Publishing industry: waving or drowning?

30 Oct

The merger between two of the UK’s biggest publishing houses, Penguin and Random House, is expected to give them at least a quarter of the market in non-digital book sales. It won’t be quite enough to attract the scrutiny of the Office of Fair Trading but that doesn’t mean there’s no frisson of alarm in the already anxious publishing world. The consolidation will give Random House’s German owner, Bertelsmann, 53% of the joint business, to Penguin owner Pearson’s 47%. The question is whether it is a predatory strike – or a survival strategy that would free up cash to invest in the new territory of e-publishing.

On the surface the book trade is as tumultuous as the seas off New York. But there are some unexpected constants. In the first six months of this year, ebook sales grew by 188% over the previous January-June, but overall sales of non-digital books are declining only slowly. When a product is cheap and readily accessible, people really do buy more of it. So far, the most obvious victims of the revolution are the bookshops, which struggle to compete in either price or convenience with the e-tail market. But that’s not for want of trying. Innovative strategies proliferate: this week, the US bookstore chain Barnes & Noble launches its own e-reader, the Nook, in the UK to compete with various Kindles, Kobos and iPads. In May, Waterstones startled observers by climbing into bed with Amazon, which means that personal shoppers can now buy ebooks from Amazon courtesy of Waterstones’ internet connection, despite chief executive James Daunt’s earlier view that the online retail giant was a “ruthless moneymaking devil”.

In this chaotic world, only the boldest would forecast the impact of the Random House–Penguin merger. In more traditional times, reducing the number of big players in an industry and putting a significant share of the market in the hands of the new company would be interpreted as a direct attack on consumer choice. In a move that might hint at a little anxiety about the attentions of the OFT, both parties to the merger are insisting their imprints will maintain their distinctive identities, and deny talk of anything other than back-office cuts.

But the only obvious casualties are likely to be blockbuster authors and their agents, who may feel the impact of one fewer competitor in the small market for books that win heroic advances. It is unlikely to matter much to readers. The independent publishing sector, which has about 45% of the market, repeatedly shows that big isn’t necessarily best. The real change defining the relationship between writer and reader, and the one that may yet dynamite for ever the traditional business model, is self-publishing, which does away with publishers altogether.

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