Friday, November 2, 2012

The Merger

by Sheila Connolly

This week two of the Big Six publishers, Random House and Penguin, announced plans to merge, sending ripples through the publishing community.  I am published by an imprint of Penguin.

For those who are not writers, the Big Six is the collective name for the major publishers, most based in New York.  They have been, until now:  Hachette Book Group, HarperCollins, Macmillan, Penguin Group, Random House, and Simon & Schuster.  Each includes multiple imprints, some of which you may have heard of or remember.  The list goes on for pages, and represents a lot of the former small publishers that  those big publishers have absorbed (or swallowed) because they were having trouble surviving in a difficult publishing environment.

Random House and Penguin are the two largest trade houses in the country, and include the two dominant publishers of mass market paperbacks. Random House publishes about 10,000 titles each year; Penguin 4,000 titles. Together they would control 17% of the market, making it hard for Amazon to jigger with the Buy buttons for those titles (as they have done occasionally).

Why this merger?  Economics, or so they claim.  In a press release, Penguin pointed to "synergies from shared resources such as warehousing, distribution, printing and central functions." Funny—most of these functions refer to print books. Of course, the companies also add that this merger "advances the digital transformation on an even greater scale."

The big publishers (in my opinion) have been slow to respond to the whole digital revolution.  They didn't see it coming; they dismissed it as a mere flash in the pan.  Obviously they were wrong, and now they're playing catch-up.  But it's like trying to turn the Titanic—the traditional business of print books is hard to move quickly.

Another reason for the merger?  Amazon, which now controls a huge market share in book sales. Are we witnessing a battle of the Titans?  The old guard forming an alliance to confront the fleet upstart Amazon?

Of course, on a more personal note, I have to worry about authors like me who publish with one or the other Big Six companies or their imprints.  I'm friends with a lot of others in my position, mostly cozy writers.  Will our contracts be valid, going forward?  Are we going to have to wait and see whether those contracts are renewed or extended?  Who will sign any new authors or offer any new contracts until the dust settles? (If all goes as planned, this will be later in 2013.)

I'd guess that most book buyers pay no attention to the logo on the spine of a book—they recognize the author, or the style of the cover, when they make a selection.  They won't know that some of their buying options may disappear in the coming months.  It's harder and harder for them to find a bookstore to browse in, so of course they flock to Amazon because it's so much easier to shop there.

Random House CEO Markus Dohle says, "the whole idea is to preserve the small company culture and small company feeling on the editorial and creative side."  Let's hope so (please don't take my editor away!).  As Bette Davis said in All About Eve, "Fasten your seat belts.  It's going to be a bumpy night."

One last question:  will it be Random Penguin or Penguin House? Outgoing Pearson (Penguin's parent company) chief executive Marjorie Scardino joked that "Random Penguin did come into conversation, but it hurt the penguin's feelings."




Anonymous said...

Hi, I think this may be a sign of more to come - print reading is in for that tres bumpy ride. Like the adjustment to climate change, we all have to roll with it - as a technophobe I resist this - but see the tsunami on the horizon. Thelma Straw in Manhattan, with power but no heat!

Leslie Budewitz said...

I'm calling it Big Bird. :)

Agents Joshua Bilmes and Richard Curtis both blogged earlier this week about the merger -- sorry I didn't bookmark the posts -- and both opined that it will be a year or two, or longer, before any of the corporate changes reach the editorial level. The acctg, tech, and other internal changes will have to be made first, and will be big. Bilmes stressed that both companies recognize they need authors. So, if they're right, writers and editors have some time before the changes reach us, giving us time to figure out what those change might be and prepare. I hope so!

Steven M. Moore said...

Hi Sheila,
I like the name Penguin House, but maybe they should just rename it completely to Dodo Publishing. That would parallel Leslie's suggestion because a dodo was a big ugly bird that became extinct.
The digital revolution is here to stay. eBook sales are heading to X% of total sales figures, where the number you substitute for X depends on whether you're counting dollars spent or books sold (the first penalizes eBooks because they're almost always less expensive than pBooks).
One thing I worry about is all the digital formats (sorry, Anonymous, but this is important): the chaos reminds me of the tape format wars with music cassettes and the war between betamax and VHS (yeah, I know, that dates me). We have to clean that problem up. I get around it by using Smashwords and Amazon because the first distributes to everyone but Amazon. I wouldn't want to see Amazon dominate the market either--trading the Big Six (now Big Five) for the Big One seems counter-productive.
All the best,