Tag Archives: Financial Times

Briefly Noted

Briefly Noted | Luke Johnson – Publishers must seize the digital challenge

May 11, 2011 – 8:42 am

From nowhere a few years ago, e-books are now booming and their spectacular growth is likely to continue. In the US, digital sales are now at least 20 per cent of revenues for big publishers and could be a majority within a few years. Because electronic books do not involve printing, binding, storage, shipping and returns, the costs of delivery are much lower, so gross margins are much higher than they are for physical books.

While authors typically get 25 per cent royalties for e-books, rather than the traditional 15 per cent for hardbacks, publishers are not in fact fairly sharing the spoils with authors because their costs have fallen so dramatically. Penguin made £106m profit last year, a record, partly because e-book prices are still close to the price of printed books. But bestselling writers will soon gain the confidence to self-publish unless publishers are more generous with the digital dividend.

via FT.com / Columnists / Luke Johnson – Publishers must seize the digital challenge.

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News

O'Callaghan Out At Houghton Mifflin Harcourt

March 16, 2011 – 10:04 am

Barry O’Callaghan has resigned his position as CEO at Houghton Mifflin Harcourt. The current Chief Financial Officer, Michael Muldowney, who has been with the company since 2007, will replace him for an interim period.

Houghton Mifflin Harcourt went through a painful debt restructure in 2010 that saw shareholders wiped out. At the time O’Callaghan said that he was one of the worst affected.

O’Callaghan’s Riverdeep company built the publishing conglomerate by acquiring Houghton Mifflin and then Reed Elsevier’s education arm, Harcourt, before the collapse of credit markets in 2007.

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For our coverage of the restructure last year click here.

For more comprehensive coverage, The Financial Times, has the best background and context, while these Daily Finance stories from last year go into more details on the debt restructure.

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Briefly Noted

Briefly Noted | Pearson on collision course with Apple over app terms | Media | guardian.co.uk

March 1, 2011 – 9:09 am

Financial Times owner Pearson has put itself on a collision course with Apple over the onerous terms it is demanding for print app subscriptions, with chief executive Marjorie Scardino arguing that as competition increases publishers will no longer have to cave-in.Earlier this month Apple announced a new subscription service for magazines, newspapers and music bought through its app store, but offered tough terms including keeping 30% of subscription revenues and retaining control of customer information.

via Pearson on collision course with Apple over app terms | Media | guardian.co.uk.

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Publishing

Amazon Vs Macmillan

February 9, 2010 – 10:35 am

Amazon and Macmillan have reached an agreement over ebook pricing. The buy buttons which Amazon had removed as part of a dispute concerning new pricing arrangements have been re-instituted for all Macmillan titles.

The dispute arose when Macmillan CEO John Sargeant informed Amazon late January that he was proposing a new model for selling ebooks through Amazon. This new model would change the way that books were priced as well as shifting to an “agency” basis whereby Amazon instead of receiving a discount and selling the book at a price of their choosing, would sell books at a price set by the Publisher and receive a commission of 30% on that price.

The “Agency Model” emerged as a point of discussion during discussions between industry players and Apple in the run up to the lauch of Apple’s iPad on 26 January 2010.

RESOURCE READING
~ The Financial Times carries a piececovering the issues in the dispute today that is worth reading.

~ Macmillan placed a statement on US industry website Publishers Marketplace explaining their actions:

Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set the price for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.

~ Amazon’s response is freely available too:

Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books.

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