Robert Fletcher: According to their Annual Report Harlequin Romance Publishing’s annual revenues have dropped $100 million dollars in the last 5 years. This article from Jack Perry cites these factors.
- Self-publishing increases competition – Romance is one of the biggest published categories in self-publishing. The onslaught of titles has crowded the marketplace and made it harder for traditionally published titles to be discovered. Plus, some of Harlequin’s authors have chosen to self-publish. “The proliferation of less expensive, and free, self-published works could negatively impact Harlequin’s revenues in the future.”
- Pricing competition is fierce – Driven, in part, by self-publishing, this genre is very price sensitive. There are thousands of novels priced at $0.99. But a huge group of free reads too. This has put pressure and made the $4.99 ebook seem high. “The low cost of digitization has also led to a proliferation in the number of digital titles available and increased competition.”
- Physical book shelf space is drying up– Romance continues to be one of biggest areas for mass market titles. But this format has been hit the hardest with the conversion from print to digital. Plus the bankruptcy of Borders (and compounded by losing the mall-based Waldenbooks division), the decline of BDalton (B&N closed them all over time) and the reduction of titles at Wal-Mart have all hurt distribution. “The significant growth of the digital book market in recent years has resulted in a contraction of the retail print market.”
- Amazon is always in the mix – Romance is one of the key areas for Amazon publishing and their Montlake Romance imprint. This has led to increased competition and also Amazon giving preferred placement and promotion on their site. “Online retailers have also entered into the book publishing business creating additional competition.”
- Direct to Consumer has changed – Harlequin has a much more developed D2C business than most publishers. The shift of this business from mail-order and print catalogues to the internet has opened up competition. “The decrease in North American revenues was the result of declines in the retail print and direct-to-consumer channels.”
- Competition from other media – This has always been an issue with book publishers, but the increase of accessibility (e.g. – watching movies waiting in line at the DMV) and the vast amount of options has cut into reading. “Harlequin competes not only with other book publishers but also with other providers of entertainment including television, music, movies, games and magazines.”
I’d rather be in PODG’s shoes than theirs.. their overhead is too high and their base is going away and I don’t think they can adapt. But, we’ll see because great management always can win.