QUESTION: If books are an important part of the culture—and I believe they are—does it follow that the way we publish and sell books is an equally important part of the culture?
If you answered Yes, you should know we’ve been under siege from foreign forces for a long time.
It started back in the Thirties when a newly minted British company called Penguin sent a flotilla of cheap paperbacks to our shores and changed the economics of American book publishing forever. I know what you’re thinking: Who knew that the British had founded anything new at all since the nineteenth century? But at that time, apparently, they spotted some economic flaws in the hidebound U.S. book industry.
When those dime paperbacks flooded the market, you can bet that a lot of stodgy old east-coast publishers started pissing their dollar-stuffed pants. The new competition soon put their fat margins under pressure, eventually forcing them to indulge in the sincerest form of flattery: imitation. Pretty soon there were dime paperbacks (later known as mass market paperbacks) everywhere.
Through all of this disruption no one asked authors what they thought. When it came to business, authors were there to be read and not heard—at least not on the subject of business. Many authors probably stood appalled, but others jumped in and wrote pulp fiction until their fingers bled. Some of these authors went on to become major brands. Go figure.
But the foreign invasion didn’t stop there. It took a pause for World War II, and with the whole world a smoldering wreck and the U.S. standing proud we had nothing to fear for a while from foreign dominance. Then the Germans, of all people, came ashore.
In 1986 that now-famous German publishing conglomerate Bertelsmann—of whom, I guarantee, not a soul in America had ever heard before 1986—purchased venerable old publisher Doubleday for nearly half a billion dollars. With that kind of loot kicking around the Nelson Doubleday household, our cultural defenders forgot to contemplate whether this acquisition was good for American letters. Maybe it helped knowing that Bertelsmann had begun life as that most unthreatening of all entities: a Bible publisher.
Anyway, once again, no one asked authors—you know, those originators of the content that makes the book business the book business—what they thought. The only option authors had was to go on writing books and hope it all worked out.
If someone had bothered to ask, maybe an author or two would have scratched his or her head and wondered whether Bertelsmann really needed to make the dramatic changes to the Doubleday business model that it soon implemented.
Before its acquisition Doubleday was a vertically integrated company. They owned printing plants and bookstores and even their own book clubs.
It’s funny to hear industry experts today suggest that the way to defeat Amazon—presuming Amazon needs defeating at all—is for publishers to sell direct to consumers, rather than rely on so-called trade channels of distribution (the now shrinking bookstores) and other brick-and-mortar retail outlets. The reason it’s funny is that when the Germans started shuffling paper at Doubleday, they wanted badly to turn a fresh page. In short, they decided that vertical integration was a dumb idea. The printing plant in Garden City, New York, for example, had a near-monopoly on books published by Doubleday. As a result, for a long time books from the company earned a reputation for falling apart in readers’ hands. When Bertelsmann took over, they started sending more and more printing jobs to other vendors.
Then came the bookstores, 39 in all, including a flagship store on Fifth Avenue. Bertelsmann didn’t want to be in the American book retailing business anymore. Great business minds told them that you don’t compete with your own customers—perceived not to be reader-consumers but rather bookstores that moved units in volume. So in 1990, Bertelsmann sold its Doubleday Book Shops division to Barnes & Noble.
No one asked authors what they thought. If they had, I suspect many authors would say that it made them sad. Oh, well, the businessmen argued, you know—progress. Keep writing those wonderful books we profess to love and we’ll do the rest. It helped that, by this time, publishers in concert with book chains had figured out how to mint bestselling authors. With that new-found revenue, publishers were throwing around money like Jay Gatsby on a bender, temporarily benefitting mid-list authors and their agents.
What about Amazon? Why didn’t anyone blame the great beast from Seattle for the demise of Doubleday’s retail division? Oh, just because at that time Amazon was a mere twinkle in Jeff Bezos’s eye. You see, he didn’t incorporate the company until four years after every Doubleday Book Shop disappeared.
Doubleday—and Dell, which had also been swallowed by Bertelsmann along with Bantam—had another way of connecting directly with readers: its own book clubs. Bertelsmann thought that was great at first, because they knew book clubs. They already owned the biggest book clubs in Germany, and they hoped to apply lessons learned there to the floundering U.S. book club market. Heiliger Bimbam! Big fail for the business guys. Because it turned out that rule-following Germans treated their book club memberships like a sacred contract, but Americans…not so much. In fact, Americans proved fond of taking the ten-free-books-for-a-dollar incentive and promptly canceling their membership the day their books arrived. In Germany if you did that, they came to your house with a gun, seized the books, and shot your wallet as an example to others.
