And then there were five

Yesterday morning, the publishing world woke up to the biggest news since the launch of the Kindle. Two of the “big six” publishers are merging to become Penguin Random House, the world’s largest English language publisher.

Between them, Penguin and Random House have combined revenues of around £2.5bn, which will give them a 25 per cent share of trade publishing in the UK and the US. And when the entire industry is on the brink of seismic change, there is only one thing for the conscientious publishing professional to do: tweet about it.

@stubbleagent Ah well, guys. At least it’s not NewsCorp, hey?

Literary agent Sam Copeland has a point, as there were rumours that Rupert Murdoch’s company, which already owns HarperCollins, was going to attempt an outright buy-out of Penguin for £1 billion. But since “Penguin Random House” and “Random House Penguin” were both incorporated on 26th October, it’s safe to say that NewsCorp was too late.

@samjordison Very sad news about Penguin and Random House. Fucking The Man ruining fucking everything.

Guardian books writer Sam Jordison expresses his dismay at, if I might rephrase, the corporate nature of the takeover.

@misdaisyfrost Please post a congratulatory penguin biscuit to Gail Rebuck at Random House 20 Vauxhaull Bridge Road SW1A

Anonymous publishing insider Miss Daisy Frost begins the inevitable slide from serious discussion to best joke competition, as is customary on Twitter.

@LeeRourke Penguin x Random House = more celebrity authors, bigger 3 for 2 tables and fewer truly literary novels. #endtimes

Author Lee Rourke laments the move in publishing towards “big books” and “prizewinners,” which has decimated the prospects for a literary career author in recent years. As the big publishing companies consolidate further, many see this as the swan song of the “midlist” of authors who could sustain a living from writing literary novels for a gradually building audience, without being pressed to tailor their work for a book club or a prize panel.

@drmabuse Is it possible that E.L. James is single-handedly responsible for publishing conglomeration?

The answer to this is no, of course not—especially since Random House’s parent company, the Bertelsmann Group, has been buying out other publishers since 1977. But, as author @holland_tom pointed out, “It’s estimated that E. L. James boosted Random House’s profits by sthg like 5 per cent this year—giving them the, ahem, whip hand over Penguin.” Random House will have a 53 per cent stake in the new company and Penguin 47 per cent, so a boost in sales this past year may have given them the edge.

@Harkaway Wait! There’s a secret political subtext in the Random Penguin deal! 47% Pearson – 53% Bertelsmann! It’s a giant financial Romney reference!

I suppose it’s possible, but the merger will probably mean massive changes to the back office staff (including redundancies), so it would be a cruel price to pay for a joke.

@benjohncock A strong mega-publisher might be just what the doctor ordered to combat the transmogrifying snake that is Random Penguin #randypenguins

This is a good point from novelist and blogger Ben Johncock. Although many are instinctively afraid of conglomeration, no single publishing company currently has the influence to stand firm—much less dictate terms—when it comes to battling with the new generation of online and digital booksellers.

@DigitalDanHouse A necessary corollary to the formation of uber-publishers must be the emergence of exciting new indies.

Random House digital publisher Dan Franklin (who may soon have to change his name to @DigitalDanPenguinHouse) reminds us that these companies are made up of people who care deeply about books and are keen to protect the industry, as well as to compete.

For some, this merger is the last nail in the coffin, if one were needed, of old world publishing, hammered in by corporate bureaucrats obsessed with the bottom line. Others see it as the stand that publishers have needed to make for some time, creating a paladin to defend their cause against digital bullies like Google, Apple and the arch nemesis of traditional publishing, Amazon.

There’s room for a big company that takes on this role, but publishing needs to remain diverse. Looking at recent prize lists, I can see a place in the ecosystem for the kind of smaller, nimbler publishers willing to take risks on books that don’t fit into an existing paradigm. If it hadn’t been shortlisted for the Booker, Swimming Home by Deborah Levy wouldn’t necessarily look good on a balance sheet. But for me, that sort of book is the reason why anyone bothers to write—or read.

If this new mega publishing company protects its editors’ right to take risks and to publish high quality books whilst holding its own in the digital age, it could win the hearts of authors and publishers alike. In the meantime, the industry is not standing still. We may yet see more consolidation among the big six—or rather, big five—before long.

Amazon: your local library?

glassThe Kindle is everywhere. In the weeks leading up to Christmas last year, Amazon boasted that they were selling over a million per week. The e-commerce giant has been “introducing” them on their homepage for so long that I’m beginning to wonder when might be a polite time to interject that we’ve already met. As I write this piece, my Amazon homepage introduces the Kindle Family: the Kindle, Kindle Touch and Kindle Touch 3G. Other customers are apparently also looking at the Kindle Keyboard 3G with Free 3G + Wi-Fi, the Kindle with Wi-Fi and 6″ E Ink Display, and Veet for Men Hair Removal Gel Crème. Something for everyone, then.

Amazon was founded as a bookseller, but it became more successful than any of its competitors because it removed something previously thought of as crucial to bookselling, which was the bookshop. Instead they posted your book directly from their warehouse, which you could then open like a little present in the comfort of your own home.

