This piece details Harlequin's biggest problem, reliance on paperbacks:
http://dearauthor.com/features/essay...and+Commentary)
Quote:
Harlequin’s revenue started to decline in 2010. (There was a decline in 2008 but a booming year in 2009 corrected that.
2009: Revenue was $493.3 million. The annual report referred to Harlequin as “a real anchor” for Torstar.
2010: Total revenue of $468 million Collectively, Harlequin authors enjoyed a record
high 257 weeks on the New York Times Bestseller Lists, up 10% over
2009.
2011: Total revenue was $459 million, with revenue slightly down from 2010. Digital growth not offsetting declines in print revenue. Seven number 1 bestsellers. They digitized 5200 new and older titles.
2012: Total revenue $426 million. Excluding the impact of foreign exchange, revenue was down 6% from 2011 as growth in digital revenues was insufficient to offset declines in print revenue. 49 titles on the NYT bestseller list.
2013: Per the fourth quarter reports, book revenue was down $28.8 million in 2013 including a $4.1 million increase from the impact of foreign exchange.
Nearly every year, the decrease was attributable to decline in retail print and direct to consumer sales and while there was digital growth it did not offset print declines and soft sales in international segments. Europe was specifically identified.
Most of Harlequin’s print sales are in paperbacks–either trade or mass market. While trade has seen some declines, mass market print sales have plunged dramatically since 2006, the last year there was an increase in mm paperback sales. (I don’t have full numbers for each year since the AAP stopped making that information available publicly).
2007 – mass market sales are down 2.0% with total sales of $1.1 billion.
2008 – mass market sales are down 3.0% with total sales of $1.1 billion.
2009 - mass market sales are down 4.0% with total sales of $1.0 billion.
2010 – mass market sales are with total sales of $673.6 million.
2011 – mass market sales are down 40.9% with total sales of $545.1 million.
2012 – mass market sales are down 12%.
2013 – mass market sales are down 7.7%, to $373.1 million.
In summary, between 2007 and 2013, mass markets declined from $1.1 billion to $373.1 million. In contrast, ebook sales grew from nothing to be a quarter of trade publishing sales. This does not include the millions of self published copies sold in 2013.
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Note the total collapse of MMPB sales in 2010-12, right when the shift to near-cost ereaders turned ebooks into a mainstream product and most avid readers went digital. Almost two-thirds of the revenues gone digital.
Also of note, in the shift to digital, Harlequin went from one of the cheaper print sources of romance to one of the more expensive sources in digital. Not as expensive as their other tradpub competitors but noticeably so when compared to their indie alternatives, many of which came from Harlequin refugees.