Unless you’re living under a rock, you already know about the merger between Penguin and Random House, which will leave the new company cleverly re-titled: Penguin Random House. (Insert unimpressed face here.) The deal is one of the largest in publishing to date, combining the forces of two Big Six publishers into one. The merger has caused a ripple of anxiety in the industry among publishers, authors, and readers, all of whom are wondering how the merge will affect prices and competition. We’ve broken down the issue into laymen’s terms, isolating the specific concerns of those who will likely be affected.
The biggest issue surrounding the deal involves Amazon and their incredible market share of e-books. Penguin Random House is expected to invest heavily in e-books and digital production after the merge, in an attempt to compete directly with the low price point of other retailers like Amazon, Apple, and Google. Remember, e-book prices were in the news recently when Harper Collins, Simon & Schuster, and Hatchett Book Group settled in court over allegations that they approached Apple to look for a way to force Amazon to raise prices. Put simply, the issue of Amazon’s low e-book prices has been a bane for the Big Six publishers for years.
It’s also worth noting that consolidation of smaller to mid-size presses into larger publishing companies is hardly rare. For example, Random House is is a conglomerate of Alfred A. Knopf, Pantheon, Crown, and Doubleday, all of which were previously independent. Many are calling the merge between Penguin and Random House inevitable, which raises the question about the possibility of future mergers. Anti-trust authorities will of course have to approve the consolidation, but it isn’t likely they’ll find issues. After all, similar instances have occurred in the music industry, with four major labels now controlling the majority of the market. Musicians and artists complain this has created fewer opportunities for new artists, and a loss of competitive price points, which echoes current concerns from authors and agents regarding Random House and Penguin.
Authors and Publishers
The biggest concern for authors and their agents is the idea that with fewer companies to bid to, authors will ultimately see lower bids for their books. There are also worries authors will have less bargaining tools when it comes to contracts, because of how much of the market Penguin Random House will own. (Projections put this number somewhere around 25% of all English-language book sales.) While these concerns are valid, optimists are discussing the opportunity for niche publishers and small presses to adapt and grow, providing new avenues and opportunities for authors to publish. Though vague, it’s likely these optimists are referring to the digital platform, and the ease and affordability it provides publishers. Though the adaptability of being a small press has its advantages, production costs still come with high margins, and in order to turn a profit, even in the digital-age, it seems easier said than done.
Because the merge will likely lower book costs (especially e-books), it’s possible readers could benefit. However, there are some concerns that with fewer companies, and less opportunities for new authors, the available books at the low price point will diminish for readers. All of this remains to be seen, but it does seem likely that if mergers in the industry continue, new authors will struggle to emerge from big publishers and diversity for readers will also suffer. However, in our opinion, the merge will probably cause an increase in mid-sized and smaller publishers, and diversity won’t be a problem.
On the night of November 8, 2012, the “Buy” buttons disappeared from many publisher’s Kindle pages on Amazon. Among them: Random House, Penguin, and other Big Six publishers. Amazon is calling the problem a “glitch“, offering no information as to why nearly 50 of the top 100 sellers were unavailable for so long, and why the problem didn’t occur for small and independent presses. You can call it coincidence, but skeptics are raising eyebrows as to the possibility that something bigger, and more malicious could be afoot. Regardless, it’s a strong reminder of the power Amazon yields in the book-buying marketplace.