The merger of Random House and Penguin may be more about leverage than money, according to a report in The New York Times. The deal creates the largest consumer book publisher in the world, but more importantly, could provide Penguin Random House with the clout to compete with Google, Apple, and Amazon.
It also likely signals the beginning of more consolidation in the industry as publishing houses join forces to create companies that have the size to negotiate better terms.
“I wouldn’t be surprised if all the major trade publishers were having conversations like this,” said Ned May, an analyst at the research firm Outsell. “I would expect to see similar realignment.”
Rumors were spreading about a possible Penguin merger with HarperCollins before the deal with Random House was announced, which means parent company News Corp. will likely continue to look for a new suitor for HarperCollins, according to Jeremy Greenfield in his Forbes blog.
Greenfield says he believes the merger could mean Penguin Random House using the negotiating clout it would have with Internet giants in its dealings with retailing partners and authors. At the same time, cost-saving efficiencies in areas such as warehousing, distribution, and printing will be coming.
It just won’t happen quickly, says New York literary agent Richard Curtis in digitalbookworld.com. He sees plenty of infighting ahead as executives stake out their turf, but added that editors, imprints, lists, and even authors will eventually feel the pinch.
“Aside from the human toll, injury to literature itself will be inflicted as the Darwinian struggle rewards the most commercial authors and makes it even harder for newcomers to gain a toehold,” Curtis writes. “And that, in turn, will fuel the self-publication and alternate-publishing trend that is already under way. The e-book and print-on-demand businesses, already prospering from that trend, will continue to thrive.”