What Penguin Random House means for authors

Penguin  Random HouseAs Hurricane Sandy was rolling up the east coast, I was switching back and forth between NAOO’s website for weather updates and Publisher’s Marketplace, because the rumors about Random House and Penguin were confirmed. Two of the biggest publishers in the world were combining forces.

For anyone working in the publishing industry, this raised a lot of questions, and several concerns. By now we know that the name of the company will not be Random Penguin, or Penguin House. It will be Penguin Random House. There are other pieces that are starting to fall into place as well, like this week’s news that Penguin is going to settle with the DOJ on the agency ebook pricing model, so that Penguin joins Random House with a clean slate. Well, maybe not entirely clean since they and Random House must comply with the DOJ restrictions for two years, but they won’t be bringing Random House into a major litigation. (For more details about the settlement, see: http://www.mediabistro.com/galleycat/penguin-settles-price-fixing-suit-with-the-doj_b62676) But there are still many things up in the air…

Will the government allow it?

The deal is expected to close in the second half of 2013. Only regulatory concerns could prevent it. The biggest hurdle is how much market share the new company would control, whether it would be too powerful. Penguin Group CEO John Makinson said that the combined market share was less than 30%, and added “we wouldn’t have reached this point of announcing the transaction unless we felt some confidence in our ability to obtain regulatory clearance.”

But the Authors Guild is not so easily satisfied, and they called for “close scrutiny” of the deal. The discrepancy seems to lie in how the market is defined. Is it the overall book market we’re talking about? The Authors Guild suggests that within book submarkets, such as fiction or narrative non-fiction, the combined market share of Penguin and Random House could exceed 35%. So what would that mean for authors? Scott Turow, president of the guild, said the following:

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.

Will this consolidate a potential author’s options?

Turow’s comment is a nice segway into my biggest concern after the announcement. Earlier in the week of the Penguin Random House announcement, Simon & Schuster had just consolidated its imprints, cutting out the Free Press entirely, which left editors without jobs and authors with one less place to send their book. Would this merger consolidate the breadth of publishing options even further? From what it sounds like, no. Random House and Penguin will maintain all of their current imprints and encourage competition among them.

In a letter to Penguin staff, Makinson noted:

I have no doubt that some authors, agents and customers will express concern to many of us that this merger will reduce choice and competition. I believe, and so I know does Markus [Dohle], that exactly the opposite will happen. The publishing imprints of the two companies will remain as they are today, competing for the very best authors and the very best books.  But our access to investment resources will also allow Penguin Random House  to take risks with new authors,  to defend our creative and editorial independence, to publish the broadest range of books on the planet, and to do it all with the attention to quality that has always characterized both Penguin and Random House.

How else could it affect authors? $$$

While authors might be able to send manuscripts out to the same group of editors, ultimately Penguin imprints and Random House imprints will not get into a bidding war over a book. Toward the close of an auction on a book, only one Penguin Random House editor is likely to make an offer on a book. They’ll still have to compete against HarperCollins, Simon & Schuster, Hachette, Macmillan, and other smaller publishers. But the stakes will be one big guy less than they are now. It’s possible that this could lead to lower advances for authors. That said, the advances over the last ten years have already noticeably dropped as the market has adjusted to a more digital audience.

On a slightly more local level, the Random House Author Portal is the best, an easily navigable site with pretty sales graphics and several years of historical sales and royalty data. Penguin authors will inherit this, which is a huge relief since the Penguin royalty site, just recently launched, kicks you off after 5 minutes of inactivity, has no historical royalties, and runs on a site that looks like it was built in the 90s. So Penguin authors, rejoice, you’ll have much easier access to your sales information after the merger is complete.

Overall, the merger makes business sense from the publishers’ point of view. Pearson, who currently owns Penguin, can focus more on educational content; Random House would enjoy a larger market share and the prestige of Penguin’s titles. For the rest of us, I suppose time will tell. It’s a major change in the publishing landscape, but publishing companies have been merging, separating and acquiring since George P. Putnam was walking the streets of Manhattan. I hope that we can still buy the Penguin book bags, but if they change the design to Penguin House, I won’t mind.

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