Will Consolidation Muscle Up Traditional Publishing To KO Amazon? Or Not?

The Publishing Industry if the Big Six becomes the Big Four

Two of the 'Big Six' publishers are in the The final stage of merging - Penguin and Random House.   The merger awaits final approval from antitrust regulators in Europe and the good ole USA.

This will drop the 'Big Six' to the ‘Big Five'.

If this merger is approved it will result in the world's biggest and most formidable publisher - at least based on past sales figures.

AND, rumor has it that in order to stay in the fray, Simon and Schuster and HarperCollins are contemplating a possible merger, further consolidating the traditional publishing industry into the ‘Big Four’ --- The ‘Big Three’ would soon follow, I’m almost sure, since Hachette and Macmillan would want to keep up with the Joneses.

Now, WHY are these old cobwebbed collaborators massing their artillery?        

Apparently the traditional publishing folks see this merging as a way to gain some strategic advantage over Amazon.

Amazon!! 

Hell, they’re no problem --- I’ve been told by many professional publishing ‘pros’ that Amazon is no real threat to ‘big publishing’. In fact, scuttlebutt on the street (what street is another story) is that traditional publishers are doing just fine and have nothing to fear from digital and the likes of Amazon --- This in spite of my best efforts to suggest or educate otherwise :)

Fact is, Amazon dominates the retail end of the book business and is expanding into the publishing end at a rather fast pace --- And traditional publishers are merging in the hopes of having enough clout to maintain high prices on their books sold through Amazon, Apple and other tech companies.

But, is merging diminishing their own publishing sector by decreasing healthy competition instead of empowering them to manhandle the likes of Amazon?

Yours truly thinks so; they appear to be cutting off their publishing nose to spite their fearful face!

These details by Zachary M. Seward in Quartz (qz.com) with a neat publishing industry chart:

This is what the publishing industry will look like if the Big Six become the Big Four

News Corp.’s HarperCollins and CBS’s Simon & Schuster are discussing a possible merger, according to The Wall Street Journal (paywall), in another move toward consolidation in the book publishing industry.

The talks follow the combination of Pearson’s Penguin and Bertelsmann’sRandom House, which will create the world’s largest publisher, two-and-a-half times bigger by sales than its nearest rival, Lagardère’s Hachette. That deal is still awaiting approval from antitrust regulators in the United States and Europe, who might look at something like the chart above and balk at evidence that competition in the industry is dwindling.

Our chart includes the so-called “Big Six” major trade publishers, ranked by trade and consumer sales in 2011, according to research firm Outsell. They will become the Big Five by mid-2013, if Penguin Random House is approved. HarperCollins and Simon & Schuster could make it the Big Four. And if Lagardere feels compelled to defend its territory, we could even be looking at the Big Three in short order.

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Publishing Folk Just Don't Know - Or - U.S. Needs a Minister of Culture

Publishing Storm

There is a higher level (or should I say different level?) thought process (like insider trading) that goes on among publishing professionals in the current publishing industry upheaval. This is evident in tonight's post.

Markus Dohle, The likely CEO of the Penguin and Random House merger; Jonathan Galassi, publisher and
president of Farrar, Straus and Giroux; Ira Silverberg, a veteran editor (Grove/Atlantic, Serpent’s Tail) and agent (Sterling Lord Literistic) now serving as director of literature for the National Endowment for the Arts, are some of the insiders giving us a birds eye peek inside the thinking and formative strategies of the besieged publishing pros.

Scott Timberg, a former Los Angeles Times arts and culture writer, writes this for Salon.com:

Book publishing crisis: Capitalism kills culture

Publishing teeters as Random House and Penguin plan to merge. It's time for a government policy to protect the arts.


Around the same time a devastating hurricane smashed and flooded its way up the East Coast, leaving millions homeless or without power, another storm collided into a professional subculture based in New York City. While the second storm is only metaphoric, the transformation of publishing could have far-reaching consequences not only for those who work on Union Square, but for readers and writers across the English-speaking world.
As with Hurricane Sandy, it will take a little while to discern the long-term consequences of the Penguin and Random House merger, the news of which was somewhat obscured by the storm and the election. But the short-term impact is not pretty — and it follows other recent bad news from the books world. The Free Press, known primarily for smart, contentious nonfiction from Emile Durkheim and Francis Fukuyama but also the publisher of Aravind Adiga’s best-selling Indian novel “The White Tiger,” just collapsed. Several well-regarded editors are now out of jobs as the imprint is merged into Simon & Schuster.

The Penguin and Random House merger would join two of the largest and most successful publishers in English. It’s likely to be completed late next year, and the new company will control more than a quarter of the global book trade. The number of major publishing houses will go from six to five, with credible predictions that it could easily go down to three. (Some in publishing note grimly that the publishers chose to announce this on Monday, Oct. 29, a day when the storm – which saw many editors and agents stranded at friends’ and relatives’ houses, without phone connections or power — would make meaningful news coverage almost impossible.)

The get-big-or-go-home strategy may allow bulked-up publishers to stand up to Amazon, which has become the industry’s Goliath. “The book publishing industry is starting to get smaller in order to get stronger,” the New York Times judged.

Lke a lot of publishing folks, Jonathan Galassi, publisher and president of Farrar, Straus and Giroux, doesn’t know quite how to read all this. But it’s significant: “Publishing is going through a sea change,” he tells Salon. “It’s going to be different when it comes out.” Whatever else is happening, “It feels like a contraction to me.”

The likely CEO of the combined publisher, Markus Dohle, sent a cheery note to agents, authors and booksellers. “For us, separately and in partnership, it is and always will be about the books. Your books,” he wrote. And he told the Times that the merger will not lead to the shuttering of imprints; there was no talk of “redundant” employees. “The idea of this company is to combine the small company culture and the small company feeling on the creative and content side with the richest and most enhanced access to services on the corporate side.”

That, after all, is what they always say.

But the implications are larger. If you work in, say, journalism, or the music business, you’ve seen this kind of thing before: the erosion and then collapse of an industry, often after mergers and acquisitions announced with buzzwords – “synergy”! – or reassurances that new ownership means that nothing significant will change because, after all, we really value the kind of work you people do. Will publishing continue to slide, gradually, or will it fall apart, like newspapers – which have lost approximately a third of their staffs since the recession and seen advertising revenue sink to 1953 levels — and record labels – where annual sales of the top-10 albums have gone from over 60 million to about 20 million in roughly a decade. Members of the creative class have been here, and it hasn’t worked out real well for them.

“It’s really painful,” says Ira Silverberg, a veteran editor (Grove/Atlantic, Serpent’s Tail) and agent (Sterling Lord Literistic) now serving as director of literature for the National Endowment for the Arts. ”I’m sure I’ll have tons of former colleagues looking for work, and they won’t find it. Regardless of what [executives] say, it’s going to be a smaller business.”

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