March of the Penguins

How big can a publisher get? Is it possible that the publishing industry will soon mirror the auto and steel industries? Would a Big Three Book-Maker industry be good for authors and readers?

Looks like the wait to find out won't be a long one.

On October 29, the two largest trade-book publishing corporations in the world—Random House and Penguin—announced that they will be merging. If approved by government regulators, the new Penguin Random House will account for about one in four books sold worldwide.

"Holy paperbacks, Batman! Penguin is trying to take over the publishing world!"

Or so it would seem. Worldwide revenues from this new publishing company will be in the neighborhood of 4 billion dollars. However, the annual revenues of Penguin's parent company are even larger.

Pearson, the UK corporation that owns the Penguin Book Group, is by far the largest publishing corporation in the world, with annual revenues of nearly 8.5 billion dollars. It has 41,000 employees in 70 countries and publishes over 4,000 fiction and nonfiction books per year. 75 percent of its revenues come from Pearson Education, 18 percent from Penguin, and 7 percent from the Financial Times.

Though roughly a quarter the size of Penguin, Random House is the eighth largest publishing company in the world. Owned by Germany's Bertelsmann AG, Random House had annual revenues in excess of 2.2 billion dollars in 2011. However, with revenues in excess of 3.8 billion the previous year, one wonders what role this revenue loss played in their merger with Penguin.

To put these revenue and publishing numbers in some context, remember that of the 85,000 publishers in the Bowker database, twelve of them account for account for almost two-thirds of U.S. trade and mass-market book sales—and now one of them will account for one-quarter alone. Also recall that the annual revenues of Penguin Random House will be more than the combined revenues of 58,795 U.S. trade and mass-market publishers—that is, over 95 percent of all U.S. publishers.

This enormous financial and market-share advantage has created a lot of concern—and both companies are already working hard to contain it.

Markus Dohle, Random House chairman and CEO, who will assume the position of CEO of the new combined publishing company, wrote to his Random House colleagues that he aims "to retain the distinct identities of both companies' imprints."

Distinct identities? Who is he kidding? That world was lost when Random House went public and started swallowing up publishing houses back in the 1960s.

It bears remembering that both Random House and Penguin have already absorbed much of their competition over the past fifty years. In the U.S. alone, Random House includes the imprints Alfred A. Knopf, Anchor, Ballantine, Bantam, Broadway, Clarkson Potter, Crown, Delacorte, Dell, Del Rey, Dial, Doubleday, Everyman's Library, Fawcett, Fodor's Travel, Golden Books, Harmony Ivy, Kids@Random, Main Street Books, Nan A. Talese, One World, Pantheon, Random House, Schocken, Shave Areheart Books, Spectra, Spiegel & Grau, Strivers Row Books, The Modern Library, Three Rivers Press, Villiard, Vintage, and Wellspring, and Penguin Book Group includes Ace, Alpha, Avery, Berkley, Current, Dial Books, Dutton, Firebird, Frederick Warne, Gotham, G. P. Putnam's Sons, Grosset & Dunlap, HP Books, Hudson Street Press, Jeremy P. Tarcher, Jove, New American Library, Penguin, Penguin Press, Perigee, Philomel, Plume, Portfolio, Price Stern Sloan, Puffin, Putnam, Riverhead, Sentinel, Speak, Tarcher, and Viking. Add to this list the UK imprints of both companies, and the combined Penguin Random House company will result in over 100 different imprints in the U.S. and UK alone.

The only distinctive difference that will come out of this new company are its profits—which will be the largest ever by one company in the history of trade publishing.

There is also worry that authors will lose more of their creative autonomy and will be reduced even more to merely equations or numbers by the new mega-corporation. To assuage this fear, Dohle wrote in the same letter that "authors...