Random Penguins? Some Thoughts on the Possible Random House Penguin Merger

Random House was the first publisher’s name I learned to recognize. I didn’t know what a Random was, but I knew what a house was, and I knew Random House was the name on some of my favorite joke books — the Bennett Cerf ones. Of course, I didn’t know Bennett Cerf was one of the founders of Random House, way back in 1927. Now the Bennett Cerf riddle books are considered vintage kids’ books, and last week, we learned that the parent companies of Penguin and Random House were discussing a merger. As if that weren’t enough, there were also reports that News Corp. was trying to bid on the Penguin part of Pearson (stay that three times fast). Yes, that News Corp. — Rupert Murdoch’s company, owner of Fox News as well as Harper Collins. This would have thrown a wrench in the merger plans.

Eventually news reports and Pearson (the owner of Penguin) confirmed that the merger with Bertelsmann (the owner of Penguin) was going through. The new company will be known as Penguin Random House. I’m not even sure how that will fit on the covers of books. On the other hand, I’m glad to know the “Random House” name won’t be brushed away or turned into something “vintage.”

In a notice that was shared by an unnamed source at Pearson, Marjorie Scardino, chief executive of Pearson, informed employees and affiliates of Pearson that, “Our reasons for doing this probably won’t be much of a surprise to anyone in Penguin. The consumer publishing industry is going through a period of tumultuous change, propelled by digital technologies and the giant companies that dominate them. Penguin is an innovator, a pioneer and a real success story in this new age. But to seize some of the opportunities it has and carry on being a winner, it will benefit from more investment, more geographic reach, more diversity. The book publishing industry today is remarkable for being composed of a few large, and a lot of relatively small companies, and there probably isn’t room for them all – they’re going to have to get together. As we thought about that, two things were very clear. First, like a teenager at a dance, we wanted to be the one to lead. We wanted to have the pick of the partners, not to be left on the sidelines hoping that somebody would get around to asking us before the last dance. And it was clear that, when you size up the talent, Random House is, by a distance, the most attractive partner. (And that’s as far as I should take this particular analogy).”

In other words, many experts (such as those at Forbes and the Wall Street Journal as well as CNNMoney) see this merger as a way for Random House and Penguin to join forces against the force that is Amazon (not to mention Apple or Google), rather than being forced to merge with another publisher, such as News Corp.

As discussed in the press release, Penguin and Random House will combine into the ” Penguin Random House” joint venture. The press release explains that this joint venture was formed because ” the publishing and commercial success of Penguin and Random House can best be sustained and enhanced through a partnership with another major international publishing house.” The new company will “have a stronger platform and greater resources to invest in rich content, new digital publishing models and high-growth emerging markets.” They didn’t comment on the many bloggers who wanted the new company to be named “Random Penguin” or “Penguin House.

You’ve probably heard people refer to the Big Six publishers. Both Random House and Penguin are part of the Big Six. If they combined, this means that the Big Six will become the Big Five. As a reader, this worries me. Fewer publishers means fewer choices for me. When big multinational conglomerates merge, something will be lost along the way. Could some of my favorite authors be affected? Whenever the publishing industry goes through one of these turbulent periods, authors are often dropped, or at least affected by staff changes. Sure, it’s now easier for those authors to give up on big publishers and self-publish, but that’s not a viable option for every author. Not everyone has the energy to write the books and market them and pick covers and find a good editor. That’s why there are so many people in publishing companies doing those jobs.

Speaking of editing, what about the editors, marketing people, and other employees? We as readers don’t see those people, as they operate “under the hood,” but like engines and fan belts, they are important parts of the car, too. In the latest(Dec. 2012) RT Book Reviews magazine, Jude Deveraux talks about losing a beloved editor when that editor moved to another publisher. According to the RT interview, after that happened, Deveraux, despite being one of the big names in romance publishing, wound up working with new editors who left her in the dark most of the time and didn’t seem to care about her work. If that can happen to a big name like Deveraux, imagine what can happen to lesser known authors. Authors often fall between the cracks when publishers start messing around with things. When authors fall between the cracks, so do readers. Publishers don’t have readers’ names on their Blackberries, so it’s too easy to lose track of us.

It’s also easy for things to go wrong in a merger. Many of us have lost jobs because of mergers. Even when we survive the merger, we can endure changes we don’t like. The publishing industry is no different. In past mergers, some companies have seen divisions or imprints shut down, and sometimes personnel shifts can occur that might have a drastic effect on the authors writing for the new publisher.

