Publishing domination writ large?

(NYTIMES) – When Penguin Random House said last year that it planned to buy Simon & Schuster for more than US$2 billion (S$2.7 billion), the entire publishing industry snapped to attention.

The merger of two of the largest publishers in the United States – Penguin Random House is already the biggest by almost any metric – has the potential to touch every piece of the book business, including how much writers get paid, which books get priority at printing plants and how independent bookshops are run.

One of the main questions federal regulators will look at when deciding whether to approve the deal is how big the two companies would be if combined. Publishing is a fragmented business: There are general-interest publishers and academic publishers, big companies and small ones, as well as people who self-publish. All that makes it difficult to get an accurate read on how dominant any one player is.

Penguin Random House says the two companies combined would generate less than 20 per cent of the general-interest publishing revenue in the US. Those numbers are from the Association of American Publishers, a trade group, which based its estimate on the complete US book market. BookScan, which tracks paper copies sold through most retailers, puts the combined company at about 28 per cent of all books sold last year; that figure rises to about 34 per cent including the books the companies distribute for other publishers.

With 15,000 titles published annually, Penguin Random House is a dominant force in the industry. Half of the previous week’s New York Times bestsellers are its books, including Glennon Doyle’s Untamed, which has been on the list for nearly a year, and former president Barack Obama’s memoir.

Simon & Schuster is a powerful player as well, publishing more than 2,400 books a year, including Mary Trump’s 2020 memoir, Too Much And Never Enough, which sold more than 1.35 million copies in its first week.

Perhaps the industry’s biggest concern about the merger, especially among agents and authors, is what it will mean for book deals. An agent representing a promising author or buzz-worthy book often hopes to auction it to the highest bidder. If there are fewer buyers, will it be harder for agents to get an auction going for their clients, and ultimately, will it be harder for authors to get an advantageous deal?

Penguin Random House runs about 95 imprints in the US, including Vintage Books, Crown Publishing Group and Viking, and these imprints are allowed to bid against one another, as long as another publisher is bidding as well.

If the third party drops out, the bidding stops, and the author selects an imprint from within Penguin Random House in what the industry likes to call a “beauty contest”. A Penguin Random House spokesman said the practice of allowing imprints to compete would continue but that it was too early to say whether Simon & Schuster and its imprints would still count as a third party. Some publishers offer only house bids and do not allow internal competition.

Concerns in the industry stretch beyond those initial handshakes between authors and editors. Penguin Random House employs about 10,000 people globally, while Simon & Schuster’s full-time workforce is about 1,350. If the companies combine, how many jobs will be lost? Will imprints fold?

Will they publish fewer books? And if the mega publisher demands priority at printing plants, where capacity has been under extraordinary strain, will that happen? Penguin Random House has worked closely with independent booksellers during the Covid-19 pandemic, offering flexible or deferred payments to help them through such a challenging year.

Still, some are anxious about narrowing competition in a world where their choices are already constricted.

Penguin Random House chief operating officer Nihar Malaviya said that a fairly recent publishing tie-up should offer solace to many in the business: the 2013 merger of Penguin and Random House. Since then, the number of US employees at the company has remained stable, as has the number of imprints, he said.

“The industry is healthier than it’s ever been,” he said. “The key reason why we haven’t done the things people were afraid of is that it’s not in our interest. We want to keep independent bookstores open. We don’t want the market more dominated by a single retailer.”

Indeed, throughout publishing, apprehension about this merger tends to wither in comparison to fears about Amazon, which has become only more powerful in the book world during the pandemic.

“In today’s market, they are very much a force for good and protection and normalisation,” Mr James Daunt, chief executive of Barnes & Noble, said of Penguin Random House. “I’m spending much more time talking about Amazon than I am talking about Penguin Random House, or Penguin Random House plus Simon & Schuster.”

Mr Jonathan Karp, chief executive of Simon & Schuster, said in a statement that joining up with Penguin Random House was “the best possible outcome” for his company. “Our combined resources will allow us to reach even more readers, while also maintaining the kind of editorial and entrepreneurial independence that Penguin Random House has long championed among its publishers.”

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