John Sargent probably has the most famous exercise bike in global publishing.
It was on that bike, “a little after four in the morning in January 2010”—as he wrote in an open letter on the SFF imprint Tor’s website—that he decided to switch Macmillan to the agency model. The decision, of course, had dramatic consequences, leading to the long-running battle with the US Department of Justice over publishers colluding on e-book price-fixing.
For a time, Macmillan was the last publisher standing, refusing to settle with the DoJ. But in February this year, Sargent announced that Macmillan would reluctantly fold its hand. He wrote at the time: “I had an old-fashioned belief that you should not settle if you have done no wrong. As it turns out, that is indeed old fashioned.”
Sargent was faced with the prospect of a “worst case judgment” of Macmillan having to pay treble damages for not just its own part of the case, but for that of the other publishers who had settled (minus their settlements). Given that Apple, which chose to fight on, went on to lose, settling was probably the right call.
Introduction to agency
Almost six months on, Sargent still believes the trade benefited from the initial introduction of agency. “The four-year period when agency first became an issue, from December 2009 to today, has had a substantial impact on our business. At the end of the day, we are better off today than before Apple entered the marketplace. We have a more competitive marketplace. We have seen Amazon’s share going from about 92% to roughly 60%, we have Apple and other players.”
It is worth underlining that the DoJ ruling might not be the final nail in agency’s coffin—at the very least, negotiations on prices will begin again soon. The DoJ allowed the settling publishers a two-year “cooling-off” period, which has allowed Amazon and other retailers to price as they saw fit. But the “cooling-off” period for Macmillan will expire towards the end of next year.
Sargent won’t (and legally cannot) be drawn on the direction he thinks those negotiations should go, but says: “There will come a time shortly when we will re-do whatever contracts we have open at that point with retailers. A moment will come when we have to have make decisions on the best way forward.”
The DoJ case was not the only thing on Sargent’s plate over the past couple of years. Last year, parent company Von Holtzbrinck restructured globally along divisional lines, meaning Sargent’s role was shifted from being head of Macmillan’s overall US business to leading its global trade division. Trade accounts for about 45% of Von Holtzbrinck’s €1.61bn (£1.36bn) books revenue—the bulk coming from its German, US, UK, and Australian arms, whilst there are smaller operations in South Africa, India and China.
Sargent acknowledges the difficulties the various territories are facing: “All our countries in the trade division are at different stages of the digital transformation, but a common thread and a common challenge is that all the territories have bricks-and-mortar retailers who are struggling. Australia, for example has been a famously difficult market in the past few years for bookstores; so too is Germany, the US, the UK.
“Having said that, I’m very excited. The main advantage of the restructure has been the ability to leverage our marketing spending and our technology expertise across multiple territories. Buying IP worldwide has become a lot easier and a lot more effective.”
For Pan Macmillan in the UK, he sees “a lot of forward momentum. For the last three or four years we have been ahead of the market. The team is digitally astute and flexible. A real advantage of Pan Mac’s size is that they can take advantage of scale issues, but at the same time be a friendly human place and do the age-old job of looking after authors, but very quickly adjust to market changes. There are advantages of being in a flat organisation where, if you need to, you can quickly get all the decision-makers into a room.”
Scale is an important point at the moment, now that two of Macmillan’s competitors have merged into the biggest trade publisher in the world. He is not fazed by it. “Random House was four times as large as us and now Penguin Random House is seven times as large. It hasn’t been a problem for us before, and I don’t think it will be a problem for us in the future.
“At the end of the day, this is a human business. The editorial function, the selling of books is a human business. Yes, scale matters in warehousing and shipping and things like that, and you have to be a certain size. But once you reach that size, the gains from becoming even bigger still are somewhat limited.”
Sargent’s parents are publishing royalty: his mother, Neltje Doubleday, is the granddaughter of Doubleday founder Frank Nelson Doubleday; his father John Sargent, Sr, was the c.e.o. of Doubleday from 1961 to 1979, and was largely responsible for taking what was then a medium-size publisher and turning it into a multimedia powerhouse.
So Sargent, Jr, was destined to get into the trade? Not exactly. His parents divorced when he was young and he and his sister went to live with their mother in Wyoming. “I grew up on a cattle ranch. There was no particular push for me to go into publishing,” Sargent says.
In fact, he sort of fell into the industry. “In all honesty, the reason I got into publishing was that I didn’t get accepted to the first three or four jobs I applied to after college. But then I did a publishing course and got a job offer out of that. I was interested in publishing and books from an intellectual curiosity point of view, but it was not in my blood. I didn’t have dinners at home with authors. But once I got into it, I loved it.”
He did start in the family firm, however, as a business associate at Doubleday, but has been around the houses. His various roles include president of Simon & Schuster Children’s, c.e.o. of Dorling Kindersley, and he started his career at Von Holtzbrinck as the c.e.o. of St Martin’s Press. He was made overall head of Macmillan US (then called Holtzbrinck Publishers) in 2002.
He may be heading up global strategy, but what still interests him is “getting that manuscript that comes in where you think: ‘God, here’s a fresh voice with a completely new take on things.’ And if we can take what the author has taken all that time and effort on and make it work in the marketplace, it is still the greatest reward. That’s still the big rush.”
John Sargent is in the running for the FutureBook Most Inspiring Digital Publishing Person award. Cast your vote at www.futurebook.net/midpp