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