Notes from An Alien

~ Explorations In Reading, Writing & Publishing ~

Penguin Random House ~ What Does It Mean?

Will the proposed, new largest publisher of the former Big Six change the publishing business?

Will it successfully counter the Amazon foot-print?

Will anything substantial change?

While I feel the future of publishing will be some balance between “Full-Service” Publishers and thriving Self-Publishing, the remaining “legacy” publishers will need to learn from the self-publishers.

I found four sources with varied opinions on this merger.


First, Gavin James Bower, editorial director at independent publisher Quartet Books, in Penguin merger minuses could be pluses for indies:

“The reactions to news that the publishing arms of Bertelsmann and Pearson are merging, creating the biggest publisher in the world in Penguin Random House, can be summed up in one word: negative.”

“The merger is an example of the big boys battening down the hatches; no matter what they say, this isn’t about exploiting ‘high-growth emerging markets’.”

“In any recession, the vanguard is to be found beyond the mainstream—and risks taken by those typically seen as outsiders. Indies, as they always do, will be seen as the risk-takers in a climate of doom and gloom, nurturing talent and publishing books not deemed safe enough for the panicky, profit-driven corporations.”

The next source of opinion is from Andy Lewis, Staff Writer for The Hollywood Reporter—What the Random House-Penguin Merger Means for Authors (Analysis):

“The Oct. 29 merger of book behemoths Random House and Penguin not only creates the world’s largest publisher…it also will present a formidable challenge to the growing power of such digital distributors as Amazon and Apple. And some already are worrying that the consolidation will decrease opportunities for authors and drive down advances.”

“But some…have argued that the future of publishing is with pure digital players unburdened by legacy costs (like printing).”

“Still, the combination is likely to be just the first shoe that drops in publishing. When news of the Penguin-Random House talks leaked, News Corp. owner HarperCollins made a late offer for Penguin for a reported $1.6 billion. Now analysts are wondering which of the remaining “Big Six” (Macmillan, Hachette or Simon & Schuster) Rupert Murdoch will court next.”

Next is Jeremy Greenfield, Editorial Director at Digital Book World, in a Forbes article—Five Thoughts on a Penguin-Random House Merger: Rapid Reaction:

“Penguin and Random House, by many accounts the two largest trade publishers in the world, have agreed to merge operations. The deal will be subject to regulatory approval and isn’t expected to close until the second half of 2013.”

“When two large companies merge, there are cost-savings to be had in combining shared business functions.”

“The company would have 9,000 employees and would have locations in about 20 countries around the world, including China, India, all major English-speaking countries and many countries in the Spanish-speaking world.”

“It’s been speculated the Penguin Random House would control about 40% of the U.S. trade book business….That gives the company more negotiating power, specifically with its largest trading partner, Amazon.”

“…the larger Penguin Random House might have the negotiating power to squeeze better terms from agents and authors in exchange for unmatched marketing and distribution resources.”

Next are Eric Pfanner & Amy Chozick at The New York TimesRandom House and Penguin Merger Creates Global Giant:

“In announcing the agreement, the European owners of Random House and Penguin—Bertelsmann and Pearson, respectively—said Bertelsmann would control 53 percent of the combined entity and Pearson 47 percent.”

“The other four houses among the so-called Big Six are also owned by larger media conglomerates: HarperCollins, which is part of News Corporation; Macmillan, owned by Georg von Holtzbrinck of Germany; Hachette, whose parent company is Lagardère of France; and Simon & Schuster, a division of CBS. They could all now face increased pressure to consolidate in response to a combined Penguin Random House.”

“Small publishers with a niche focus and loyal groups of authors and readers might manage to remain independent, said Douglas McCabe, an analyst at Enders Analysis in London.”

“The combined company is expected to invest heavily in e-books and what Mr. Dohle [the new CEO] called digital product development. He said that did not necessarily mean it would produce its own e-reader device, as some in the industry expected.”

“Authors and literary agents, one step removed from the merger, have expressed concern about consolidation, fearing that they will lose leverage if there are fewer publishers.”