And what could this mean for eBooks alone? Penguin was one of the publishers that blasted the Department of Justice ebook settlement. On the other hand, Random House wasn’t named in the lawsuit. (Random House books came to the iBookstore later than those of the other big publishers as Random House refused to move to the controversial “agency pricing” model at first.) Penguin also garnered controversy in January when they cut off library eBook lending, as well as cutting off ” over-the-air” delivery of library eBooks to Kindles. Penguin eBooks returned to libraries in June, but as the later article points out, Penguin is using the 3M Cloud Library rather than Overdrive, quite possibly because the 3M Cloud Library doesn’t allow delivery to Kindles. Random House, on the other hand, has gone on record saying that libraries own the eBooks they buy from Random House (although the specifics are not without controversy in the digital world), rather than simply leasing them. So it seems that both treat eBooks differently. I hope that the two companies can work together on this issue, that Penguin doesn’t make Random House stop supporting lending to Kindles, and that the new company doesn’t do anything foolish, like, oh I don’t know, refusing to lend eBooks to customers using the most popular ereader.

Of course, it’s way too early to say what effects this will have on publishing, let alone eBooks. First, the merger will still have to be approved by various regulatory agencies. We also don’t know the final outcomes of the pending lawsuits over the agency pricing model — those aren’t over yet, and they could be impacted by the merger(and vice versa.) On the other hand, so far, the companies involved are on record in the various financial reporters are being confident that the merger will occur.

– Anne Marble

11 thoughts on “Random Penguins? Some Thoughts on the Possible Random House Penguin Merger

  1. While I am sympathetic to the employees and authors, I don’t have a lot of sympathy for the companies. The writing has been on the wall a long time about changes in the industry with the new technology. Instead of changing with the times publishers, tried to turn back the clock

    And their actions help put their companies in jeopardy. Without their attitude, self-publishing and all the new independent publishers wouldn’t have happened or it wouldn’t have been as big.

    Just over the last year or two, most publishers decided to come out with their own eBook imprints. And my thought on this was really – I think you are about four years too late.

    I know that it is difficult for large companies to think outside the box, but when an industry is affected by changes in technology, then that is what is needed. Look at Kodak- and the many other companies that fail to keep up with changes.

    As a consumer I want convenient. I want to be able to find something to read at 11 pm at night without leaving my house. And I don’t understand why this concept was so difficult to understand.

    My thoughts are with the employees as these two companies make the transition. Having gone through a similar situation, I know the difficulties and how unsettling it can be.

    • And don’t forget Polaroid!

      I see this merger as one way for these companies to try to deal with the changes in the industry. I just hope they make the changes in the right way, and not in the wrong way. This had better not be a case where they decide that more cash at hand means they can create stronger DRM. ;) I also hope they wake up about digital publishing and realize that some of their choices have been really bad. (As in angering the customers bad.)

      Digital only imprints sort of make me nervous. It depends on how the publisher handles them. Maybe it comes from hanging around on writer boards so often. When publishers first started creating digital only imprints, they did some things wrong that made writers nervous. For example, whether it would be easy for readers to buy the books, relative lack of publicity, differences in contracts, etc. Of course, some publishers have done really well with their digital imprints — such as Harlequin with Carina. Let’s hope publishers have learned how to sell eBooks better since their early experiments

  2. Usually, when something like this happens, the writing is on the wall for bankruptsy. That is when investors step in, pay the debts for a loan, and yes, people lose their jobs (aka Romney’s group). But the alternative is that everyone loses their jobs and the business disappears forever so, sometimes the good has to come with the bad. Also, in today’s world jobs are not for “life” and people move on for a variety of reasons and other’s take their place. Everyone is replaceable and unfortunately, sometimes that person who replaces those people we have dealt with before and have had great success, aren’t a good fit for how we do things. I have found more and more of late that customer service everywhere is deteriorating and the age group of the rudest sales people is ironically not that teenager but the 40+ crowd.

    Do I sympathise with the publishers… no. Most of us have read the news here, on Dear Author and other reader sites and in our general news. We’ve seen the numbers, we’ve refused to pay the higher prices, we enjoy the convienience of buying in our jammies, and have used the library instead or found other authors at lower costs that we enjoy through other readers who’s reading habits mirror ours. Authors and publisher’s complain but, my book habit if I had to pay it would be approx $3,000/yr at $10/book and I can’t afford it.

