Bertelsmann, the German media company, and Pearson, its UK rival, are merging Random House and Penguin, their respective publishing units, in response to the rapidly developing challenges of the ebook revolution, according to The Financial Times.
Marjorie Scardino, chief executive of Pearson, said the merged company would have greater resources to invest in digital publishing which could include the development of a web platform selling books direct to consumers or the creation of its own ereader device to challenge the Amazon Kindle.
In a move likely to trigger more consolidation, the companies on Monday said 53 per cent of Penguin Random House would be owned by Bertelsmann, and the other 47 per cent held by Pearson, which also owns the Financial Times.
From the article in Shelf Awareness, it sounds like this was a preemptive move to keep News Corp (owner of HarperCollins) from buying Penguin.
Well, the way I read it, Penguin and Random House were exploring the issue when NewsCorp entered the scene in order to preempt the deal between P & RH. That's what apparently pushed the deal forward.
More interesting is what will happen to publishing and to the market for e-books and self-published authors. My guess is that Amazon better keep faith on the 70 % to keep its market share. I'm not too worried. They are making great strides going international. I had an e-mail from a German web site this morning, expressing interest in running promotions and reviewing my books. My international sales are still small, but I hope they will improve. None of my publishers has ever tried for the international market.
This article from the Telegraph (via Passive Voice, where I get all my news)
"A company that controls a quarter of the book market will also be able to drive down advances – not good news for authors. And the more a company grows the more ravenous it becomes for even greater profits. Yet the book market is fairly static: readers don’t tend to go dramatically up or down. The way to grow is to find cheap bestsellers: hence the avalanche of books by celebrities in recent years.
Yet the many excellent editors who work at both companies can still provide one thing the moneymen know they cannot do without: cultural capital. Go into the lobby of any publisher and you will see posters of its most serious, prize-winning books, not necessarily its most profitable ones.
. . . .
Of course the behemoth in the room is Amazon, which now accounts for 40 per cent of all book sales in this country. Jeff Bezos, Amazon’s boss, said last year that “if you’re going to invent, you’re going to disrupt.”"
My comment: Having been inside Penguin in NYC, I can testify that there wasn't a single book display anywhere. The building was fortified and terror-conscious (they publish Salman Rushdie), but so stripped of anything remotely resembling publishing as to prove they don't care much about their authors.
As MPR pointed out the other day, agents are likely to take this news on the nose. It means fewer publishers to play off of each other for bidding.