Viewpoint - Penguin Random House merger

Viewpoint - Penguin Random House merger

The merger of Penguin and Random House is expected to close in July, creating—with sales of £2.5bn—the largest trade publishing business ever. Ahead of any announcements about its forthcoming plans, The Bookseller asked a range of industry insiders what the new management team should do:

Jonny Geller, m.d. Curtis Brown

The Penguin Random merger is certainly the biggest event in publishing this decade and may well prove to be the turning point in how our industry evolves. From the author's point of view, change is only useful if it improves standards of development, production and distribution.

If I were in charge of the "author care" side of this merger, I'd concentrate on the following issues:

1. Clear and constant flow of information to help authors through the transition.
2. Transparent communication on areas of potential difficulty—not endless "everything is so exciting" communiqués, with no real detail. Mergers mean consolidation. Consolidation can mean a lesser service.
3. If they are keeping editorial independence in all the lists in both houses, explain how this can work.
4. How can a merger of two dominant publishers improve the "rights" of an author? Will there be more flexibility in contracts or less? Agents obviously fear the latter. Will sales departments merge? Authors who chose a boutique imprint (like Secker or Hamish Hamilton) may find themselves competing with the commercial juggernauts of other imprints? How will the author be heard when one group controls nearly a third of the market? Some very smart people are behind this merger and I am not in the conspiracy theory camp nor do I believe this move is simply to increase leverage with Amazon. If Penguin Random provide a robust reason that big can be beautiful, deliver new dynamism, new ways of growing readership (a Penguin virtual bookshop that invites other publishers to take floors?), then we will welcome further changes in months and years ahead.

Caroline Michel, chief executive, PFD

To a writer the size of the publishing house doesn't really matter, some of the most promising books in some of the largest publishing houses fall off the radar. What matters is getting the book they have written into the hands of as many readers as possible in whatever form, print, digital, audio.

So where size does matter is the power that the company can wield in achieving all of the above for their authors as well as protecting the rights of the author. The publisher cannot be just a production line.

Apart from ensuring that the publishing house continues to publish and discover the best writers there are, surely the most important role a strong publisher can play is to create a hub of reader connectivity that offers the reader a trusted place to discover/ find and buy books and the publisher to build a network direct to readers.

Henry Rosenbloom, founder and publisher Scribe Publications

The first thing I'd do would be to use the weight and influence of the combined company to make myself extremely unpopular initially by launching a lobbying campaign to restore the Net Book Agreement. Virtually everybody who supported its abolition in the mid-1990s now recognises that they were wrong, and that the policy has had disastrous consequences for every participant in the industry—authors, agents, booksellers, and publishers. Consumers think they're better off, and politicians are terrified of alienating consumers who vote, but it's a mad, bad policy.

In the mid-1990s, the public interest was deemed to lie unequivocally with cheaper books. But is it really in the public interest for bookshops to disappear en masse, for authors to get a pittance for their work, and for gargantuan retailers and etailers to swallow their competition and to bleed publishers dry? This is the revolution eating its young, when only the Committee for Public Safety is safe — for now.

I'm not under any illusion that restoring the agreement would restore the fortunes of the industry overnight — many European countries with fixed-price arrangements are also struggling with severe market downturns. But it would at least provide a base to work from, instead of consigning the industry to a future spent in quicksand.

PS: The Australian arm should do the same thing, directed at restoring retail price maintenance. We only have a decent independent bookselling sector because Amazon hasn't yet set up here; otherwise, all our conditions are similar—and similarly dire.

Rebecca Smart, chief executive, Osprey

There would be two key organisational themes I would address as quickly as possible. First, I would look at structuring publishing around readers' interests, taking the lead from whichever company is strongest in each genre or subject area. This would allow reader relationships to be built up steadily by a consistent team across many books, rather than marketing and selling a book at a time. Second, I'd focus on developing and utilising global infrastructure that facilitates local action. How can the mass of data the combined entity will have be shared across divisions and around the world in order to drive the best decision-making, publishing, sales, marketing and customer service in each territory?

