Random Penguin

Last week I received an email from a friend — hi, Taylor! — who asked if I’d seen what was heating up the twitter feeds from a lot of folks in publishing. That was the first I’d heard about the possible merger between Random House and Penguin. I read the initial articles and then read the next group where it was speculated that Rupert Murdoch might throw his hat into the fray. I’ll admit, I both laughed and shook my head in bewilderment at the way some folks were greeting the possible merger with tempered joy and yet the thought of Murdoch getting involved sent them scurrying like rats looking for shelter. Whether it was because they don’t like Rupert’s (AKA Fox News) politics or were afraid he’d actually require writers to write what readers wanted and not the politically correct tripe some of them have been cranking out, I don’t know and, frankly, I don’t really care.

We now have confirmation that the two publishing houses will be merging. Random House’s parent company will be the majority owner and will have more members on the board of directors. (You can see the official announcement at the Random House site.) It is anticipated that it will be the second half of next year before the merger is concluded — and that assumes there are no legal complications along the way. Considering the fact this is a merger of multi-national companies it is possible that it will take longer and that any significant delay might cause the agreement to fall apart.

Still, it is interesting to see how the media is handling the announcement. The New York Times notes that this merger could “set off a long-expected round of consolidation as the industry adapts to the digital marketplace.” John Makinson of Penguin who will serve as the new company’s chairman noted that they decided to make this move now, so they wouldn’t be “a follower”. Sounds to me like he realizes they were late getting into the e-book era, or at least adapting to it, and is now trying to avoid doing that as the landscape of publishing changes. The question is, is this concern not to be left behind again so great that the companies made a knee-jerk reaction and jumped before they should have?

Some hard facts. The merger will create the largest “consumer book publisher” in the world. It will have a global market share of something like 25%. This market share is based on such current best sellers as Fifty Shades of Grey as well as Penguin’s backlist of classics from authors such as Orwell.

There is speculation that one reason for the merger was to combat the growing influence of Amazon and, to a lesser extent, Apple. Forbes specifically noted Amazon’s growing footprint in publishing as the company continues to woo authors to the KDP platform as well as expanding its own publishing lines. It wouldn’t surprise me at all if that wasn’t one of a number of considerations for the merger. However, whether the creation of a Super-Publisher will take much of a chunk out of Amazon remains to be seen. My own thought is that it won’t. At least not unless the new Random Penguin figures out how to have a consumer driven user interface with good customer service.

Other details of the merger have continued to emerge. Random House’s parent company will own 53% of the new Random Penguin and will nominate five directors. The remaining four directors will come from Penguin’s parent company. There is also a clause requiring the two corporations to retain their interest in the merger for at least three years. Makinson, Penguin’s chairman and CEO, will chair the new company and Random House CEO Markus Dohle will be the CEO. It is claimed the new company will save money on warehousing, distribution, printing and “central functions”.

But this is what interests me and, to be honest, is something I find hard to swallow. “We will have more than 250 imprints in this company,” Dohle said in an interview with Reuters. “We want to preserve and give those imprints even better and richer resources.” Okay, color me skeptical, but how often do two companies merge and there aren’t changes in the way both companies operate? If this merger is to make more money, does anyone really believe they won’t cut those imprints that aren’t pulling their weight?

And this is what worries me as a reader and as a writer. Not only does the merger of two of the Big Six mean there are now fewer players to bid on works out there making the rounds, it means there are going to be even fewer slots, at least for a couple of years, for new authors to break into. It also means that authors who are publishing through the imprints that will be cut — and don’t fool yourselves into thinking there won’t be casualties — may very well find themselves with orphaned works they can’t get back without jumping through legal hoops.

I’ll be honest, I’ve already talked with a couple of authors I know who have books with one or the other of these publishers. I’ve told them to check their contracts and their statements. If they have rights they need to get back,, they need to do it now, before they get tied up in the lengthy merger process. Authors and their works are nothing more than assets to these companies, something to be traded on and used. So here’s my advice to each of you. If you are an author with either of these houses, check your rights. Do what you need to do to protect yourselves because the companies won’t.

If you work for these companies as editors or support staff, I hope you are getting your resumes together because there will be personnel changes. You’ve seen it before as the companies downsized. Get ready for the next round.

As an aside, I hope everyone in the New York/New Jersey area is safe this morning. My thoughts have been with all of you in the path of Sandy.

27 comments

  1. The two biggest lies in any corporate merger: “Nothing’s going to change” and “Nobody’s going to lose their job.” As you point out, if nothing’s going to change, why merge.

    They tell these lies because the valuable people they most need to keep are also the people with the easiest time finding other work. They need to keep everyone calm for a year or so. Then the axe can start falling.

    1. Martin, it’s amazing how so many people forget that. Like I said, I hope those working for these two publishers are polishing their resumes and sending them out.

    2. Precisely. Then there’s this point of Amanda’s:

      “It also means that authors who are publishing through the imprints that will be cut — and don’t fool yourselves into thinking there won’t be casualties — may very well find themselves with orphaned works they can’t get back without jumping through legal hoops.”‘

      That’s a big reason I went indie. The biggest reason was not wanting the rights to my work potentially tied up in a corporate bankruptcy, because I’m pretty sure that’ll be the next shoe to drop.

      1. Pat, thanks for the comment. You’re right. Even if the imprint you’re with now doesn’t turn out to be one of those that is shuttered, there’s the looming spectre of bankruptcy out there and, as an asset, an author’s novel will be tied up in court for potentially years. So run, don’t walk, to the nearest attorney and accountant to see what needs to be done to get your rights back asap.

