How Much Money the Biggest Publishers Actually Make

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

pub lunch pub slide

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

profit margin chart 640

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.

7 thoughts on “How Much Money the Biggest Publishers Actually Make

  1. Magda Jozsa

    It’s nice that publishers and retailers are all fighting for bigger profit margins, but they seem to forget that without the writer there would be nothing to sell and no profit whatsoever for them, yet in all this greed for more profit by publishers and retailers, the writer who has done all the work, receives very little for the books everyone else is squabbling about.
    If anyone deserves to profit from their books, it should be the authors first and everyone else second. What, I wonder, would happen if all the authors stopped writing – where would that leave the publishing industry and the likes of amazon. Interesting to think about.

  2. JamieT

    So, Big 5 publisher earnings have increased 25% since 2006. Wow! Business is good, sounds to me like Amazon’s squeezing of Hachette isn’t such an \evil\ act after all, unless you are telling me this 25% INCREASE in profits was equally shared with the Big 5’s authors…….lol.

  3. Theresa M. Moore

    The headline of the article denotes “the biggest publishers” so yeah, there are only 5. The others do not earn as big a profit margin. The profit margin is meant to increase authors’ royalties, too, amid all that push-pull. But now the number is skewed by Amazon’s drive down of prices. Eventually the big 5 will figure out how to wean themselves from dependence on a company which does not care how much authors make, only its goal of cornering the market. This is impossible, but the effort is affecting how many ebooks are being sold and when. Remove Amazon from the equation and you will have a much healthier picture of the statistics.

  4. BarbaraM

    Just a few thoughts to add to the conversation. Not all books are profitable. The bestsellers or strong backlist books carry the company. Successful books support authors well. Many advances are paid to authors for books that are either not very good or good but not very marketable while better authors go unpublished. That bothers me more. On the other hand–it was no secret that bookselling is not a high margin business and that booksellers make their profits on sidelines such as gifts and greeting cards and other items their customers like. During their first several years I wondered how Amazon stayed in business and was not surprised when I found out they were not profitable during that time. Ironically, other businesses give the impression they are in trouble in that case–but Amazon seems to be a success even when they have shown no profit or very low % profit. Personally I think if a company covers its expenses and can grow or change when necessary, high profit may not be necessary. Also less than 1% of multi-billions can total more than 10% of one billion or less–apples/oranges. Harry Potter books would sell new on Amazon for about what it cost for a bookstore to buy it wholesale. Books bring Amazon customers for their other products. If they choose to undersell those products too and minimize their profits I do not feel sorry for them. They make it in volume. Customer experience is good.

  5. Deborah Smith

    Agree with Barbara. To simply look at publisher earnings is a mistake. Most books barely earn their advance back and create very little if any profit for the publishers (easy to note by listening to all the stories from published authors don’t sell many books.) The bottom line is generally dependent on huge hit franchises like The Hunger Games and Harry Potter. Reports on these franchises making a crucial difference in annual income are regularly seen in the trade publications. Publishing remains a high risk business with a low profit margin on almost every \product\ sold. Amazon, in comparison, is not in the business of relying on book sales for profits, and has willingly lost money on discounted books in order to lure customers through the doors. This has seriously damaged the ability of publishers and booksellers, who rely solely on book sales, to compete.

  6. Bryan Koepke

    There are no surprises in the charts. The recession initially hurt big publishing just like every other industry, but they have all rebounded. The increase in profit margin is due to 3 things – less author marketing, a new tighter business model, and jumping into eBooks. I’d bet their raises to middle to lower end workers have decreased as well.

  7. Bill Peschel

    This analysis ignores that indy writers have about a 30 percent market share, so it’s not the recession that’s biting, it’s increased competition from writers (some of whom are former NY-published writers publishing their old books).



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