Once these were taken care of, I'd be thinking about how to make the most of the Penguin brand with some kind of direct offering for readers, whether retail or subscription.

Finally, I would be looking afresh at Author Solutions and thinking about how to use its workflow infrastructure and production network to create a new self-publishing services offering that uses scale to provide low-cost, clear, fair assistance for authors.

Shane Richmond, technology journalist

The challenge for digital innovation is not more publishers experimenting with video games and the future of storytelling. There is plenty of that happening. What is missing is a vision for the future of longform reading. Amazon has that sewn up right now and it has earned its victory. But a healthy marketplace needs competition and the scale of this merged publisher should grant it some leeway to experiment.

The abundance of digital content has played havoc with models built around scarcity. Hence Spotify in the music business and Netflix for film. In the world of apps—a 'medium' of sorts that is less than six years old - prices are being driven down to zero, with the basic content given away and upgrades sold via in-app purchases. In other words, we need more experiments with selling services instead of books.

The idea of 'Spotify for books' chills many in publishing and, yes, there are rights obstacles and other hurdles. However, somebody is going to try the experiment sooner or later and it might as well be a publisher with the clout and catalogue of Random Penguin. Or would you rather wait until Amazon's Audible subscription model comes to e-books?

Patrick Neale, bookseller and president of the Booksellers Association

Having worked for Waterstones when it merged with Sherratt and Hughes and Dillons I am aware that management teams can become distracted by the task of squeezing two successful companies together while benefiting from the obvious economies of scale. Deciding who gets to sit where and what colour the livery should be can take up an awful lot of time.

So the important job will be to focus on publishing really great books in all formats. Everyone is poised to observe how the new behemoth will work with its larger customers, hoping that the behemoth can wrestle the internet Titan into more reasonable behaviour. It's essential that this company doesn't think it can sell direct to customers. You need thousands of shops and ardent foot soldiers/booksellers on the ground to keep books relevant in this busy age.

I suspect that the real drivers of the publishing world will remain much the same, those being profit, price and sales figures. Authors and shareholders will want what they have always wanted dividends and that number one slot.

Casting short term expectations aside I hope that the two already magnificent publishing houses can become greater than the sum of their parts. I hope they recognise the real value that physical books and physical bookshops bring to the long term health of our trade.

As the owner of a tiny business it is my greatest hope that Random Penguin will reap the benefits of size while still making sure that every member of staff feels empowered and close to books and customers.

Nick Harkaway, author

'Talk to your parents'. Even at £2bn, Random Penguin is not in Amazon's $108bn weight class. But the parent companies emphatically are - and Amazon is a group, not a single entity. To compete with a seller of electronics, clothes, and garden furniture, publishers need the help of their own umbrellas. But size alone won't cut it. The key word will be "clever".

Dennis Johnson, publisher and co-founder, Melville House

If I were the c.e.o. of Random Penguins, I would...

1. Join those b******* at Apple in standing up to the American government's persecution of the publishing industry, and to its protection of Amazon's monopoly. I'd fight back against the EU's imitation of the US DOJ, too.
2. Make all the e-books in my kingdom DRM free.
3. Give independent booksellers the same deal I'm giving Amazon.
4. End the insane practice of returns.
5. Petition the government and my colleagues at the other too-big houses to support a net-pricing agreement.
6. Fight to protect the print book, still the superior literary data storage technology for the poor and working class of the world, and which lots of people still want, while promoting the idea that digital media is great but should be given the chance to become what it's going to be, which is not necessarily a Xerox of a book.
7. Try to restore the literary culture to meaningfulness by breaking myself up. I'd sell off Penguin, Knopf, Dial, Pantheon and all my other various imprints to individual private owners, in hopes they would then restore those legendary companies to businesses that are at least as concerned with art-making and politics as they are with the bottom line.
8. Drink a far better brand of vodka than the stuff I'm drinking right now.