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Digital more than 10% of RH UK sales
31.08.11 | Charlotte Williams
E-book sales now account for over 10% of Random House Group UK sales, as worldwide earnings for parent company Random House surged despite a dip in sales.
In the first six months of 2011, Random House worldwide reported revenue of €787m (£697.3m), down from €791m (£701.0m) last year, according to figures from parent company Bertelsmman. However, earnings before interest and taxes surged from €40m (£35.5m) to €69m (£61.2m) during the same period.
In a letter to staff accompanying Bertelsmann's announcement, Random House Group UK c.e.o. Gail Rebuck highlighted the 25 Random House UK titles that have reached number one in the first half of the year. She said: "We closed the half year having met all our internal targets and are well ahead of our position at the same time last year."
Rebuck called for e-book sales to be included in BookScan figures, as e-book sales now account for over 10% of RHG UK sales. She said the company now has lifetime sales of three million e-books and has 7,000 titles available digitally. In the US, Bertelsmann said digital sales now account for more than 20% of all revenues, with all Random House imprints making more than 27,000 e-books available worldwide.
Bertelsmann highlighted the bankruptcy of the Borders Group in February 2011 and Random House's adoption of the agency pricing model for most of its digital business in March 2011 as marking "material turning points for Random House". It said: "In the near- and medium-term future, customer risk will focus on the longer-term erosion of the number of retail space devoted to physical books. Risks related to e-books will focus on the issue of where title price points will settle. Other risks, including a soft economy and the potential for new competitors to enter the publishing market, will continue to be important."
The anti-trust authorities' investigation of market practices in the e-book market, with the EU Commission, British OFT and US Justice Department all investigating the agency model, was also highlighted as a legal risk.
Bertelsmann said: "It is not currently possible to predict the outcome of the investigations or any effects this may have on Bertelsmann."
In her statement, Rebuck added the industry was in "transition". She said: "There has never been a more exciting time to be in books." Looking ahead, she picked out autumn titles including Lee Child's The Affair, Terry Pratchett's Snuff and Robert Harris' The Fear Index as highlights for Random House UK.
She said: "We will see change, be that in the way we use insight to talk more directly with our consumers or the way we look at creating new content for this digital age. We will look for even greater collaboration and co-operation with our worldwide Random House colleagues and we will be brave when it comes to taking creative risks." She reiterated the company's goal to be the "leading creative publisher in the UK".
For the trading period, Bertelsmann group revenues reached €7.2bn (£6.38bn), up from €7bn (£6.2bn) on the same period last year. Meanwhile, group profit rose by €23m (£20.37m) to €269m (£238.37m).