Opinion Books and the behemoth

Conglomeration in publishing has been due ever since size began to matter in bookselling. Over a decade ago,online retailers like Amazon and Borders aggressively took away the initiative from publishers,the traditional gatekeepers of the world of books. A brick and mortar superstore can hold perhaps 1 lakh titles. An online store’s capacity is theoretically unlimited,and actually unlimited in the category of ebooks. Led by Amazon,gigantic online sellers leaned on publishers to wrest the initiative on how books should be packaged,priced,discounted and sold. At some point in time,they may even want a say in what books should contain.

Long-suffering publishers began the fightback this year. In April,the US Department of Justice launched antitrust proceedings against five big publishers and Apple,alleging that they had colluded to hike the prices of bestsellers,and then tried to force Amazon to cut discounts and follow suit.

It is illegal to collude,but perfectly legal to gang up by merging. Quite by chance Pearson,which owns Penguin,faced a turning point this year. Its chief executive,Marjorie Scardino,steps down in December. As early as September,there was talk of Pearson selling Penguin,the world’s best-known publishing brand. This was apparently contemplated to reduce its exposure to media (Pearson also owns the Financial Times),which is now a risky business in Western markets,and allow it to concentrate on education,a reliable boom sector. A merger with Random House offered a far better solution,allowing Pearson to retain the brand with reduced risk.

The creation of Penguin Random House may spark off another round of consolidations,bringing together other publishers eager to lean on retailers who have leaned on them. In fact,this deal was concluded in a terrific hurry,literally over a weekend,possibly to fend off HarperCollins. Rupert Murdoch,though still punch-drunk from the phone hacking scandal in the UK,is refusing to be left out of the fun and games. Now that the most valuable deal is done,Murdoch may see HarperCollins as the sheet anchor of a multi-cornered merger involving several other publishing houses — with a market share just under what antitrust regulators would find disturbing.

This would be even more potent than the current merger,whose strength lies mainly in cost reduction by sharing back-end functions and pooling some of the biggest names in the writing trade. In terms of monetary strength,Penguin Random House cannot compete with Amazon. Its revenue is an order of magnitude lower than Amazon’s $48 billion.

Consolidation is good news for publishers,the original gatekeepers of the book trade,but probably bad news for writers and their agents,the foragers and quartermasters general who keep the industry fuelled and provisioned. Penguin argues that the merger gives it the clout to represent authors more forcefully and secure beneficial terms. However,the main beneficiaries would be well-branded writers in formats and niches with predictable sales. With fewer outlets to pitch to,new talent and experimental work would find it harder to get its foot in the door.

But that does not mean that talent will die. Consolidation and the dwindling of choice could force a formerly reviled choice upon writers — self-publishing and services enabling it could gain legitimacy. In fact,now that writers have been turned into performing fleas who go out there and sell their books,the difference between mainstream publishing and self-publishing is diminishing.

This feels like the beginning of decisive change in the book trade. Publishing is one of the few industries that have flourished through the recession. Unlike its less cultured cousin,media,it has been fattened by the digital revolution. Sales of printed books have fallen slightly while that of ebooks,audiobooks and related media are rising much faster.

The industry is in a turbulent phase,when numbers matter more than ever before. The merger of Penguin and Random House has been conceived on purely financial grounds. It is about managing risk,reducing costs and securing control over markets. It has absolutely nothing to do with literature,culture and learning,those mysterious,magical entities that publishing packages and sells. After it’s done restructuring the market,maybe the industry should go back to nurturing the content that is at the heart of the business,which it has been neglecting of late.

pratik.kanjilal@expressindia.com