HarperCollins acquisition of Harlequin and what it means for readers
Let’s start out with gathering the information that has been put out there publicly. HarperCollins has acquired Harlequin Enterprises from Torstar for $455 million. Harlequin will be a division of HC (as opposed to the Random Penguin which was a merger). According to one report, Harlequin will remain in Toronto where there are 350 employees. None of the news reports identify what will happen to the New York based Harlequin offices and employees. Part of Mira, HQN, and Teen Harlequin, and foreign rights divisions (among others) are located in New York.
Harlequin was initially acquired by Torstar in 1975 and Torstar has indicated that part of the proceeds will go toward its $158.5 million in debt. There is some suggestion that the remainder of Torstar will be sold yet this year.
I saw a number of people speculate that the sale of Harlequin had to do with Harlequin being in trouble financially and while Harlequin has seen decreasing profits in the recent years, it was still a healthy and profitable division of Torstar. The above article noted that Harlequin was the one bright star in the Torstar portfolio.
The Harlequin book publishing division of Torstar has long been a boon for the media company, which has struggled in recent years amid declining newspaper subscriptions and advertising sales, while adapting to a growing digital environment.
Torstar’s real issues were related to its newspaper side. This May 2013 article discusses Torstar’s troubling future in the digital age due to the decline of print ad sales. In November, Torstar had posted a $70.8 million loss in the third quarter.
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.
Combining the e-book sales for the adult and children’s trade groups, total sales of the format fell 1.0% in 2013, to $1.47 billion. E-books’ share of the adult trade market rose to 26.6% of all sales of companies that report to AAP in that category compared to 25.9% in 2012. E-books’ accounted for 10.9% of children’s sales in 2012 compared to 13.9% in 2012.
In summary, we have a major part of the Harlequin enterprise seeing a major decline while an increase in competitors including digital publishers, digital imprints from mainstream publishers, and self publishing.
In the press release, HarperCollins CEO has suggested that the acquisition of Harlequin will assist in an increased global presence for HC books. It’s important to note the last part of the quote:
The Harlequin name and rich heritage will be preserved independently, with the aim to leverage capabilities to bring the book-reading public more choices. Harlequin’s business has grown internationally, and will give HarperCollins an immediate foothold in 11 new countries from which we can expand into dozens of foreign languages for authors who choose to work with us globally.
I added the bold for emphasis because it’s the perfect segue into how the acquisition affects readers. I said on Friday when I heard the news that I was dismayed and the reason for this dismay is that Harlequin has very reader friendly policies and HC not so much. Let’s look at a table, shall we?
| Harlequin | HarperCollins | |
|---|---|---|
| Library | Same low price, unlimited lends | HarperCollins offers its complete ebook and audio catalog for library lending. HarperCollins allows only 26 circulations after which libraries must repurchase a new copy. |
| Coupons | Yes. | No. |
| Discounts | Yes, frequent discounting and sales | Yes, frequent discounting and sales |
| Pricing | Category books are priced under $5. | Most titles retail $7.99 or above. Digital imprint books vary in pricing. |
| DRM | None for Carina Press titles. Yes for Harlequin titles. | Yes except for a select few sold through All Romance. |
| Reader to Reader lending | Yes for Carina Press titles. No for other Harlequin titles. | No. |
| Available worldwide | Yes because generally all Harlequin contracts with authors were for worldwide distribution. | No. Each contract with each author is different. Authors may choose to hold or sell rights in different countries. And even if they do sell world rights sometimes the publisher will sit on them and not push the book out into other regions. This is known as geographic restrictions. |
There are some other intangibles. Harlequin has made a concerted effort to provide diverse content, offering Asian and African American protagonists. While having its own category line is problematic in some aspects, the Kimani categories have provided increased exposure to AA authors and protagonists. Harlequin in recent years has included multi ethnic characters outside the Kimani line.
Harlequin is also in a unique position in that it is one publisher that has sold direct to consumer successfully and because of that has a better understanding of readers. They were one of the first to digitize its backlist (2011) and make the frontlist available digitally (2007). They believe in putting their content where the readers are including at nearly every retailer including small ones like All Romance and in libraries. While it is still a publisher, it’s a fairly reader connected one.
