Over the past 10 years, sales at the largest publishers in the world have leveled as the book industry felt the effects of recession and the ebook revolution.
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According to a new analysis from DBW partner Publishers Lunch, the worldwide revenues of the largest publishers except Macmillan have ranged from about $8.6 billion to $9.7 billion since 2006. Adjusted profits on those sales—before depreciation and amortization and omitting special balance sheet charges—have ranged from $735 million to $1 billion.
The PM 5-Publisher Index: Sales and Operating Earnings, 2006 – 2013
Data source: Republished with permission from Publishers Lunch. Figures on the chart are in U.S. dollars.
Following a period of growth, the recession hurt sales and profits at publishers Hachette, HarperCollins, Penguin, Random House and Simon & Schuster. The rise of ebooks then helped publishers maintain sales level but increase profits, the well-documented and oft-discussed result of ebooks being more profitable for publishers than their print counterparts:
Big Publisher Profit Margins
Data source: Publishers Lunch
This level of profit margin falls in the middle of the pack when it comes to industries tracked by the S&P 500 and also in line with “media” in general as tracked by the index of equities, according to a 2012 Business Insider report. That year, media companies tracked in the S&P 500 had a 10.1% profit margin. (It should be noted that the Publishers Lunch analysis did not consider depreciation and amortization, meaning that publisher “net profit” as measured in the Business Insider analysis would likely be lower.)
At the high end of the spectrum are software and pharmaceutical companies, which have margins in the 20% range. At the low end are retailing of food and staples and retailing in general, which have margins closer to 3% or 4%. By comparison, last year Barnes & Noble had a net profit margin of -2.3% and Amazon had a net profit margin of 0.37%.
The disparities between publisher profit margins and those of their primary retailers brings in to relief the current contract disputes Amazon is having with Hachette and other suppliers, which is about, among other things, which company should profit more from the creation and distribution of books.
For more detail on each publisher’s numbers, go to Publishers Lunch.