Penguin and Random House to Form Franken-Publisher

Now that the Agency Model has been rendered toothless as a way to keep publishers afloat, we’re seeing the next phase in book publishing evolution: mergers! Random House, which was already the biggest publisher in the USA, is buying a controlling stake in Penguin, forming a super-publisher!

According to the New York Times:

PARIS — Two European media companies, Bertelsmann and Pearson, confirmed Monday that they planned to combine their book publishing divisions, Random House and Penguin.

Under the agreement, Bertelsmann, which owns Random House, would control 53 percent of the merged publishers. Bertelsmann and Pearson would share executive oversight, with Markus Dohle of Random House serving as chief executive and John Makinson of Penguin becoming the chairman.

The deal would consolidate Random House’s position as the largest consumer book publisher in the English-language world, giving the combined companies greater scale to deal with the challenges arising from the growth of e-books and the rise of Internet retailers like Amazon.

“Together, the two publishers will be able to share a large part of their costs, to invest more for their author and reader constituencies and to be more adventurous in trying new models in this exciting, fast-moving world of digital books and digital readers,” said Marjorie Scardino, chief executive of Pearson, which is based in London.

It’s a bit early to say if this is a good or bad development for readers, but I do think it was inevitable. Publishing has become a tight business in the last few years, and dying bookstores, rising self-publishing, and cheaper ebooks have all been taking their turns drawing blood. It makes sense that the big publishers would begin to merge and pool their resources as a way to stay relevant against self publishing and Amazon.

The cynical side of me says this is a bad sign. One less publisher means one less outlet for an author to get their book published the traditional way. It also means less competition in the mainstream space, which is going to tighten the flexibility that many retailers have as well. On the other hand, if they streamline their operations and inventory, it could mean that margins get slightly looser, and maybe that means we see some of that savings passed along to readers to encourage more book buying.

I also think this is a huge opportunity for Amazon, Smashwords, and Fastpencil. All three run successful self-publishing businesses, and with big publishers consolidating, it means there’s going to be more authors looking to circumvent the traditional routes, or simply being rejected or lost in large slush piles building up at Random Penguin (Penguin House?). Amazon and Fastpencil also run full publishing arms, with access to editors and promotional resources, so it will be interesting to see if they snap up books at a faster rate in the future.

At this point, it’s way too early to see what will happen with this consolidation. Overall, it probably won’t be a net benefit to consumers, at least not at first, and whether this is a benefit to the two publishers remains to be seen as well. I do find it fitting that they announced this today, October 29th, though-New York City is about to face a Frankenstorm, and now they have to face a Frankenpublisher too!


Categories: eBooks


2 replies

  1. If music is a guide … mergers will do nothing to help publishers, will do nothing to help the authors, and will do nothing to deliver better content that people want …

  2. Oh, please, please, please – can the FTC mandate that this merged beast must be called “Random Penguin” in order to receive approval for the merger?