E-book Sales Decline Continues

First-quarter financial reports filed by three of the country’s largest trade houses last week found the decline of e-book sales continuing. (A fourth company, Pearson, said in its quarterly update last month that Penguin Random House saw “reduced demand” for e-books in the first quarter; Pearson owns 47%of PRH.)

E-book sales at HarperCollins fell 23% in the quarter ended Mar. 31, 2016, compared to a year ago. HC CEO Brian Murray attributed the decline in part to extremely strong e-book sales of American Sniper and the Divergent trilogy in 2015. He also noted that sales of print books have been up for the first nine months of HC’s current fiscal year (which ends June 30) compared to the same period in fiscal 2015. Murray said the market seems to have found an equilibrium between print and digital sales, which he believes is a healthy thing. For the quarter, revenue at HC fell 10.9% and EBITDA (earnings before interest, taxes, depreciation, and amortization) declined 35.7%. Murray expects results in the fourth quarter to improve.

First-quarter e-book revenue at Simon & Schuster was down slightly in the quarter, CEO Carolyn Reidy said, but sales of digital audiobooks were up by double digits. Reidy said she believes e-book sales will finish 2016 down modestly, while sales of digital audiobooks will post a solid gain. Overall, Simon & Schuster had sales of $145 million in the quarter, flat with the same period in 2015. The company did manage to boost profits by $1 million. S&S’s children’s division had a strong quarter, with sales up 23%.

Revenue at Houghton Mifflin Harcourt’s trade division dropped 6.8% in the quarter, and its loss increased compared to the first period of 2015. HMH blamed the revenue decline on lower e-book sales as well as a drop in e-book subscription revenue. The decline in e-book sales was attributed to fewer movie tie-ins. Sales of cookbooks were up.

First-Quarter Results, 2015–2016

($ in millions)