The Random House – Penguin Merger

Note. This is an update from yesterday’s post which was written before the announcement of the merger between Random House and Penguin.

The big news in book publishing this week, probably the biggest news all year, was the announcement that Random House and The Penguin Publishing Group are in negotiations over a possible merger.  Random House, owned by the German company, Bertelsmann AG,  is the world’s largest book publisher and the largest US book publisher by far. Penguin is owned by  the British company, Pearson PLC,  and is the second largest US book publisher.

What does this really mean? The new company will have sales in the US of over $2 billion dollars.  It would have an estimated 17% market share of the general book publishing  business. But expect the share of best sellers to be even higher. In 2011 Random House and Penguin together had 45% of all bestsellers on the Publishers Weekly list.

I think such a merger will be bad news for authors, booksellers, and book lovers. Both Random House and Penguin have a huge number of imprints. By my count, Random House has 56 and Penguin 39. (Imprints are units within these publishers that operate independently, essentially as separate publishers. For instance Knopf and Ballantine are imprints within Random House. They have their own editors and  their own styles and cultures. Sometimes they even compete against each other.)

A lot of these imprints overlap  with  one another. There is likely to be some consolidation and elimination of some of some  imprints that would allow the new super-publisher to reduce overhead. Agents are understandably distressed that less competition will mean smaller advances. That will certainly be true. But more significantly,  I worry   that fewer imprints with fewer editors is going to mean fewer books. The big name brand authors: Stephen King, James Patterson, Janet Evanovich, John Grisham, Malcolm Gladwell, etc.  will always be there.

The pressure will be on the midlist. These are the books that never become bestsellers, but I suspect these are the books that most of you like and admire. There just won’t be as many slots in the catalogues for these kinds of books. It astonishes me, really. Whenever I go to New York to talk to editors, they are always telling me how much they want “new talent.” Smaller midlist opportunities mean fewer chances for new talent to break out and fewer chances for book lovers to discover this new talent.

Still,  these are but  the  parochial concerns of the editors, the people on the creative side of publishing. They have some rather quaint and old fashioned values. They love books, for instance. The mergers are being driven by the business side and probably at the level of the parent corporations, giant multi-media conglomerates.

There are probably a few silver linings  in all this. Certainly a lot of the midlist is going to be picked up by independent publishers. And we have to hope that all this available midlist  talent will help these midsize publishers to thrive. And since a lot of these midsize publishers will care more about these authors than the mega-publishers, it might even turn out to be a blessing in disguise.   One might even suppose that by strengthening these publishers, we will paradoxically end up with a more diverse and robust  commercial publishing universe. But one ought not to get smitten by this possibility.

This is probably very bad news for Amazon.com. (Which is usually good news for everyone else.) The new Random House/Penguin would be so powerful that Amazon couldn’t threaten to remove the buy button from their titles if they don’t agree to Amazon’s draconian trade terms.  I suppose that the best defense against Amazon’s monopolistic intentions is another monopoly.

In a related story, Simon and Schuster announced this week that they were merging 3 of their imprints into other imprints. Most notably the extremely prestigious Free Press is being combined with the Simon and Schuster imprint. Whether Free Press will still retain any independent identity is unclear. But several very good editors, I mean editors with towering reputations, have already left. Not a good sign.

The advocates of self-publishing, who issue jeremiads with increasing frequency  about the imminent  fall of  “legacy publishers”, seem to be excited about all of this. But for them, the misfortunes of other publishers  always seem to be a revelation of a new and radiant future. Self publishing will continue to grow with or without the demise of commercial publishing.  And there is much to be said for self-publishing. But  the choice to self-publish comes with some big negatives as well. However,  that is the subject for another blog on  another day.

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8 Responses to “The Random House – Penguin Merger”

  1. Tita Beal Says:

    I’ll bet buggy whip companies merged when horse and carriages were losing out to cars. My question: I wonder if online/media publishers will create an alternative to publisher vs self-publishing and create a new publishing structure we haven’t yet figured out?

  2. Heather Villa (@HeatherVilla1) Says:

    Andy, thank you for “merging” the concerns and the silver linings in your post as you highlighted the future of publishing.

  3. ellamedler Says:

    Most informative and unbiased. Thank you.

  4. Andrew Says:

    I have been reading Salman Rushdie’s new memoir, Joseph Anton, and in it he describes his less than amicable split with Penguin over the Rushdie Affair.

    According to his account, execs at Penguin tried to shake him down for “security costs” and leaked unfavorable stories to the press. An auditor even discovered that Penguin had been illegally withholding a portion of his royalties. When this was revealed, they offered “no apologies.” Penguin also shined him on about the publication of a Satanic Verses paperback. Essentially, the publisher wasn’t much of an advocate for freedom of expression during a time when it was threatened the most.

    I only mention this because since Mr. Rushdie left Penguin, his last few books have been published by . . . Random House, including the new memoir. It will be ironic to find the “trouble-making” writer back in association with Penguin again as a result of this merger.

    • andyrossagency Says:

      Well, that’s an interesting observation, but as a practical matter, I don’t think it will have an impact. I have a client who sued Random House for defamation. It was very bitter and high-profile. He made it clear to me that he would never submit a book to that particular Random House imprint and likely they would never make him an offer. His next book was published by Ballantine which is another Random House imprint. In the last 20 years or so, pretty much everybody at Penguin has moved on. I think they were acquired by a larger company, and I’m sure every imprint at Penguin or Random House would be honored to have Rushdie as an author.

      • Andrew Says:

        Haha, interesting! Oh, and I have no doubt that they will welcome him with open arms today, 20 years later, but the irony remains.

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