“The U.S. publishing industry is robust and highly competitive.”
Once you’ve finished wiping away the tears of laughter that statement is likely to produce, be aware that it comprises the opening declarative sentence in the defendants’ pretrial brief in the upcoming U.S. Department of Justice suit to prevent the merger of Penguin Random House and Simon & Schuster, two of the so-called Big Five U.S. publishers. While two years of Covid-19 lockdowns have shown that the publishing and bookselling industries on both sides of the 49th parallel are more resilient than might have been anticipated in the early months of 2020, the notion that publishing is a “highly competitive” enterprise – after years of unchecked and rampant consolidation – is likely to provoke surprise.
It is, of course, highly competitive if one focuses solely on the economies of scale exploited by multinational publishing houses with access to enormous sales and marketing budgets from, say, a German parent company or an Australian media magnate. And PRH has good reason to focus on this segment of the market in its pretrial arguments.
The case, which is set to go before Judge Florence Pan in Washington, D.C., beginning Monday, August 1, will determine whether the two biggest multinationals in the U.S. would contravene Clayton Act antitrust legislation by closing a deal that would see PRH acquire S&S for the eye-popping sum of $2.175 billion USD. In a move that surprised many industry observers, the DoJ filed suit in November 2021 to block the merger, arguing that the combined company would “exert outsized influence over which books are published in the United States and how much authors are paid for their work.”
Both groups may have reason to be confused, however, about the specific rationale underpinning the DoJ’s suit. In brief, the suit alleges that the merger will have deleterious anti-competitive effects on bestselling authors, defined in the suit as those earning advances of $250,000 USD or more. “The evidence at trial will show that the proposed merger is likely to lessen competition substantially in at least one relevant product market: the market for the acquisition of publishing rights to anticipated top-selling books,” claims the DoJ’s brief.
This may, in fact, go some way to explaining a fact Publishers Weekly zeroed in on in an article posted online last Friday:
According to recent filings, 72 total hours have been allotted for arguments – 38 hours for the government, and 34 hours for the defence. The witness lists include a few boldface names, including many of the Big Five CEOs, some major literary agents, and bestselling author Stephen King, who is listed as a witness for the government.
It’s possible that having one of the planet’s most financially successful authors appear for the plaintiff will lend the DoJ’s case an aura of celebrity, but it’s hard to imagine that King himself has much to worry about. Currently published by Scribner (an imprint of S&S), King no longer needs to work at finding places to bring out his books; all he need do is continue cranking out a hefty brick of a novel every year or two and he will continue cashing cheques.
Over the course of his career, King has also proven to be very supportive and encouraging of younger, less seasoned writers; it is to be hoped that his testimony is not intended to be entirely self-serving but rather might throw a spotlight on the real anti-competitive part of the deal, which involves the hit that smaller, independent publishers will take from the further conglomeration of large houses at the top of the publishing food chain.
Though the focus of the DoJ complaint is on the Big Five, it isn’t the other three multinationals – HarperCollins, Macmillan, and Hachette – that need to worry should the PRH/S&S merger go through. It’s Copper Canyon Press. Or Tin House. Or Graywolf Press. Or Coffee House Press. Or any of the smaller publishers that will be further squeezed by the new behemoth’s increased marketing and distribution clout. Likewise in Canada, it is Coach House Press, Véhicule Press, NeWest Press, Nimbus Publishing, Freehand Books, Book*hug Press, Biblioasis, and the like – all those intrepid independents responsible for discovering interesting debut writers or innovative experimentalists the multinationals won’t take a chance on – that stand to lose the most.
This is the problem with focusing on bestselling authors who earn more than $250,000 in advances. As the defendants’ pretrial brief states:
The government … has narrowed its focus down to one very small segment of the market to acquire U.S. book rights: the set of about 1,200 books acquired annually for advances of at least $250,000, or about 2% of all books published by commercial publishers.
The brief is correct in pointing out that this group of authors represents a tiny fraction of the market as a whole and, in any case, are not the people who will be unduly squeezed out should the merger go through. The people who need worry are those less visible authors who publish with smaller houses that the late S&S CEO Carolyn Reidy derisively refers to as “farm teams for authors who then want to move to a larger, more financially stable major publisher.”
Reidy’s comment is included in the DoJ’s pretrial brief, which goes on to say:
The Big Five make up 90% of the relevant market because they are the only firms with the capital, reputations, editorial capacity, marketing, publicity, sales, and distribution resources to regularly acquire anticipated top-selling books. The proposed merger would further increase consolidation in this concentrated industry, make the biggest player even bigger, and likely increase coordination in an industry with a history of coordination among the major publishers.
Here we get to the crux of the matter. In a literary environment that has already seen review outlets in mainstream media decimated, the bookselling sector in both the U.S. and Canada reduced to a single big-box chain in each market and a smattering of independent and regional booksellers struggling to survive, and the dominance of a Hollywood-style blockbuster mentality driven by social media and celebrity figures like Oprah and Reese Witherspoon, smaller publishers are already at a disadvantage. They lack the marketing clout or financial resources to land plum advertising spots or to purchase placement in large stores. Their books are purchased in ones and twos and placed spine out on bookstore shelves where they linger for a few months before being returned for a full refund.
These are the publishers that are most imperilled by the proposed merger. They are also the publishers responsible for finding interesting new voices – that are then, per Reidy, scooped up by multinationals with deeper pockets and larger publicity teams – and driving literary culture forward. Stephen King may be the recognizable face of publishing for the average person on the street, but he is by no means the type of author most threatened by the proposed deal. Should the deal close, however, the chances of finding the next generation’s Stephen King may be significantly curtailed.