Publishers reap benefit of e-book boom

By SIMON DUKE FOR MAILONLINE
Updated: 03:58 EDT, 1 March 2011

The e-book boom may have heaped misery onto traditional booksellers but for publishers it has provided a much-needed, and somewhat unexpected, boon.

Instead of decimating the industry - as the music business was destroyed by the download - the digital revolution has fired up a books market that has long since sunk into stagnation.

For the time being at least, publishing houses are reaping the benefits as readers increasingly turn to their Kindles, iPads and other handheld devices.

Two of Britain's best known publishers yesterday underlined the huge opportunities that exist in an era when their entire back catalogue can be accessed through the flick of a finger.

The venerable Penguin unveiled record profits of £106m for 2010 as sales of e-books leapt by 182%.

And at Bloomsbury, best known as the home Harry Potter, the rise was even more dramatic. Boss Nigel Newton predicted that 2011 would be 'the year of the e-book' after his digital turnover surged nearly twenty-fold last year.

Indeed sales of these virtual tomes are growing so quickly that they now account for almost a tenth of Bloomsbury's print sales.

The 'extraordinary' rise of the ebook is even more pronounced in the US, where 15% of the company's sales are now in electronic form. It is little wonder that bookstores, such as the Borders chain in the US, are being trampled as readers take their custom to download stores.

Analysts at Forrester Research estimate that US e-book sales will triple to £1.7bn by 2015.

Although the 'cover' price of an e-book is lower than a traditional hardback, publishers can claw this back through lower production and distribution costs.

Indeed, the profit margin on an e-book is slightly higher than for their physical forebears, according to Dame Marjorie Scardino, chief executive of Penguin-owner Pearson.

But there is no certainty that the internet will remain a rich profit pool for publishing houses.

Apple recently announced an onerous set of charges for media groups looking to sell subscriptions through its applications stores.

If the e-book market reduces to a small number of devices, publishers may have to accept less favourable terms or risk being squeezed out entirely.