Penguin Random House and Simon & Schuster Merge

“Come on, come on, listen to the moneytalk.”
-AC/DC, “Moneytalks

German company Bertelsmann has agreed to acquire Simon & Schuster for $2.175 billion from ViacomCBS. This is a massive deal in the book industry, and one that could either help or hurt indie publishers and amateur authors.

Bertelsmann is the parent company of Penguin Random House, and this agreement turns the media giant into a complete publishing conglomerate. Both Penguin and S&S are two of the five brand leaders in book publishing. The deal took eight months to close, and is set to become official next year.

Markus Dohle, Penguin’s CEO, told Publishers Weekly that the deal was a, “good day for books, book publishing and reading.”

HarperCollins, Hachette Book Group and Macmillan still remain strong outlets in the publishing world, but it will be hard to compete against Bertelsmann’s combination of houses.

Bertelsmann Chairman & CEO, Thomas Rabe, said in the company’s press release, “This purchase marks another strategic milestone in strengthening our global content businesses. The book business has been part of Bertelsmann’s identity since the founding of C. Bertelsmann Verlag more than 185 years ago and has lost none of its appeal to this day.”

On the contrary, the book business needs competition, and this transaction may reduce the possibility for deals and only present lower advance offers for authors. ViacomCBS explained that both Penguin and S&S would be managed as separate publishing units, just under the same umbrella. Though that resonates an assurance of market rivalry, the revenue is still filtered into the same ownership. 

CEO Robert Thomson of News Corp, parent company of HarperCollins, told Fox Business of the deal, “This literary leviathan would have 70% of the U.S. literary and general fiction market.”

HarperCollins was also bidding for S&S, but the house couldn’t outdo the substantial, almost desperate offer from Bertelsmann. If News Corp was able to land the deal for their publishing unit, it would have helped HarperCollins catch up to Penguin’s sales. The U.S. sales for both are estimated at $1.1 and $2.2 billion respectively.

Thomson added, “There is clearly no market logic to a bid that size. Bertelsmann is not just buying a book publisher, but buying market dominance.”

Despite the fierce challenge that lies ahead for HarperCollins, Hachette and Macmillan, this is the business of the industry. With that in mind, there needs to be less business and more diversity.

Independent Publishers   

Bellevue Literary Press is a non-profit publisher. The press was founded in 2005 as part of the New York University School of Medicine, and was stationed within Bellevue hospital. In 2010, the house made a mark in the literary world by publishing a Pulitzer Prize winner, Paul Harding’s Tinkers.

Bellevue has been dedicated to providing quality work that engages readers and creates conversations and debates. They have several award-winning titles in their catalog. Now fully at independent status and located in lower Manhattan, the press has become one of the more consistent and sustainable names not only in the non-profit world, but across the independent publishing landscape as well.    

Publisher and Editorial Director Erika Goldman said of Bellevue’s goals, “We simply wish to continue publishing great books at the same rate as we have been so far.”

Independent publishers have grown tremendously of recent, and more boutiques and presses open yearly. Due to the modern form of self-publishing and a variety of smaller outlets, major houses have seen a drop in market shares. Penguin and S&S combine for just 18.2% percent of the book market—and the giants rank first and third respectively.

“Consolidation of the commercial corporate publishing world has been going on for decades now,” explained Goldman. “Independent and small press publishers represent true diversity in the publishing industry and great alternatives for authors. I believe that authors and agents will understand that they may be better served by independent presses.”

Smaller houses tend to focus on producing a handful of excellent titles per year while corporations simply seek to increase revenue to benefit their shareholders. Quality over quantity should prevail, but that unfortunately isn’t always the case.    

Self-Published Authors

The plight of a self-published author is a difficult one to combat. The market has become over-saturated due to free platforms such as Amazon and a plethora of author services companies. There are some sub-par works being produced and made available to the public, but there are also great novels by undiscovered writers.

Scott Kujawa, author of four trilogies and a variety of novels and short stories, not only has had to battle in order to get noticed among the crowd, he also writes in a niche-romance genre. There is hope, however.

“My income is growing,” Kujawa said. “However, indie/selfpub is a different mindset compared to trade pub. I’ve heard many trade pub’s say they have to work to market their books. They don’t help the way they used to when it comes to selling certain authors. The help they receive depends on who the author is.”

Advertising and marketing rule the world. Many self-published authors and independent presses know how to expertly navigate social media. Their strategies have put the pressure on major brands. Even though Penguin’s and S&S’s market share percentages seem low, book sales are up in 2020 so far. Print sales have increased 3.6% and ebooks are up 4% from last year.

Yet, the merger may hurt self-published authors in the long run. “Many authors might struggle with finding anyone willing to contract their stories,” Kujawa predicts.

Looking Ahead

Smaller presses must be more select with the work they choose in order to strengthen their brand, and independent authors must increase their presence on social media. Bertelsmann’s acquisition promotes a strange forecast for the publishing industry next year. The independent sector could continue to grow, helping the industry overall with quality works and diversity within authors and trends, but authors may still struggle financially. Penguin and S&S can both expand their sales through synchronized rival marketing and taking advantage of famous author names and well-known brands. However, the merger could limit the scope of opportunity for unestablished writers, swaying them toward independent houses and platforms.

It’s still beneficial for an author to be traditionally published because of editing services, promotional strategies and media exposure. On the other hand, less opportunity at the highest publishing level may saturate the industry even more below. Dohle mentioned that the market was highly fragmented, but that doesn’t mean this merger is going to fix anything. We will wait and see.

Good luck, authors.

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