This is disturbing news.

Harlequin profits right down, even lower than expected.

I think it’s been coming for a while. Authors are hemorrhaging out of Harlequin, moving to Entangled or self-publishing, and that includes some of their best known and popular authors like Day LeClaire and Ann Voss Peterson.

Here’s Ann’s comment on leaving.

Basically for her it was an economic decision. I review a lot of Harlequin books, and I’ve noticed a lot of debut authors recently, and many of these haven’t been as good as the authors they’re replacing. Pale imitations, really.

I don’t know what’s been going on inside the organization, but I do know that advances are right down, even worse than they used to be.

It used to be a great place to start. Authors like Suz Brockmann and Linda Howard had their start there. So what’s different now?

Well, for a start, Harlequin entered digital early and did it well, apart from slapping DRM on the books. The site was professionally designed and easy to navigate. The books were cheap – $2.50, give or take a few cents. Lots of good offers and bundles.

But now we have the 99-cent book. That undercuts Harlequin, and sometimes the books are as good or better. For people wanting a quick read, they can get it from Amazon for far less than the Harlequin price.

At the moment the 99-cent book is ruling the market. Authors are giving their books away. They are dominating the best-seller charts. The only authors who can compete are the biggest names. How can they afford to do this? Well, look at Ann Voss Peterson’s figures. On a Harlequin book priced at $4, she would get 6 cents for each copy sold. If she sells a book through Amazon and charges 99 cents, she gets at least 29 cents a book (at 30% royalty – you don’t get the 70% royalty until the book is priced higher).

That’s how. She doesn’t need to sell as many to make far more profit, even if she has to pay for the cover art and editing.

New writers at Harlequin are doing it for the glory and to make their names. You can still get them in most of the biggest stores in the world, but with sales down, their royalties will be down.

So, any more theories? I would hate to see Harlequin decline. I’ve read the books for years and enjoyed them. Discovered many authors that way. But they have to do something, don’t they?