We don’t know how this acquisition will change for readers. It may not have any effect. A year out from the Random / Penguin merger, it seems business as usual for those two entities. Perhaps we will say the same about the acquisition of Harlequin by HarperCollins. But I admit to being worried and I hope that my worries are irrational and that this acquisition will mean continued pro reader policies.
Even if they kepp all of the various lines and imprints (which personally I doubt will happen), I cannot imagine there won’t be layoffs for editors and people who work in the art department, payroll, etc. Selfishly I want my Romantic Suspense titles to continue arriving in the mail and to be able to buy books a month early or use Kobo coupons, but it’s the employees who will lose their jobs I feel bad for.
Also, what will happen to the bonus bucks program? I must have 100+ of those because I don’t read much in print any more, but I liked to use them to buy the non-book stuff they sometimes offered.
I know it’s most probably a pipe dream but wouldn’t it be nice if HarperCollins actually adopted some of the great things about HQN for readers and libraries?
Thank you for breaking down the business reasons for the sale, Jane. TorStar’s newspaper division has led them to the same place as other holding type companies where they need to sell off their most profitable asset to settle debts.
I also hope that HC adopts the reader-friendly portion of Harlequin’s business model. I’m constantly frustrated by the crazy waiting list for HC titles at the library’s eBook section.
I would also add that Harlequin (or at least Carina) is very generous about allowing authors to give away free copies of their book for reviews, even after the book is no longer at NetGalley. I know authors at other publishers who can’t participate in things like “R2R” programs on Goodreads b/c it would mean giving away 10 – 15 digital copies – but Carina was great about letting me do that (beauty of DRM free too – it was easy to do – I can give away digital copies easily, none of the hassle of people trying to figure out how to gift from an Amazon gift card, etc that I see on author loops).
Also, I can’t speak for other publishers, but Harlequin’s “report piracy” system is super-easy and author friendly. I go on little spurts where I go crazy, scour the internet to find them all and turn them in. It’s sort of like when you get ants in the kitchen and you get A LOT of satisfaction smushing them and washing them down the drain.
Those are two author-friendly things that I hope stay that way.
I wonder what is going to happen to Mills & Boon out of Richmond, UK. Are those imprints going to be brought to the US, thereby making the editors move or lose their jobs?
Harlequin’s biggest problem is that they bought the DRM kool-aid and drank it and have never stopped drinking it. The result is, as usual, people either skip buying, buy and jailbreak, or say “f— ’em” and go pirate DRM-free versions.
DRM automatically treats paying customers as criminals. People who are treated as criminals tend to resent it and justify “getting their own” back.
If you chase away your audience, don’t piss and moan about losing them.
Looking through my Amazon account, I haven’t read a HQN title in years. I have lots of them in my house from the latest conference, but I just can’t summon the interest to read them. I’ve been reading HarperCollins books and Hachette, some from indies and other publishers, though not all romance. I read a lot of non-fiction as well. I think the last time I bought directly from the HQN website, I was really disappointed by the stories and I wrote an email to them. I thought the writing had changed for the worse…so I just stopped reading them. Their reply email to me was just to say sorry I didn’t enjoy my books. They were awful stories with awful writing, but I was kind of sad to say goodbye. I’m hoping HC bring something good back to HQN books, but if not, that’s fine. There are heaps of other publishers who sell awesome romance.
I’m not really a Harlequin reader (the few I’ve read weren’t stellar reads and were poorly edited), but I do respect companies that treat their customers well, and Harlequin seems to be among them. Yes, DRM sucks, but I find geo-restrictions to be even worse. As someone outside the U.S., I already miss out on a lot of deals (I can’t buy from All Romance Books, for example) and even sometimes have limited access to publications (when Books on Board implemented geo restrictions suddenly some time back, I had problems accessing stuff I’d already bought, and could no longer make many purchases from my wish list).
So I hope HC respects Harlequin’s global personality; even if I might not be buying their stuff, I think anyone who wants to should be able to do so.