    Ebooks are becoming more and more popular. I refuse to buy an ebook over $5 and even then I look for the $3 and under books. I still haven’t moved to borrowing ebooks although my library system has an excellent selection and one day I’ll finally do so.

    The days of the big paper publishers controlling book pricing are over although they’ll fight it for a while longer. It’ll be rocky but change will come. First change though…. our books are $2 or so more than US books – both prices are on the back of our books. The reason given was the difference in the dollar. With our dollar often of late worth more than yours… I’d really appreciate a decrease on the price of our books. Before too long I’m going to start buying from Amazon.com/BN etc not .ca sellers especially when it’s cheaper to simply pay for the shipping than buy the book here at full price. I have before, and with NAFTA I can again.

    Lastly, websites are very, very important. I know it’s easier to purchase many things in the US online. In Canada we can’t access a lot of it due to the sellers lack of NAFTA, duty, taxes etc ability to send over the border. But, companies here really need to get their act together. Even Toys R US has the crappiest website and nothing on it, yet, I’d use it instead of waiting until I am in the city and shopping elsewhere (like Walmart) simply for the convienience. E-shopping, e-books, e-….. is not going away and consumers are looking to use their computers, phones etc more and more to shop. All, sellers, not just those of books, need to get online.

  3. I like your name (Random Penguins) better than the one they chose.

    As I have reviewed and read for pleasure the last few weeks I have come to one conclusion. I am a dinosaur. I know my kindle is more convenient but I read faster and more enjoyably when I have a paper book. I see the handwriting on the wall, know that the change is absolutely gonna happen but dang it, I’m sad about it and am sad when I read any news regarding trouble at the publishing houses. ebooks are the future, I get it, I accept it. But I really miss the past.

    • Maggie AAR: I like your name (Random Penguins) better than the one they chose.
      As I have reviewed and read for pleasure the last few weeks I have come to one conclusion. I am a dinosaur. I know my kindle is more convenient but I read faster and more enjoyably when I have a paper book. I see the handwriting on the wall, know that the change is absolutely gonna happen but dang it, I’m sad about it and am sad when I read any news regarding trouble at the publishing houses. ebooks are the future, I get it, I accept it. But I really miss the past.

      I completely understand that not everyone loves to read eBooks and many prefer paper. Publishers could have had the best of both worlds- excepted for their bullheadedness. When eBooks were first released I know I was satisfied with a dollar difference. But publishers delayed releasing the digital version, then they joined with Apple in price fixing. Cry me a river – it is their own fault.

  4. Well, like Roarke, I’ll cling to the printed book as long as I can, so if a merger of Penquin/Random will increase the chances of my being able to do that, I’ll raise a cheer, pay the price, and luxuriate in the feel of substance in the hand.

  5. Maggie, I gotta agree with you. I love my Kindle, and in fact am planning on getting the new Kindle Tablet when it premiers this month. But there is something about a “real” book that will always have my heart. During the outage of Hurricane Sandy, when my Kindle had given up the ghost, I sat in my den, with a fire lit in the fireplace and a flashlight on my shoulder and re-read some of my old favorites. Yummy!

    Formatting errors are a large part of what keeps e-books from becoming #1 for me. I have 3 or 4 books on my Kindle now, that take me twice as long to read, because of bad line/paragraph/word spacing, various spelling errors and other editing related errors. I don’t remember “real” books being this bad..or am I looking through rose colored glasses :-/

    As I have a Kindle, most of my purchases come through Amazon; for e-books and paper books. And this is starting to scare me a little. OH, not enough to yet stop, but I am occasionally concerned that I am becoming a “one-source” reader.

    I can only hope this merger will bring me back into a bookstore, as I cannot remember the last time I was in one. I always liked Walden Books and Borders more than any others, and when they closed I just pretty much stopped going to bookstores, thereby helping to contribute to the demise of the bookstore.

    All I know for sure, is I like “real” books and I like my e-reader. Seems like there should be a way for these guys to get together and figure out how to give us best of both. Win for them, win for us.

  6. I’m in a state that uses the 3M library and has yet to cut a deal with Amazon. I was wondering why there has been no deal to use Kindle on 3M. Our state used to have Overdrive but changed to 3M due to cost issues. I have been waiting eagerly for the Kindle to be able to work for library books. Now, after reading your blog, I might have to think about using a different device for digital library books. Thanks for your informative blog.

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