But Bertelsmann wouldn’t quit easy on the book clubs. In 2000, when Amazon was just six years old and people still accessed the Internet via dial-up, they merged Doubleday Direct (which ran eponymous book clubs and others) with Book of the Month Club. Grundgütiger! Here, of all things, was a business that proved resistant to synergies.
(Remember synergies? Maybe they’ll kick in for authors when James Patterson writes a hundred percent of the books on the market.)
Bertelsmann hung onto their direct mail business for eight years before surrendering, selling out to a private equity group in a transaction that was undoubtedly, in Wall Street parlance, immaterial to the bottom line. In that time, Amazon had grown from $2.76 billion to $19.17 billion in revenue. That twinkle in Bezos’s eye had become a firestorm.
Nobody asked authors whether this last vestige of Doubleday’s vertical integration ought to be abandoned. Authors were expected to go on writing for the good of the culture and let the business people worry about strategy.
Bertelsmann wasn’t alone in the very small pool of American publishing (small compared to, say, less culturally important industries consuming people’s leisure dollars, such as the sporting goods business). They faced friendly competition from a company just a short subway ride up the Maginot Li—er, the IND Line. How the French got involved is a long story, but I’ll shorten it because it’s so damned familiar.
In 1968, Time Inc. purchased Little, Brown and Company, which had been founded in 1837. In 1989, Time merged with Warner Communications to form Time Warner. One little division of that behemoth was Time Warner Trade Publishing (later called Time Warner Book Group). In 2003, the parent company tried and failed to sell the book group. But the giant French publisher Lagardere stepped up to the comptoir in 2006. Crazy French people actually thought you could still make a living in the book business—although it’s worth noting that by law retailers (including Amazon) cannot deeply discount books in France, so maybe Lagardere (which does business under the Hachette name in the U.S.) figured that socialism would soon reach American shores.
Then again, perhaps the French, in a rare departure for them, saw the future. Because the long-anticipated ebook revolution was about to take off. One year after the sale of the Time Warner Book Group, Amazon released its Kindle, thereby unleashing the pent-up book hounds. As ebooks, unburdened by “legacies” like paper and ink, flew across the airwaves in little electronic packets, publishers found their unit costs dropping and their margins expanding. Needless to say, they weren’t about to share much of that bounty with the authors of those books—not when authors had no leverage to demand same. In a few short years, publishers would cry “bully” whenever Amazon bitch-slapped them over business terms, but it turns out they’ve been crying all the way to the bank.
In any event, no one made a peep about the French invasion, and as usual nobody asked authors, who might have expressed some relief that at least this great publishing conglomerate hadn’t been swallowed by Samsung. Because, you know, Apple is much cooler than those Korean brands, even if the average author can’t afford an iPhone.
Speaking of Apple, in an effort to keep those margins fat and defy the Amazon bully, Big Pub turned to the genius of Cupertino. We all know how that turned out, but really, who can blame them for thinking they could collude on book prices when the royalties on nearly every author contract that comes from New York look exactly the same?
It’s no coincidence that after the curtain dropped on the Apple-Big Six pricing collusion scheme, Penguin got cold feet. They liked it when they were the ones driving down everyone else’s margins, I guess, but that was a long time ago. Now it was Amazon in the rearview mirror, and to them it looked like a semi without brakes. So German Random House (Bertelsmann having swallowed that publisher whole after digesting Doubleday, Bantam and Dell) and English Penguin smushed themselves together into Penguin Random House.
Obviously they didn’t ask an author or other creative person to come up with a new name, but at least the business guys had the wisdom to avoid the rumored moniker “Random Penguin.” No matter the name, this arbitrary-flightless-bird conglomeration is now said to control more than a quarter of the U.S. book business—also known as a drop of guano in the Amazonian river. For if the wave that swamped book retail grows any more powerful, any successful publishing merger may turn out to be a pyrrhic victory.
But…whatever. No one asked authors what they thought of that deal, either. Just keep writing and take your 25 percent of ebook earnings and stay out of it, you pains in the ass! We have lunches to do (remember when authors could swing lunch?), quarterly profits to report (big publishers pay authors semiannually).
