If you, like me, hover around the sphere of professional publishing but aren’t fully “in-the-know” you might have been asking yourself; does it matter that Penguin Random House are buying Simon and Schuster? Here’s a bit of a crash course on the situation.
On the 25th November, it was announced that Penguin Random House is purchasing Simon & Schuster from ViacomCBS for a reported $2.175 billion in cash. Or more accurately, Bertelsmann who owns Penguin Random House is purchasing Simon & Schuster – for the sake of simplicity, I’ll be referring to Penguin Random House alone.
the fair wage issue
First of all, the news that Penguin Random House has a cool $2 billion in cash to spend on the acquisition of market dominance comes as a slap in the face to all the underpaid workers in publishing. The death of the book industry is often cited as an excuse for low salaries and the resultant poor working conditions – despite the fact that the book industry has actually seen growth over the past few years. With an increase in value of 1.4% in 2018 and almost 2% in 2019. While the trends and implications of COVID-19 are certainly a spanner in the works, there has still been an increase in book sales are readers rally to support bookshops and the book industry during this uncertain time – book sales are up around 20% from 2015 overall.
the mega-publisher issue
In the book industry, publishers are generally split in independent presses, small presses, mid-level presses and then large publishers – commonly referred to as the “Big Five” an umbrella under which Penguin Random House, Hachette Book Group, Harper Collins, Simon & Schuster and Macmillan are currently housed. With the yet to be completed sale, the “Big Five” (the “Big Six” in 2013) would become the “Big Four.”
Penguin Random House’s acquisition of Simon & Schuster will create the world’s first “mega-publisher” that will control a majority percentage of the fiction market. The glaring sin her is that PRH isn’t just buying a publisher but is making a bid to take over the marker. It is by no means a done deal; the US Justice Department will need to approve the deal but understandably it has come up against immediate criticism. The Author’s Guild explained in a statement that the reduction of these mainstream publishing houses from five to four will mean less competition – less bidders – for an author’s work. In an industry that has been subject to increasing consolidation of publishing power, this impending merger will inevitable drive down the advances offered to authors. Inevitably, it will also mean fewer jobs in the industry and less leverage for anyone negotiating with publisher – whether that be agents, editors, authors or publishing staff. Additionally, existing employees (those that don’t lose their jobs in the merger…) will most likely find themselves with an increased workload and no added compensation. One of the biggest messages to takeaway here is that breaking into this industry will become even more difficult than it already is.
the antitrust issue
As I mentioned earlier, the consolidation of publishers from six in 2013 to a possible four brings us to a domain I am a little more familiar with, competition law. The merging of PRH and SS (PRHSS) becomes an antitrust issue. However, it is not being treated as such. Antitrust concerns in publishing became increasingly relevant in the early 2010s with the popularity of online retailers and the threat they posed to the profitability of traditional retailers such as publishers and bookstores.
Why? Because it generally costs traditional retails more to run their business than it does with online retailers. This has obviously made it difficult for traditional retailers to remain competitive, evidenced by the bankruptcy of the bookstore chain Borders in 2011. Considering this, it is feasible that publishers might want to implement measures that raise the cost of business for online retailers. A publisher could increase the costs of online retailers by establishing a minimum price at which an online retailer must sell to consumers. However, this is a form of price-fixing that could be illegal under antitrust law. While I’m not incredibly familiar with US law, from what I understand, vertical-price fixing has a mistakenly perceived legality – that is to say, PRHSS can argue the overall effect of said price fixing is pro-competitive and escape liability.
the ethics issue
The biggest threat to the publishing industry still and will continue to be Amazon. It is not a big leap to assume that the concern over this is partially what has prompted the merger of PRH and SS – it is an effort by publishers to increase their bargaining power. To put this into perspective, Amazon sells around 49% of the books bought years. This is just as concerning as a 33% monopoly on the publishing industry. You might still be asking, why is it necessarily bad that PRHSS controls 1/3 of the market? In the simplest terms, it prompts questions regarding ethics, diversification and influence.
Let’s put it into the context of trend controls – if PRHSS decides that dystopia books are back again then more than 30% of the books you see on shelves could be dystopias. This monopoly will mean that smaller and independent presses will find it harder to get shelf space. Proportionally, the amount of books you could see on shelves that were decided by one entity could be far more. Furthermore, as explained in the antitrust section – you’re looking at retailers (bookstores, libraries etc) being faced with added hurdles such a distribution difficulties and price-fixing. This also raises concerns regarding imprints – different imprints with different publishing ethos’ will be in conflict one another if they’re housed under the same roof. The end goal here is money; those at the top of the food chain don’t particularly care if books that they publish (let’s use a Trump biography as an example) go against the values of their imprints.
After a certain point, any company – any publisher – gets too big to be ethical.
A monopolisation of anything in general is bad. It is a consolidation of power away from the largest amount of people most involved in the market. However, to play devil’s advocate for a second; this throws up the very stark reality that is the damaging effect of Amazon. While I do not support this deal nor do I think PRH is doing it in the interest of pro-competition, I can understand the path that led us here.
Disclaimer: I am by no means a publishing professional. Everything contained in this article is based on my own knowledge and understanding of the situation.