Standing Up to Amazon: The Random House Penguin Merger

5 November, 2012

Last week, just as Hurricane Sandy came bearing down on us, the publishing industry was chilled by news of a merger between two giants: Random House and Penguin.  Anyone who has been witness to mergers and acquisitions in publishing (indeed, in any industry) over the past two decades knows that when companies merge, whatever benefits may accrue–the so-called greater efficiencies and economies of scale, for example–the negatives always outweigh the positives.  First, back-office operations will be consolidated, and there will be hiccups as systems merge. (Undoubtedly, contracts and checks will be delayed.)  There will be job loss, but of a more invisible sort, at least to us agent/observers.  That will be followed in short order by decisions to eliminate redundancies in terms of both function and identity throughout the myriad imprints and divisions.  With that, many of our respected colleagues’ jobs will be in jeopardy, and well-respected entities within the publishing houses will be merged or eliminated altogether.

Those who lose their jobs will not all bounce back to find new ones.  The industry cannot absorb them.  Some will freelance and even herald getting back to what they love best.  Others will become agents, and while some among these may succeed, others will find it intensely challenging.  And yet others will drop out of the industry altogether.  This is an avocation they will not be able to afford to pursue.  Very quickly, many of these talented publishing people will discover that life without a steady paycheck, a 401K, medical benefits and the possibility of making a bonus, is not nearly as much fun as they thought it would be.

For writers, and the agents who represent them, the pie will shrink dramatically.  The emphasis will continue to be on publishing mega-hits.  There will be less and less risk-taking.  All of these forces have been at work for a long time, but a merger at this level will dramatically accelerate the trend. Other large publishers will feel pressured to form their own alliances, in order to compete with a publisher who will arguably control 25%-33% of the total publishing output.  And so it goes, a chicken-an-egg situation.

One of the key reasons for this and other mergers is that publishers are trying to fight back as Amazon unabashedly continues to flex its muscle as both publisher and vendor.  For a publisher to be able to stand up to Amazon, the thinking goes, they need to big, really big, big enough to matter to Amazon.

Of course, Amazon is not just the villain in this story.  Amazon has transformed publishing and delivery systems, bringing books to readers globally in both print and digital form with exceptional customer service.  Indeed, this agency is proud that Melissa F. Olson’s DEAD SPOTS, represented by our own Jacquelyn Flynn, was acquired by an enterprising and visionary editor at Amazon’s 47 North imprint, Alex Carr, who was willing to take a chance on an unknown author.

The only thing to do is continue to look forward, not backward, to anticipate change as a constant, and for authors and agents to try to find the silver lining.

–Joelle Delbourgo