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When Allen Lane set out to make cheap paperbacks for commuters in the 1930s, no one imagined he was building what would become the biggest publishing house we鈥檝e ever seen.听

The company he founded became Penguin Books, which in turn became聽. Now, in a deal first announced in November 2020, Bertelsmann, the parent company of Penguin Random House, wants to buy another publishing behemoth, Simon & Schuster.

The proposed merger has caught the eye of the Biden administration. The US Department of Justice has filed an antitrust lawsuit, arguing that the merger will drive down author advances, result in fewer books being published, and provide less variety for consumers.听

The court case, which began on August 1, is set to continue over three weeks. It has featured evidence from bestselling author Stephen King, who testified in support of the Department of Justice.

The publishers and their attorneys聽聽the deal will create 鈥渆fficiencies鈥� that will lead to 鈥渂etter offers to more authors鈥�.听

The proposed acquisition of Simon & Schuster is the latest in the long history of mergers and acquisitions in what has been described in the聽聽as 鈥渋ncreasingly a winner-take-all business in which the largest companies compete for brand-name authors and guaranteed best-sellers鈥�.听

If allowed to take place, the merger of Penguin Random House and Simon & Schuster will reduce the number of big US publishers from five to four. It raises the question of how big is too big.听

Since the early 1960s, many independent publishing companies operating in the Anglo-American trade sector have become imprints of multinational corporations as the result of a succession of mergers and acquisitions.听

As John Thompson writes in the聽, the scale of these large publishing corporations gives them access to financial backing of their parent company and the ability to offer high advances and extensive marketing and editorial support for big name authors, in return for multi-book deals.听

Larger publishers also have the leverage to negotiate with large retailers and other entities in the book publishing chain.听

The typical sale of a publishing house happens as result of its founder retiring or for financial reasons. This is not the case with Simon & Schuster. The attempt by Penguin Random House to acquire Simon & Schuster is a buyer-driven merger, with the ability to better compete against Amazon given as the key rationale.听

聽rose 10% over 2020 to just under US$1 billion in sales in 2021.听聽reported that the $2.2 billion bid for Simon & Schuster aims to recoup Penguin Random House鈥檚 lost market share and 鈥渃ement鈥� the publisher鈥檚 number one status in the USA.听

The market share of Penguin Random House and Simon & Schuster in the US has been estimated variously from 20% to 50%. In聽聽it is around 30%.听

According to author聽, the consolidation is a logical outcome of the fact that 鈥渢he 鈥榯rade鈥� itself is shrinking and the total sales made by those publishers constitute an ever-diminishing share of the total market鈥�.听

础蝉听聽reported, the plan is to maintain the Simon & Schuster imprints, and allow Penguin Random House and Simon & Schuster editors to bid against one another for books at auction. But as Penguin Random House CEO Markus Dohle admitted, there was no 鈥渓egally binding way鈥� to ensure that promise is kept.听

According to Franscois McHardy, until recently Head of Publishing at聽:

Promises of editorial autonomy being made by Bertelsmann are not to be trusted. They made them in the late 90s when Bantam Doubleday Dell/Transworld was merged with Random House, and although Transworld has maintained a separate building in the UK, they were quickly merged in all other markets. The same has happened with the Penguin Random House merger where people now routinely only talk about 鈥淧enguin鈥� in reference to the merged company, and Random House imprints are being phased out.听

Fewer imprints means fewer opportunities for mid-list authors and new writers without a proven track record.

The protection of bestselling authors is one of the key arguments in the antitrust case. The聽states that the merger is likely to diminish author advances of $250,000 and above and lead to 鈥渇ewer authors being able to earn a living from writing鈥�.听

The complaint and the court case聽聽as 鈥渢he latest demonstration of the Justice Department鈥檚 commitment to pursuing economic opportunity and fairness through antitrust enforcement鈥�. But they ignore the key player undermining fair competition in the US publishing industry.听

聽has approximately 50% of the print book market, at least 75% of publishers鈥� ebook sales (in addition to Amazon鈥檚 own ebook publishing business), and over 41% of the US audiobook market through its subsidiary聽.听

Hence, the merger is not about Penguin Random House being in competition with other publishers; it is about giving them heft in the negotiations with other players in the book publishing circuit.听

These include Amazon and other platform retailers, streaming services for audiobooks (publishers are trying to avoid music-industry style streaming services in favour of a restricted credit model), and libraries that are聽聽high prices and restrictive licensing terms for digital works.听

Penguin Random House are seeking to own enough of the market so they can begin to make structural decisions that will provide a bulwark against disadvantageous changes in book distribution.听

A consolidated Penguin Random House and Simon & Schuster may enable that publisher to stand up to Amazon for longer, but the continued growth of the latter suggests this is likely to be a losing battle.听

Few authors will ever receive a high advance from the big four or five publishers, so the outcome of the court case is not likely to have an impact on most authors鈥� ability to earn a living from writing, which is becoming increasingly difficult.听

According to a survey conducted by the US聽, the median income of full-time authors was $20,300 in 2017, a figure that combined book income with related activities, such as speaking, teaching and reviewing. The聽聽has reported in 2020 that 53.6% of full-time writers earned 鈥渓ess than $15,000 per year from their creative practice鈥�.听

This article is written by Dr Agata Mrva-Montoya from the Department of Media and Communications in the Faculty of Arts and Social Sciences, and was originally published in .听

Hero image: Adobe Stock.听