    1. And justifying their actions in merging. Ayup – they will think themselves far-sighted for anticipating the impending market collapse, like the person who starts the run on the bank.

      Feedback loops are a b*tch.

    2. But, but, but, they think this merger will allow them to compete with Amazon and Apple.

      Sigh. There are times I wonder what they are drinking/smoking/injecting/whatever.

      1. Me, too, Amanda. I don’t really see the logic here. And I certainly don’t believe them when they say no one will lose their jobs or that the imprints that aren’t all that profitable won’t get cut, because that’s just stupid.

        I think you’re right that Random Penguin hopes to become a player in the e-book market, and of course they’re going to have to up their game(s) significantly in the process. But big mergers don’t always work — think about the merger between Time Warner and AOL, for example — and the best thing that happens afterward is that there’s a breaking up into smaller components again. (The worst thing is that the new company goes under completely.)

        Great advice for those who work for either of these concerns right now, and greater advice for the writers who have books placed but not yet printed at these two concerns . . . if I had one, I’d be trying to get it out. And if I had an agent that had placed one there, I’d be putting pressure on that agent to get the book to revert back to me so I could self-publish instead (as that’s far less risky than leaving the book there, right now, even if you know nothing about e-books.)

        1. Barb, I absolutely agree. Of course, cynic that I am, I wonder if the agent really would do so. I’ve seen too many agents over the last few years seeming to work more for their own best interest with regard to publishers and not necessarily with regard to the writer they are representing. Not all agents, mind you, but too many for me not to wonder just how they will react to the news.

          1. I agree; even the reputable agents now are scrambling, and are looking for ways to advance the business model. One of ’em, Kristin Nelson, has started up her own e-book house . . . I don’t know how it works, necessarily, and I don’t think it’s ever going to be a huge concern for her, but she had a few clients who weren’t able to get their books out any other way (one had written book five of an ongoing series and had overseas interest, but none here), thus the new e-book venture.

            Anyway, I hope that the good and reliable agents out there will watch out for their clients best interest, whatever that best interest turns out to be. But I agree wholeheartedly with your cynicism, too, because the marketplace is changing so rapidly that it really seems like most agents cannot keep up.

            1. Barb, a number of agents/agencies have done this and it does raise red flags for me. Agents are supposed to work for their clients’ best interest. If that agent has a publishing arm, there is at least an appearance of a conflict of interest because they are now in competition with the publishers they are supposed to be trying to sell their clients’ work to. I’m not saying there is a real conflict, but I know of quite a few authors who have left their agents because of this — and because of pressure the authors felt from their agents to agree to letting the agent/agency bring out their backlists or other works through the agency “press” instead of on their own. I’m not saying that’s what Nelson would do, but the impression is still there.

  2. Oh…fantabulous! You already know how I feel about Penguin. *shrug* meh. doesn’t affect me that much. Everything I read now is published by Baen or other independents..

  3. It is entirely appropriate for publishers to view “Authors and their works are nothing more than assets” — it would be irresponsible for them to act otherwise. It would be entirely foolish for authors to view the relationship otherwise. Your bartender may be your friend, the hooker with whom you lay might “really” like you and find you attractive — but don’t rely on that to see you home safely afterward. Always practice safe commerce and don’t let your books get lost in the orphanage.

    1. I wish publishers were even more commercial in their attitudes – they might do more market research and put out more books that readers actually wanted to read.

      1. Laurie, the only problem is they would do the research and by the time they managed to implement it, public taste would change. That’s part of the problem now. They think everyone still wants Twilight or Fifty Shades of Grey. But, by the time they get new books like those out, there will be a newer “biggest, greatest fad”.

    2. Agreed on both counts. It’s the authors I’m worried about because this merger could muddle even further their rights issues — not to mention the way it can lead to yet even newer and “more creative” accounting practices.

  4. From a reader’s standpoint it means that there going to be less variety. Some of us don’t read what ‘everyone’ is reading. One more reason look to Indie. I still wonder if why none of these houses see that part of what drives the growth of Amazon and e-books is based on their very own policies?

    1. No, they think Amazon is evil and is sitting in a circle at the dark of night, casting spells to curse them. Oh, wait, I’ve been reading Kate’s Con books again 😉

  5. I’d be curious to see if some lines are “spun off” or just flat sold on the open market in order to keep shareholders happy. And I would wager a few dollars (US or Canadian, I also have Austrian shillings) that RES is correct: more potential Random Penguin authors will go indie and current R.P. authors will be cut out and forced to go indie, thus tightening the vortex around the drain.

    1. I doubt any of them will be spun off or sold. They’ll be shut down and the authors will find themselves in limbo. Their books are under contract but the imprints aren’t there. When they try to get their rights back, they’ll be told the house still has plans for the book. Worse will be those who already have books published by those imprints. This is not a situation where bigger is better, at least not from a writer’s point of view.

  6. Agreed. The reduced competition can only hurt writers, and readers.

    Wayne

  7. Color me loopy, but every time I see “Random Penguin” I visualize something like an Antarctic bird zipping all over the ice without an apparent objective.

    Think I’ll call my indie house “Inconstant Parrot,” just for fun.

    1. I imagine a penguin looking around and pointing to itself, as if thinking, “what? Why’d you pick me?”

      And “Random Penguin” will probably be the name of the next big dub-step mixer. “Tonight only: Skrillex, Deadmau5, and Random Penguin!”

    2. Actually when I first saw the title, I thought Amanda was writing about the FilKONtario music convention. The penguin is our mascot 🙂

      Wayne

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