E-Books Benefiting Publishers

Well who would have thought it...my prediction was actually correct?

You may have read some of my earlier posts and research about eBooks and how they are or will affect publishing as a whole. If not, well, get to it! The publishing industry is changing, and quickly-- authors, potential authors, even readers would be wise to keep abreast of the situation, because anything that affects our beloved books is of great importance.

Recently on Publisher's Weekly, Jim Milliot reports that Higher e-book sales bolster the bottom-line at the big five while curtailing revenue growth.

What this means, essentially, is that the industry is in a state of change. In any change there is always going to be some sort of milling about which will cause growth and actual progress to stagnate or fall off. Imagine moving out of your house. There is always that initial moment where everyone is running around without actually doing anything, generally accompanied by quite a bit of hair-tearing or crying. Then there's the friend who showed up with the coffee, and things begin to be a bit easier. Things really get going when the friend with the sandwiches and bottles of water arrive. And when the friend with the truck makes their appearance, it's all gravy.

That's what is happening with eBooks. We're probably at about the sandwiches and bottled water stage. When the truck gets here, we'll see an overall spike and increase across the board in terms of revenue, output, and authorship. At the moment,

"more than one publisher (or parent company) said higher sales of e-books is boosting its bottom-line—even if e-books are curtailing revenue growth—and should lead to higher margins in the future."

Initially book-lovers were worried that eBooks would kill the tangible, paper book. But really, even as popular as eReaders have become and as quickly as digital media is expanding, the group of traditionalists and the amount of money to be made off of physical books is too great for anything to happen to them yet. Do a survey of people who read books frequently, and see how many answer the question about how books smell. You can't get that from a digital book.

After conducting some of my own extensive research into the matter, I came to the conclusion that the industry would make way for digital media and then find a balance between the two. And that, ladies and gentlemen, seems to be exactly what is happening. Milliot's article quotes Simon & Schuster's parent company CBS as observing:

“underlying publishing results reflect margin growth associated with an increase in the mix of revenues from digital book sales, which have lower production and distribution costs than print books. As the publishing business continues to transition to an increasing mix of digital book sales compared to print book sales, profit margins are expected to continue to grow.”

Let's face it, physical books are inefficient to publish. The paper and binding, the production, the loss of revenue with each box of books that doesn't sell and gets shipped back to the publisher at their own cost, any defects, any damaged books...it still makes them worth it. And now with digital media cutting down on those costs, it will become easier to both publish books through cost-effective electronic means as well as use those savings to bolster physical production lines.

It's not all good news in Milliot's article, though. Several publishing companies have taken hard hits in terms of revenue and growth, and backlists continue to slide (for those who don't know, a backlist is the list of all books that a publisher has released in the past and are still on sale; the frontlist includes books that are current for the publishing 'season'; and discontinued books are, of course, no longer sold by their publisher and have been taken off the backlist). Legal issues still being worked out due to eBooks are also proving costly, so it's not just the physical book that is causing problems--

"Penguin Group had the largest decline in earnings in the year, which it said had to do with the slowing sales of backlist titles. Parent company Pearson ate the charges for the e-book legal costs in the year totaling £32 million—a figure that also included expenses tied to the formation of Penguin Random House."

Still, the conclusion is as of yet positive. HarperCollins reports leaps upwards in terms of sales and earnings, and News Corp. views eBooks as positive, not negative, for publishing and the business of books. The company claims,

“as our digital products continue to account for more of our business, we expect to benefit from increased profit contribution and improved working capital dynamics due to diminishing physical plant requirements, inventory and returns related to our print business as well as faster payments for e-books.”

Check out the original article and some of the charts that Milliot provides on the revenue and return of the publishing companies. And put down that picket poster claiming It's the End! The end of books is far, far from being a reality.