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The Authors Guild Speaks Out on the Penguin/Random House Merger

6 November 2012

From Scott Turow for The Authors Guild:

Here’s our storm-delayed member alert on last Monday’s unsettling announcement that Random House and Penguin, the two largest trade book publishers in the U.S., are merging.

Although Random House has said that the combination would control 25% of the book market, that appears to significantly understate things. The companies’ share of the U.S. trade book market for fiction and narrative non-fiction likely exceeds 35%. Their share in certain submarkets is no doubt even higher. The merger merits close scrutiny from antitrust officials at the Justice Department or the FTC.

. . . .

“Survival of the largest appears to be the message here,” said Scott Turow, Authors Guild president. “Penguin Random House, our first mega-publisher, would have additional negotiating leverage with the bookselling giants, but that leverage would come at a high cost for the literary market and therefore for readers. There are already far too few publishers willing to invest in nonfiction authors, who may require years to research and write histories, biographies, and other works, and in novelists, who may need the help of a substantial publisher to effectively market their books to readers.”

Link to the rest at The Authors Guild

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16 Comments to “The Authors Guild Speaks Out on the Penguin/Random House Merger”

  1. Give him this: he’s consistent.

    • I was just thinking the same thing. But he is right about the merger. Readers and authors will suffer.

      • If readers and authors are going to suffer, they will suffer exactly the same things they’ve suffered from every corporate merger in the publishing business for the last umpty-ump years. But really, with the rise of self-publishing and viable small presses, the Big Countdown (Six . . . Five . . . ) have lost most of their ability to inflict suffering on anyone with the sense to move.

        I’ve seen these kinds of mergers before in industries with somewhat similar characteristics: oil and gas production (!) and computers. In both cases, you have existing resources — fossil fuel, or marketable systems — which are separate properties from the talent that discovers or develops them — geologists or engineers.

        When an oil or tech giant swallows a small company, it acquires all its existing reserves or patents, but the talent doesn’t fit the giant’s culture, has its own reasons for not working for a giant, and quickly migrates away to startup companies. In fact, many people make their careers out of building one startup after another, developing a field or a technology until it’s valuable enough to sell to the majors.

        (This is one reason why income inequality has appeared to increase in recent decades: this kind of entrepreneur works several years for very little money, building a business, and then gets paid off all at once when the company is sold. So while there is always a steady drizzle of energy and tech people making millions of dollars in a given year, they are not the same people from one year to the next. Most only receive one big payday in their lives, and the rest get one only every five to ten years.)

        When two giants merge, it creates ripple effects through the whole industry as contracts with suppliers get changed or cancelled; but it does little to change the terms of employment for the talent, because they mostly weren’t working for the giants anyway. The real upheavals happen when a big company takes over a smaller one; the merger of two giants (like Exxon and Mobil, or HP and Compaq) makes headlines even in the non-business press, but has surprisingly little effect on the people who actually find or create the assets. Not many of them were working for those companies even before the merger.

        If writers had the sense that God gave geologists and engineers (or wasps and houseflies, for that matter), they would migrate elsewhere every time one of these mergers happens. Random Penguin, or Ruinous Penhouse, or whatever it ends up being called, will have a bigger and less efficient bureaucracy in charge, extra M&A costs to pay, and will consequently be at a bigger disadvantage in offering money and terms to authors. This ought to drive considerable numbers of writers into self-publishing, and even larger numbers into selling their next book or series to a smaller and nimbler company.

        Unfortunately, many writers have a screwed-up sense of personal loyalty to these impersonal corporations, and many more have placed all their business affairs in the hands of agents who are essentially shills for the publishers. These two classes of writers won’t make the necessary changes and will suffer, and their readers, in many cases, will have to either pay higher prices or find something else to read. That is the suffering this merger will cause, and it is nearly all preventable. A pity it won’t be prevented, but the average writer has the business sense of a turnip that has not yet fallen off the truck.

        The proper attitude of a writer to a large publishing company is approximately the attitude you take towards your mobile phone provider: you’re stuck with them for the term of the contract, but you feel no loyalty and will jump to a different company if a better deal comes along. They’re just a business providing a service, and such a huge and unwieldy business that they generally do a pretty rotten job of it. Nobody with a phone is grateful to Verizon. Nobody with a book in print should be grateful to Random House or BixBoox.

        • This is such an excellent piece of analysis. Sadly, you’re right that the average writer has the business sense of a turnip. Not only do I see and hear this misplaced loyalty coming from writers all the time, but I wouldn’t exclude myself. I used to be one of the turnips. It’s one of the reasons, I think, why so many older writers have jumped off the truck. We’ve learned a hard lesson over a number of years. I can remember my gradual realisation that the ‘curating and nurturing’ was mostly illusory, and that all I wanted was to be treated in a businesslike way by my publishers and my agents. It never happened.

          • Great comments.

            I admire anyone who is willing to say that currently many writers have the business sense of a turnip, because it’s really true.

            But I also think it’s temporary. I’ve been watching this transtion, as have many others, and I’ve noticed it is moving REALLY FAST. Within months, things change.

            Word is spreading, and pretty soon, those writers will gain the sense of a human being who values their own talent and protects their own rights.

  2. While I don’t have an issue with Turow asking this to be examined, it’s funny to see Turow calling on the DOJ to investigate Publishers for anti-trust actions, given his vehement protests against the DOJ anit-trust collusion suit against them.

    Although maybe I should be fair. Maybe Turow learned something from the DOJ suit, and realizes the DOJ can be our ally.

    • I agree that it’s kind of hilarious that Scott Turow is willing to suggest it. I thought publishing was SPECIAL and shouldn’t have to follow all those pesky laws.

      And it’s kind of you to suggest his apparent contradiction is due to heightened perspective, instead of a complete lack of the same. :)

  3. Well, think about it: he’s not concerned that the Random Penguin will control a third of sales, he’s concerned they’ll control a third of all new *contracts*. And if they (as expected) cut back on non-executive staff and advance funding it will be *his* ox that gets gored, not just consumers.

    So yeah, *now* he wants the DOJ to intervene.

  4. Let’s take this merger to its conclusion. RHP is a big company and it will be able to save money by eliminating redundant functions. But a bigger company has a bigger bureaucracy, which means slow decision making. Giants don’t move fast. Will this new giant keep all their authors onboard? Or trim their numbers to make more profits. Giants like this are dominated by bean counters. But are they stamping cookies or producing creative works where economy of scale does not apply. And what will happen to the authors that lose their contracts? They will see the light and become Indie/self-published. Competition increases from nimble, quicker Indie authors that know that their creativity is the key to selling books, not economy of scale. Indie Authors can survive on twenty thousand sold books per year. This number is crumbs for a giant. In the end we may have a few megasaurs and a zillion mice that will eat all the food out there, and eventually the megasaurs will shrink and die. And no comet hit the Earth. Scary!

  5. “There are already far too few publishers willing to invest in nonfiction authors, who may require years to research and write histories, biographies, and other works, and in novelists, who may need the help of a substantial publisher to effectively market their books to readers.”

    OK. Novelists who need help won’t get it. They will go do something else. Other novelists who don’t need the help will step up and provide lots of books for readers. Readers will neither notice nor care.

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