Storms brewing beyond Sandy

First and foremost I am incredibly fortunate that my family and home got through Sandy with little more than being inconvenienced for few days.  Far too many people were dealt incredibibly difficult circumstances from Sandy with serious damage to their homes, loss of precious possessions and having their lives turned upside down by this storm.  Trying to get back to the way things were will be months and years for some communities. 

So while has Sandy managed to push the fever pitch of the Presidential election out of the news, news in publishing is just as seismic with the announcement of the pending merger between Random House and Penguin.  Markus Dohle issued a thoughtfull and reassuring letter to booksellers, agents and authors.  I took the copy from PW along with the posted comments from Robert Gotlieb at Trident & Peter Riva who is also a well known agent who have a clear contrast of opinion - it is interesting to read them together, speculating who is correct will play out for everyone in the next couple of years.. 

Regardless if this is good or bad for the industry, it is the reality and probably not only domino in-line as consildation in any industry comes in bunches.  If anything is clear, publishing is no where near done changing.  It has undergone more transition in the last 3-4 years than it has in a half century and it is probably just getting started.  I know I am here to talk about BEA, but it feels too self serving if I do that now, especially in light of watching people struggle to get some normalcy back in their life after Sandy.  Still it is important to know that change brings opportunity.  Where Sandy brought change that is having maps re-drawn from Connecticut down to the bottom of the Jersey Shore, change is opportunity to rebuild in a way that makes sense and will survive for the new reality.   The same is opportunity is here for publishing.  I feel BEA is ahead of the curve for the industry with the changes we have implemented and will continue as BEA intends to remain the most important event in North America for the publishing industry.

Dohle Addresses Booksellers, Authors and Agents About Merger

Oct 29, 2012
CEO of Random House, Markus Dohle, has sent three letters--to booksellers, authors and agents--addressing the momentous news about his publishing company merging with Penguin. The letters, intended to offer elaboration on the merger, the possibility of which sent shock waves through the industry last week, are also intended to calm three of the house's publishing partners, who are no doubt concerned about what the future will now hold.

In his letter to booksellers, Dohle said the new company will be better equipped to "deliver amazing books, innovative sales and marketing creativity, and the best-in-class supply chain support, all of which will combine to help you to continue to connect our authors with your readers." The CEO did not, however, offer specifics on these things, noting instead that new company will not actually come into being for some time. Dohle said that, for now, "Random House and Penguin remain competitors" and, until the merger is approved by the government, which he suspects will happen in "the second half of 2013," it is impossible to "discuss post-closing plans."

Addressing authors, Dohle said one aspect of the merger he is "most excited about" is the creation of a company that is "author-publisher-and editor-centered--just like Random House." He added that authors will "benefit from an extraordinary breadth of publishing choices and editorial talents and experience," when the two biggest members of the Big Six merge. He also assured writers that the new company will remain "endowed withcreative autonomy, and financial resources, to decide which books to publish, and how to publish them." Dohle also noted that Penguin Random House will "supply more services for physical retailers, while expanding our opportunities in the digital space."

To agents, who have been particularly worried about the effect the merger will have on advances, Dohle promised many of the same things as he did to authors. He also assured agents that backlist will remain "a priority." Again, though, the theme returned to the "breadth of publishing choices" this new company will offer. The CEO closed by saying the goal is to "publish the content you entrust us with for everyone, everywhere, in every format, and on every platform."

Read the full version of each letter below.
Dohle's letter to booksellers.  Dohle's letter to agents.  Dohle's letter to authors.

·         Robert Gottlieb · Top Commenter

Trident does a great deal of business with both companies. Recently S&S virtually shut down The Free Press. Bantam Books is a shell of what it once was as Ballantine has emerged as the major player in the Bertelsmann group. I don't see how this merger will increase the "breadth of publishing choices"? I believe it will be just the opposite. Mr. Dohle who I have a great deal of respect for and has done a magnificent job at Random House says agents only have their eye on what size advances will be. Trident is first and foremost interested in our author's careers. We believe money follows success in the market place. The consolidation of publishing divisions will occur in this merger. Will the Viking Children's group remain an fully functioning operation or will their sales force and the children's book division at Random House be merged? If not how will they compete along side one another? Those are the kinds of serious concerns authors and agents should have in part in connection with this size merger. I am not only thinking of the above but about Berkley books and Ballantine books as an example. When those sales forces are combined and there are only a handful of slots for major authors open as lead titles what authors will benefit and which one's will end up taking a second or third place position on the list? Random House and Penguin really don't care about the unintended consequences of this act but the publishing industry does. When there is a book auction who will be favored in the new publishing giant. Will it be baby Random or Putnam's when it comes to one on one completive submission? Right now we are already told that if there are only two imprints inside Bertelsmann bidding that one will drop out in favor of the other. They simply won't seriously bid against each other. In countries like the Netherlands publishers have understandings amongst each other that they won't bid on each other's authors so competition is highly reduced. In Germany I have personally seen executives at Bertelsmann call competitors and ask them not to make offers on authors they are publishing when an agent is thinking of moving the author. The other published agreed because of their fear of the size and strength of Bertelsmann in Germany. None of us should be lulled into a transe over the company line that is being told to us as one firm intends to dominate the publishing market place.

Robert Gottlieb
Chairman
Trident Media Group, LLC.
www.tridentmediagroup.com

·         Peter Riva · Top Commenter

I have many fears here, not all of which are within Markus's control, I fear. In Random's statement (parsed down by me): "With our backlist always a priority, Random House expects the new company to offer an even deeper catalogue, alongside our newly," but damn fewer, "published titles....as we continue to transition in the digital space." And there it is. How to tame the digital space? Become bigger seems to be the answer. I fear like the car companies of old (UK's British Leyland and US's GM and Chrysler and France's Renault), bigger will mean less financially stable, less fluid, less competitive. Which leads me to his next comment, which I doubt going forward especially for debut authors, "And we will be even better positioned to support our authors’ intellectual property and copyrights." This is NOT about advances for us agents, this is about marginalizing debut authors and non-branded authors in favor of MBA type supermarket sales and marketing efforts. Good for the investor, bad for the literary world, I fear.And in the end bad for business. The car company example is effective, I believe. Looks good on paper, becomes too big to fail for investors, terrible for the consumer.