“‘The idea of this company is to combine the small company culture and the small company feeling on the creative and content side with the richest and most enhanced access to services on the corporate side’, Mr. Dohle said.”


Well now, I think we all know how leaders in mega-business can paint pictures that never translate to reality

Some folks feel this merger, as well as easily predicted further mergers, will not stave off Amazon’s growing power.

Some see the mergers as a prequel to more balance between digital and print.

Most people have no idea what will happen

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20 responses to “Penguin Random House ~ What Does It Mean?

  1. Graham Whittaker November 2, 2012 at 4:33 pm

    We should not always consider the negative as it is we self publishers who, in the final analysis are driving the new model. When Pearson Penguin purchased Xlibris (Author Solutions), for $116 Million US, we Th’ink Tank decided to test the ‘system’. My new novel The Girl From Kosovo was prepared by Xlibris. I have to say that the experience was one of the worst I have ever experienced in years of self publishing. We invested $5000 in “Publishing Services” from Xlibris. Eventually, having been pushed, ignored, screamed at and ripped off, we pulled the print versions and filed for copyright infringement. The insistence that Xlibris was “the publisher” contrary to their owns FAQ’s provided the final reasoning for pulling the novel.. Emails to Pearson Penguin took some time to reach a “responsible person” but we are now in email discussion with Pearson Penguin regarding the way Xlibris operates. We feel however that eventually the experience will provide positives. The novel is now back on sale as print copies, and “Published by Pharos Books and distributed by Xlibris”. I would recommend that self publishers DO use the “full service” providers but enforce the fact that you, the owner of the work maintains total control. It seems to me that though the initial experience with Xlibris was horrible, Pearson Penguin WILL create a new culture with these companies, and we will all be better off for it. We NEED the experience of these big publishers, and THEY need us equally. I personally believe that the future is positive for all of us self publishers and for the big publishers. The big publishers are beginning to realise that their income stream will come from BOTH publishing and taking on their own authors as well as giving a service to those of us who choose to control our own work. The jury is out at the moment, and we’ll see how Pearson Penguin react to our suggestions and demands. The merger with Random House will be an interesting entity and I believe it will become a positive factor in publishing. We, the self publishing community have the opportunity to lock into the big publishers expertise, and they have expertise to sell. IF they understand that major change is necessary, and the previous culture of companies like Xlibris CAN be altered to provide self publishers with vital services, we will all benefit. The self publishing community is still a chaotic and ill-informed one, but perhaps together, and with representation, a strong alliance of author/publishers and “mainstream” publishers will end the present chaos. Don’t be ‘afraid’ of these companies. Use them and their services but do so with care. YOU the writers and self publishers have power. Be firm, stand your ground, and become a part of the change. We will all be better off. We, Th’ink Tank are working out the problems with Xlibris/Pearson Penguin and we are quite sure that the culture of the “publishing Services” companies will change. It is in the interest of Penguin/Random House to rein in those excesses. I look forward to the merger and forming a good relationship with them in the provision of their expertise and services. It’s an exciting time in publishing.


    • Alexander M Zoltai November 2, 2012 at 5:02 pm

      Fascinating perspective you bring to the issue, Graham

      When you mention “‘publishing Services’ companies”, would you include FastPencil in that category?


      • Graham Whittaker November 2, 2012 at 5:14 pm

        Funny that you should mention fastpencil Alexander. We are actually evaluating it right now. We are preparing a book on Creative writing. “Picking Up Peas With Chopsticks” by Dora Bona. It is certainly an improvement on CreateSpace. These services are quite different from the “full service” promises of companies like Xlibris. From a personal point of view we have found that the very best full service company we deal with is Lightning Source (an Ingram company). I’ll come back to you on fastpencil as we go through the process of publishing “Peas”


  2. Graham Whittaker November 2, 2012 at 4:37 pm

    Please forgive my typos in the last post. I have so sticky laptop keys. (And it’s 0730 pre-coffee time)


  3. Jane Watson November 2, 2012 at 4:45 pm

    I think the aspect of this that worries me the most is summed up in when Jeremy Greenfield talks of how this new behemoth could: “squeeze better terms from agents and authors”. What’s going to happen to authors’ rights when we end up with one giant publishing house which rules the world – anyone going to stop this happening? It’s no accident that authors I know are now referring to this new company as Random Penguin….


