Two in one week: S&S reports that it’s making more money on lower sales, and like Penguin, names digital profitability as the reason.
This is obviously not the right forum for me (or anyone) to stage a debate with Carolyn Reidy (who I’m going to go on record and say is smart, honest, straightforward and genuinely a pleasure to do business with), but I have to say that this bit raises more questions than it answers:
For those agents and authors who see declarations of digital profits and wonder why ebook royalties are not higher, Reidy replies, “They’re saying ‘more profitable’ than during the recession…. I wouldn’t say exactly that our margins are significantly better than before the world went through an econmic [sic] cataclysm.” (In 2009, they had operating income of just $42.5 million on sales of $793.5 million; in 2010, they had sales of $790.8 million and operating income of $64.6 million.)
“I wouldn’t say exactly that our margins are significantly better” could easily be read as “I would say that our margins are at least somewhat better,” which continues to beg the questions raised by Penguin’s similar announcement earlier this week.
On a deeper level, though, the real issue is not whether we should be comparing performance to cataclysm or to the healthier business that preceded the recession. The real issue is: have authors similarly found a way to make more on less in this environment? Are your individual authors “doing better” overall? Do they have increased profits despite lower sales revenue? If the answers are no, then you have to ask: why are publishers openly telling the world that they’re finding increased profitability via digital business while essentially telling authors that authors have to accept less in a digital world?
Food for thought.