Merger Mania

Even by the standards of the last 10 years, an extraordinary series of takeovers occurred in the early days of November-certainly from the viewpoint of my own history in publishing. My first publishing company had long since disappeared into the academic publisher Routledge. Now Routledge itself was taken over by the venerable English firm of Taylor and Francis, which celebrated its centenary by buying a publisher with an equally distinguished history (and twice its size). Two days later, my second publishing company-which had been taken over by an entrepreneur charged with lots of venture capital money and which had itself been sold to the French publisher Hachette the month before-bought another distinguished UK company, Cassell, which itself had swallowed up a group of smaller companies in the early ’90s.The only thing that made these purchases unusual was that no German companies were involved in any of these deals. Random House, Bantam Doubleday Dell, Holt, St. Martin’s, and Farrar Straus Giroux are all now German-owned. British companies hold Putnam, Viking, and Addison Wesley, and an Australian company controls HarperCollins.Then two more days later came the news of Barnes & Noble buying Ingram-not a month after they had themselves sold 50% of Barnesandnoble.com to Bertelsmann. By the time this article appears, this development will probably be old news, surpassed by yet more megadeals.Within Chicago, a group of us had started an Illinois Book Publishers Association four years ago, with the aim of serving the many large publishers that existed as well as the growing number of independents. Since that startup, most of those larger publishers have gone-National Textbook Company, Scott Foresman, Contemporary Books, Rand McNally, Mosby, Encyclopedia Britannica, CCH-all purchased with either complete closure or significant staff reductions.

Market Changes& The Independent Publisher

So is the sky falling on the publishing industry? Is the industry as a whole in a crisis, unable to respond to the competition for the leisure dollar from other sources, and slow to respond to other corporate initiatives on the Internet? And most pertinent to PMA members, what does all of this mean for the independent publishers?Many would have us believe that the bigger publishers will squeeze us out, that their domination of the industry will eventually be so great that their marketing clout and control of distribution channels will make independent book publishing an almost impossible endeavor. But independent book publishing over the centuries has proved remarkably resilient, and with good reason. No matter how giant the mega-publishers get, there can be no monopoly of ideas. Technology has lowered the entry costs for would-be book publishers so remarkably that it is perfectly possible for individuals to make the decision to begin their own companies, and to fund the production of their first books without being millionaires.And the technology of the Internet has revolutionized the ability of smaller companies to reach markets without reliance on the major booksellers or the major media. Also there is a clear reluctance on the part of large publishers to produce books that are controversial, difficult, novel, or groundbreaking, especially now that the owners of these large publishing companies are multinationals, often with book publishing being only one portion of a much wider portfolio of holdings. So today the independent publishing movement has not only the ability to manufacture and market books, it has a growing number of gaps to fill. And the culture as a whole has a great need for these independent voices.So does the merger of Barnes & Noble and Ingram, for many of us our two biggest customers, change this scenario? Will our access to our customers go down as the demands for discounts go up? Actually, I suspect this merger may be good news for independents in the long run . . . if there is a real danger to the independent sector, it would lie in the big publishers gaining control of traditional retail distribution channels, and that then could lead to serious problems for the independents. From the inception of the superstore, the development of bookstores with large title stockholdings has on the whole been a huge benefit for independents, whose books, with the best will in the world, at times can’t force themselves onto the shelves of smaller bookstores.This merger could result in a better supply of books to the Internet customer who wants access to the infinite number of titles an Internet bookstore can offer. Coupled with what might be (through luck and a little forward thinking) better inventory purchasing and control by the new group, leading to lower returns, I think we would see our sector benefit from these moves.Both companies have in their ways tried to navigate through the burgeoning numbers of smaller publishers to ensure that they can offer their wares to the public-not always smoothly and not always successfully, but they have tried, in a way that not many other retailers in our industry have done. Both would therefore seem to have decided that working with our sector is a source of benefit to them, and PMA as an organization will do its best to encourage and enable this collaboration.