    • Alexander M Zoltai November 2, 2012 at 5:06 pm

      Well, Jane, I feel self-publishing is definitely gaining major traction in the marketplace—some feel this merger is in direct response to the growth of self-publishing—so, to me, self-publishers will provide what any giant publishing house cannot


    • Graham Whittaker November 2, 2012 at 5:46 pm

      I think Jane, that the “fear factor” tends to infect us until we begin to understand that Self Publishers have a great opportunity to access the experience and distribution channels of the big publishers. The big publishers are fighting for their own survival and the market will eventually make the terms of trade. By purchasing companies like Xlibris (and others) the publishers are intending to create an income stream. We self publishers have access to experience we have never had the luxury to tap in to before. Distribution. Print On Demand, layout. In fact, everything that makes us better authors and publishers. What many don’t understand in self publishing is that to provide quality product and quality marketing there is cost involved. To get a quality product to a wide market (in my case my latest novel 451 pages, 130,000 words) costs us about $5000. “Production” of our work with tools like fastpencil, createSpace etc is only the first step in a very complex process. Accessing online sellers, keeping accounts, marketing, distribution, purchasing ISBN’s and barcodes, copy editing, et al. Amazon’s KDP Kindle has a stranglehold on OUR marketing. If you go the KDP way they demand that you ONLY publish with them (including your own websites and blogs!)
      Personally I welcome this battle for the hearts and minds of we self publishers. Mergers and buy outs won’t hurt us. In fact they may do us a lot of good.


      • Jane Watson November 3, 2012 at 3:21 am

        I agree with you, Graham. Hopefully we will be better off. My experience with mainstream publishing is that many writers are really afraid of rocking the boat when they are dealing with these large companies and so they disempower themselves and often put up with the most dreadful treatment. I still remember being at a writer’s festival some years ago where a young female writer had just won a prestigious publishing prize with a large publishing company. She had travelled miles interstate to get to the festival with her husband who had travelled with her to give support, but upon arrival she was told by the publishing company that while they expected her to show up for an important dinner to celebrate her win, he would not be welcome at the dinner that night and would have to stay in their hotel room on his own (the company knew that he was traveling with her as they had booked the hotel accommodation for them). She was very upset but felt she could do nothing…How could people who purport to be able to judge the value of a literary work with all its insights into human behaviour not see how they had failed to understand courtesy and feelings on this occasion at this most basic of levels??

        So I like your comment : ‘YOU the writers and self publishers have power. Be firm, stand your ground, and become a part of the change…” Indeed this is what needs to happen!


  4. Barbara Blackcinder November 3, 2012 at 8:45 pm

    The merger, whatever consequences it will have between the major corporations, cannot be construed as any kind of benefit to the indies. It is clearly an attempt to subvert Amazon, an aide to the indie, and continue to battle the indies as a matter of business as usual. I only trust Mr. Dohle’s proclamation that they may invest heavily in digital product development as a tactic to make everyone else hesitate for long enough to gain an edge, nothing more. It is more corporate business technique. His idea to “combine the small company culture and the small company feeling on the creative and content side with the richest and most enhances access to services on the corporate side” is just a paraphrase of “business as usual.” What a corporate dildo! It means to pat the creative side of the equation on the ass and make them feel good, while the corporation gains and stuffs it where the sun don’t shine.


  5. Barbara Blackcinder November 3, 2012 at 8:51 pm

    I have to disagree with Graham Whittaker, even though I have no experience, and he obviously has plenty. “Don’t be afraid of the major publishing houses…” I say run with your pants behind you until any of these corporations begin risking their money as a matter of course. Until then I can’t trust anything any corporation tries to stick down my throat.


  6. Jane Watson November 4, 2012 at 1:28 am

    Well Barb, I would not trust any bunch of random penguins… they may be cute, they may be able to tap dance but….can they look after authors better than their eggs..?


  7. Don Bross November 7, 2012 at 7:15 pm

    You need more readers, how isn’t this filled with comments!


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