially when it became a direct competitor as a publisher and when it became powerful enough to hand a small publisher a contract and tell the publisher take it or leave it.

    It will be interesting to see how the dispute between Hachette and Amazon resolves because if it resolves in Hachette’s favor, other publishers, big and small, will insist on similar terms; if it resolves in Amazon’s favor, it will be only the first step in the erosion of publisher power and all publishers will be subjected to travel the same road.

    As to which is the best for authors, that remains to be seen. Over the years, publishers have been less vigilant in enforcing their contractual rights than they could have been, although the advent of ebooks has changed that. OTOH, Amazon has always been ever-vigilant and if it prevails, its terms for market access may become draconian.

    At least in the case of publishers, there are a lot of publishers, all of whom are competing for authors and books. In the case of Amazon, there is little to no competition and there may well be even less than little to no competition should it prevail in the current dispute. Then what?

  3. Where’s the big surprise that I’m an Amazon fanboy? I support anything that breaks the chokehold that the Big Five has on the publishing ecosystem in general, and right now Amazon is the best contender. If something more ethical and less aggressive than Amazon comes along and stands a chance of succeeding, I’ll likely switch to that. But right now I’m in the very good company of the UK Society of Authors and the UK Authors’ Licensing & Collecting Society on this – neither of them exactly pro-Amazon, and both absolutely critical of what the publishing establishment is giving authors to live on. Amazon has at least given authors one alternative, and traditional publishers still seem to be doing very nicely with Amazon around.

  4. Regarding Amazon forcing publishers to pay for better placement: You do realize, right, that every single large retailer in the world does this? When you see a product on the endcaps in your local store, it does not mean the store thinks highly of the product. It means that the maker paid the retailer an extra fee.

    I’m not at all an Amazon fanboy, but I find it a little weird when people say it’s the worst business in the world for doing exactly what every other retailer does.

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