It's hard to say so soon after the news of the Pearson deal exactly what it means, but here are some top-of-mind initial observations.
By spending over $116m (£74m) buying Author Solutions (which operates as Author House in the UK) Penguin are lending massive credibility to the self-publishing market—it is perhaps the day self-publishing came of age. The valuation marks another landmark too, given the business had revenues of approximately $100m last year.
The traditional snottiness of publishers to the area—that self-publishing is just the slush pile in print—may need urgent revision. And here's another reason that attitude may need to change: E L James. Penguin make mention of her in their announcement. Just the fact that Penguin has bought Author Solutions will make every other major British publisher consider if they need to follow suit—and the valuations of other self-publishers will be rising accordingly.
Another thing that strikes me immediately is the vast numbers of people the outfit employs, 1,600—spread across Indiana and the Philippines. Let's put it another way—that it is about 600 more people than Penguin have in their London HQ on the Thames. And also the vast numbers of authors—150,000—that Author Solutions has put into print. Although perhaps if everyone has a book in them, and if it can only cost a few pounds to put it into print, then that 150,000 in reality represents just a tiny fraction of the potential market.
Clearly the deal puts Penguin into a fast-growing part of the publishing market, even if it is not its natural one, and to some extent acts as a hedge against the uncertainties of how the digital future will unfold.
The deal has been done in the US, and it will be interesting to see quite how the Penguin UK/Author House integration happens here. But I suspect the real underlying reason Penguin want the business is to see the secrets of online "customer acquisition and data analytics"—so that they can apply them to its core businesses, and to spin-offs. These are retail skills, as well as publishing ones, and Penguin is planning for a disintermediated future.