Well, rather than biting our nails over these turns of events, at least authors can find solace in the fact that the foreign invasion hasn’t completely overrun book culture. After all, the balance of the Big Five—Macmillan, Simon & Schuster and HarperCollins—are red-blooded American corporations, right?
Um, actually, no. The modern incarnation of Macmillan resulted when Germany’s von Holtzbrinck Group rolled up a whole bunch of publishers more than a decade ago. The News Corp. owns HarperCollins, and therefore Australian press baron Rupert Murdoch controls that large publisher. Okay, technically, he became an American citizen, but we all know he’s a fox in the counting house—if there’s anything left to count in the book business besides indie authors and the howls of New York publishers complaining about You Know Who.
Naturally, no one asked authors what they thought of the Holtzbrinck invasion or the News Corp. engulfment. How many times do I have to tell you people to shut up and write?!
That leaves, among the Big Five, Simon & Schuster, which is owned by CBS, which is actually an American company for real. But before you indulge visions of launching a rearguard action from the remaining wisp of ‘Murican cultural territory, you might consider rumors that CBS has considered pitching this dead tome overboard since at least 2013. Maybe the Russians will buy it. Gazprom and Schuster, anyone?
Which brings me, at long last, to all of the pixels that have been excited by authors weighing in about the skirmish between Amazon and Hachette. Listen, people, for the last time: Nobody asked you, nobody plans to ask you, and furthermore, you’re not qualified to have an opinion about the future of the book business just because you write books. So just shut up and be grateful for your 25 percent of nothing and get back to writing. Vous sale…du dumm…you motherfucking wankers.
Remember: The pseudo-American book business knows what it’s doing. And if you’re an author, this business has less and less to do with you.
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I hope that was as much fun to write as it was for us all to read.
Thanks, Randall. It kind of was, but it also makes me sad to think that writers (and other artists) almost always get the short end. What to do but mine that pain for more material!
And go indie.
Amazon buys Penguin. Good. Penguin buys Amazon. Disaster.
I know you’re being facetious, but it’s worth nothing that Penguin couldn’t afford to buy Amazon.
Yet another lopsided take on the history of publishing and What It All Means, while polishing the bright shiny halo you think the giant controlling corporation that is your bestest friend (Amazon) wears.
This is an interesting little Rorschach test, isn’t it? Do tell me which part of this history of publishing was “lopsided.” And, while you’re at it, tell me where I said “What It All Means.”
I would be surprised if she actually does. *grin* Fantastic article!
I used to work for Bertelsmann–and it seemed weird at the time, too.
Yeah, I used to work for Bertelsmann, too. Needless to say, the corporate thing wasn’t for me! I lasted five years.
I still believe “Random Penguin” would have made a much better name. Somehow I just feel like it describes the publishing house perfectly.
Plus, I love to imagine penguins randomly waltzing through their office buildings.
I’d love to hear your thoughts on Random Penguin buying Author Solutions. This is another aspect of all the buying up of entities that doesn’t get touched on enough. It seems like so much conflicting interest as well, and another way in which the big publishers ignore what’s actually good for authors—by not having strong quality control with their self-publishing entities.
I don’t know much about it besides the fact that Author Solutions has a poor reputation. At the time of the acquisition, it seemed to me a sign of panic–of a lack of strategic vision. One thing’s for sure: The moment it became clear that self-publishing was taking off, many companies–new and old–came along with the intention of fleecing wannabe authors. Of course, they don’t look at it that way. They say they’re here to help.
Despite whatever people may be reading into my piece, I don’t see Big Pub as all bad or Amazon as all good, by any means. I think it takes a great deal of moral fiber not to use all the leverage one has against a weaker player. Big companies driven by quarterly earnings inevitably fail this test. There’s great irony, of course, in their screwing over weaker players one day and complaining the next that they’re getting screwed over by someone who’s stronger. Especially because Big Pub was happy to cash the checks from Amazon (and continues to be), when times were good.
You can’t dictate terms that disadvantage authors one day and claim to be a defender of the culture the next day. Rather, you can make that claim if you so choose, but at that point you’re building the castle on sand.
All but a few authors have very little leverage against anybody, despite the fact that we are the ONE truly essential element of the book business. Until, that is, someone teaches a computer to do what we do. Then it’s game over.
Bertelsmann may have begun as a Bible publisher, but they became big with printing Nazi propaganda.
The real idiot in all of this is the very first author how ever long ago who held up his hands and accepted 10 percent or less, he was the one who made the rod for all of our backs.
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What was this article supposed to be about?
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