In a sister post to this one, I’ve discussed the Amazon-Hachette dispute more generally. This post looks at one specific and underaddressed issue: namely the financial aspects of the current brawl.
It’s pretty clear why the Big 5 Publishers are scared of Amazon. The company is massive, with such a huge revenue advantage that it’s in a different league altogether. But, as the saying goes, revenues are vanity, profits are sanity … and the simple truth is that the Big 5 Publishers are much, much more profitable than poor old Amazon. The infographic below tells you more – but the next time you hear publishers talking about Amazon the way dairy farmers complain about Tesco, it’s worth remembering who ended up with the cream.
Please feel free to reproduce this graphic – just link back to us in your post or article. Many thanks!
Please note: There are data limitations preventing a properly detailed view of the accounts of any of these companies, and some assumptions have been made to obtain this data. Principal among those assumptions were that: the two publishers who do not report operating profits or margins (Macmillan and HarperCollins) run margins of 10%, or slightly lower than the average of their peers; and that Amazon’s lowly media margin applies, specifically, also to their margin on book retail. These assumptions, particularly the latter, are by no means incontestable, but do note that if Amazon is thought to be making excellent margins on its book sales, that would imply that the rest of its media business is horrendously loss-making.