For Amazon’s next trick, they removed an element which many regarded as a defining feature of the book, namely the codex itself. With ebook technology available but no one else willing to invest in developing the market, Amazon was like a (very businesslike and non-violent) wolf among sheep. Both heavy investment in the technology of their own-brand Kindle device and its unbeatable retail price gave them a de facto monopoly, particularly in Britain, where the competitive Nook isn’t being sold.

Now, it looks as if they are putting the infrastructure in place to make another seismic shift—from ownership to access. As well as Amazon Cloud Drive which, like Apple’s iCloud, lets you store the files you’ve bought securely online, they have created the Lending Library—a name which evokes nostalgic, homely images. They already have over 100,000 books on their digital shelves, and if you’re part of the scheme you can borrow one a month, with no overdue charges and no need to worry about whether you’ll have to join a three year waiting list to borrow the latest Game of Thrones.

The catch is that, unlike your friendly local library, it is not available for all comers. At the moment you have to be a US customer, and you also have to be subscribed to their Amazon Prime service, which will set you back $79 a year. If you do borrow a book by George RR Martin, he will get a tiny royalty. So you pay a flat subscription rate for access to content, and the owner of the intellectual property gets a smaller royalty than if you had bought it, because you never own the content. The Lending Library is beginning to look like a very familiar revenue model, one that is tremendously lucrative for the owner of the service, and less so for the owners of the content.

Except—and this is why I feel a vague sense of unease every time I land on the Amazon homepage—to qualify for the Lending Library, you have to be a Kindle device owner. At least Spotify have never tried to force you to buy a Spotify mp3 device. If I were the suspicious type, I might start to worry that, with its virtual monopoly on the ebook market, Amazon was trying to funnel my consumer behaviour into ever more proprietorial systems, designed to make owning and sharing harder and more expensive than if, for instance, I just went back to where it all started, and bought a physical book.

No-one has sold more physical or electronic books than Amazon in the past decade. For that, they have done the world a great service. But where musicians have tried to make up for declining record sales by making money from live music, authors have no direct analogue. So if Amazon loves books, I hope it remembers its roots and continues to sell them, because this isn’t quite the replacement for our local libraries that I had envisioned.

What Radiohead can teach the book industry

If you own a TV, radio, computer or phone, there is a high chance you will have come across The King of Limbs, the new album by those unlikely digital marketing experts, Radiohead. You may even have listened to it. I had a quick listen—it’s not bad, though I prefer In Rainbows.

Giving the print press four days’ notice, to minimise piracy, they started selling the £6 digital version on Saturday. Their legions of die-hard fans, however, will no doubt want the £30 package, which will include two vinyl, a CD and, according to Radiohead’s website, ’625 tiny pieces of artwork.’ This two-tier approach follows their previous effort with In Rainbows, where they let people pay whatever they thought was fair for the digital files, whilst also releasing a £40 premium edition. The band generated considerable press attention with this scheme, but also a market research model that record labels and marketing companies would have killed for.

Meanwhile, digital pricing in the book industry is as random as it was for music ten years ago. The former has never enjoyed the margins of the film or music industries: people are worrying on the one hand about making good sales, and on the other about driving down the perceived value of books. Agency pricing, where publishers rather than retailers dictate prices, has led to accusations that some are trying to resurrect the standardised pricing of books, and has even roused the interest of the Office of Fair Trading. Now, with people wielding Kindles on the tube, we’re starting to see a massive uptake of digital reading. A consensus is beginning to form that books are to have their equivalent of the ‘iPod revolution.’

The difference, of course, is that the book industry can thank music and films for having made all the mistakes first. The success of iTunes and subscription services like emusic.com has proven that people are willing to pay for content. Moreover, there has been a fundamental reassessment of the relationship between digital and physical formats. If something as complicated and inconvenient as Blockbuster could be made to work, convincing people to download a film simply and cheaply at home was never a hard sell. In physical formats, the box set has overtaken the stand-alone DVD as the accepted package.

However, Radiohead still stand out as the group who are redefining the divide. They have become an exception, operating without the backing of a big label, and publishing too will have its exceptions in the digital age. The Fleming estate recently announced it was to release its own James Bond ebooks, for instance. But people have taken well to Radiohead’s last two online initiatives not just because of their fan-base, but because they presented a strong consumer proposition: you can get the easy, cheap version or the presentable, high-quality premium edition.

Ultimately, there are two ways that people want to interact with books, film and music. Either they want quick, one-time-only access, or they want to own it and return to it again and again. Half the pleasure of buying a nice hardback is just seeing it sitting there, edifying my bookshelf. This distinction isn’t new, either. The paperback format became popular when Allen Lane started producing cheap, mass-market editions in the 1930s. Hardbacks, meanwhile, continued to exist. Before paperbacks there were pamphlets, catering for the same market, who wanted to digest the latest ideas and stay current.

The production value of the hardback has already started to go up, as publishers realise that the physical book can be a desirable luxury object. Fourth Estate released some beautiful limited edition hardbacks for its 25th anniversary, and Penguin’s Designer Classics series sold out almost immediately. Ebooks aren’t going to jeopardise this market; they will become the new airport paperback. You never really own an airport paperback, so much as use it, and nobody will ever own an ebook, because they’re only ever licensed to a user. If any format is going to lose out it’s the trade paperback, and it’ll be no great loss. But rather than do what the music industry did and wait for an omen, why not do what Radiohead did and ask: do you just want to consume it, or do you want to really own it?