A penguin walks into a random house …

July 2, 2013 by · 2 Comments 

Penguin_Random_HouseYesterday, news broke that Random House and Penguin, the world’s two biggest multinational publishing houses, had completed their merger with the creation of a new entity, Penguin Random House. The parent companies, Bertelsmann and Pearson, own 53% and 47%, respectively. According to a press release, the new company “will employ more than 10,000 people across five continents,” and industry estimates suggest that it will control fully 25% of the global market in trade book publishing. The Wall Street Journal states that the company’s annual revenues are in the neighbourhood of $4 billion, which Alex Shephard of Melville House points out is larger than the GDP of some forty-six countries.

By any reasonable measure, the new megapublisher is a monster.

Yesterday’s release indicates that, for the time being at least, the company will retain its various independent international imprints – which number upwards of 250 all told. The press release quotes new Penguin Random House CEO Markus Dohle:

As separate companies, we have long performed outstandingly by every benchmark; as colleagues, we will share and apply our passion for publishing the best books with our enormous experience, creativity, and entrepreneurial drive. Together, we will give our authors unprecedented resources to help them reach global audiences – and we will provide readers with unparalleled diversity and choice for future reading.

Certainly, the new entity will have the capability to reach more readers around the world than any other so-called “legacy publisher,” and it also boasts a formidable backlist, which includes the Penguin Classics line, the Vintage line, and others. Whether this will translate into “unparalleled diversity and choice for future reading,” however, remains to be seen.

In recent years, domestically at least, the large houses have been highly conservative in their acquisitions: previous award winners, sequels, and safe bets have been the order of the day. Random House of Canada’s vaunted New Face of Fiction program, which helped launch the careers of writers such as Yann Martel, Ami McKay, and Mary Lawson, this year released only one title: Kenneth Bonert’s historical epic The Lion Seeker. Besides scaling back on novels by first-timers, story collections have been scarce (none from Random House of Canada or Penguin Canada in the first half of 2013; last year saw Miranda Hill’s Sleeping Funny from Random House imprint Doubleday Canada and Penguin’s Hamish Hamilton Canada imprint published D.W. Wilson’s Once You Break a Knuckle in 2011), and poetry has been non-existent, except for collections published by Random House imprint McClelland & Stewart.

Fall 2013 is a strong season for both Random House of Canada and Penguin Canada, with new books on the way from Margaret Atwood, Joseph Boyden, Wayne Johnston, Mary Swan, Douglas Coupland, Mary Lawson, Michael Winter, Peter Robinson, Craig Davidson, Kelley Armstrong, Anthony De Sa, and L. Marie Adeline. And that’s just the Canadian fiction. But these are all established names: bestsellers and award winners or nominees. If the new edict for Penguin Random House is profit above all, will there be room to take chances on untested authors or risky material?

One test case this season may be Eleanor Catton’s second novel, The Luminaries, published by M&S. A stylized historical novel that clocks in at a whopping 850 pages, Catton’s book may serve as a bellwether for how risk-averse the company’s various imprints prove to be moving forward.

Of course, the other way the new publisher might impede readers’ diversity of choice is by further siphoning the air from the national conversation around Canadian books and literature, making it even harder for the smaller independents – the ones who do take chances on new or risky authors – to survive.

The one place Penguin Random House might be able to exert some influence is in the digital sphere. Its sheer size and the power of its combined lists could offer it the muscle to stand up to Amazon, which has a virtual monopoly in online book sales, and has historically acted as a bully in demanding steep discounts from publishers. In December of last year, Penguin settled its lawsuit with the DoJ in the U.S., effectively putting an end to the company’s practice of agency pricing and paving the way for regulatory approval of the merger with Random House. Jeremy Greenfield, digital publishing reporter for Forbes, asks some salient questions about how the new company will proceed in the arena of online sales: “So, when will Penguin Random House sign new contracts with retailers? When will their prices be subjected to the same kind of discounting now happening with ebooks from every other publisher? We’ll wait and see.”

“Wait and see” seems to be the only real recourse at this point, including in the matter of staffing. When two large companies merge, there are inevitably “rationalizations” that occur to eliminate newly created redundancies; while not ruling out future cuts, Dohle told The New York Times that those decisions will be made later. “We have the luxury to take the time before we make any strategic decisions,” Dohle told reporter Julie Bosman. “There is no need to rush.” Quill & Quire enumerates the Canadian executive for the merged company; it appears that, for the moment, the changes are minimal.

The bottom line, at least in the short term, is perhaps best expressed by consultant Mike Shatzkin in Bosman’s NYT piece: “If you’re a Penguin author or a Random House author, you should be pretty happy today. If you’re another publisher or an author with another publisher, you should be watching this with a wary eye.”