White knights

When on the 11th April the Department of Justice went public with its lawsuit against five US publishers over the adoption of the agency model, my hunch was that this day would be remembered as the moment publishing changed: became less convivial for sure, more professional in some ways and certainly much less fun.

Seven months on and I think we are beginning to see more clearly how the fallout will settle. The deals struck with the DoJ in the US by HarperCollins, Hachette, Simon & Schuster, suggested a desire to move on, quickly, with minimum fuss and pain. But with the News Corp Simon & Schuster dance beginning, the corporate moves now in play point to a deeper wound.

Publishing has not always enjoyed a happy home in the corporate jungle. For every Bertelsmann there has been a Vivendi, or worse, a Riverdeep. Publicly-quoted publishers have not fared much better: for every Bloomsbury, there has been a Dorling Kindersley (a City star before its fall and acquisition by Penguin in 1999). As the recent travails at the Quarto Group demonstrate, ownership really is the all.

The tale of the last decades of the past millennium was how the giant corporate businesses first fell in love with trade publishing and then tried to drop it, when they realised the promised economies of scale were all but illusory, the margins grim, and anyway somewhat academic in an industry where one hit can do so much for the P&L.
Many of the reasons agents give for resisting agglomeration apply equally to publishers. It is incredibly difficult to scale-up a people-led business. Corporate parents can understand this, some can even put in place support structures, but often they simply lose patience.
Smart trade publishers ameliorate the risks, like Bloomsbury with its diversified portfolio of interests, or by building a legacy of author relationships and copyrights that can withstand the vicissitudes of fashion.

But the DoJ’s lawsuit will have accentuated to the corporate mind the risks around trade publishing, and undermined confidence in it. It makes Pearson’s decision to find a home for Penguin incredibly perceptive, and suggests that even Rupert Murdoch—whose interest in trade publishing dates back to 1987—can be more white knight than not.