Authors Guild Statement on Penguin-Random House Merger

Posted by Victoria Strauss for Writer Beware

The following statement was sent by the Authors Guild to its members on Sunday. The Guild labels the proposed merger between Penguin and Random House (which would create the world’s largest publisher) “unsettling,” and urges “close scrutiny from antitrust officials at the Justice Department or the FTC.”

Here’s our storm-delayed member alert on last Monday’s unsettling announcement that Random House and Penguin, the two largest trade book publishers in the U.S., are merging.

Although Random House has said that the combination would control 25% of the book market, that appears to significantly understate things. The companies’ share of the U.S. trade book market for fiction and narrative non-fiction likely exceeds 35%. Their share in certain submarkets is no doubt even higher. The merger merits close scrutiny from antitrust officials at the Justice Department or the FTC.

While the companies discuss the cost savings from this merger through consolidating warehousing and other operations, those potential efficiencies for such large publishers are probably minor.  Economies of scale only go so far. The business logic of creating Penguin Random House would appear to have much more to do with the ongoing restructuring of the book industry. Barnes & Noble is now the sole brick-and-mortar giant; Amazon’s hold on online bookselling is more solid than ever.

“Survival of the largest appears to be the message here,” said Scott Turow, Authors Guild president. “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.”

We’ll keep you updated on developments in this matter.