Entries in penguin (3)


Random House Set to Merge With Penguin

Thanks to increased pressure from online rivals like Amazon.com and Barnes & Noble, among many others, two powerhouse publishers are merging in the hopes of shoring up their bottom lines amid the overall deterioration of the publishing industry. Penguin and Random House are in talks to join forces in what is purported to be a £2.4 billon deal. From The Telegraph:

Pearson, the listed media business which has owned Penguin since 1970, said on Thursday it is in talks with Bertelsmann, the German media giant which owns international publisher Random House, about combining the publishing assets. Bertelsmann would own more than half of the joint venture.

The negotiations come at a critical time for the companies, as well as for the wider book publishing industry which spent most of the last decade in major turmoil, as new online businesses like Amazon, Google and Apple tried to stake their claims on their traditional business.

Heavy discounting by online retailers and supermarkets has made it harder and harder for specialist book chains and independent booksellers to survive, leaving publishers with many fewer places to sell their products.



U.S. Justice Department Sues Apple and the Big Five

As I reported on March 9th in this blog post, the U.S. Justice Department was threatening to sue Apple, Inc. and five of the biggest book publishers in the world. Well today, Wednesday, April 11th, that has happened.

The suit, filed in U.S. District Court in New York, is based on allegations that Apple and the Big Five colludied to fix eBook prices, and claims that Apple and the publishers "reached an agreement whereby retail price competition would cease (which all the conspirators desired), retail eBook prices would increase significantly (which the publisher defendants desired) and Apple would be guaranteed a 30% 'commission' on each eBook it sold (which Apple desired)." It also claims that "Defendants' ongoing conspiracy and agreement have caused eBook consumers to pay tens of millions of dollars more for eBooks than they otherwise would have paid."

On the heels of this, eBook prices skyrocketed, which forced competitors, such as Amazon, to keep them above $10. According to the suit, this was in violation of antitrust laws. Thus we saw eBooks from Macmillan, Simon & Schuster, HarperCollins, Hachette and Penguin priced between $12.99 and $14.99. All have been named in the suit along with Apple, Inc.

This is major news, as I've said before, and will likely shake up the industry yet again. If nothing else it will return the eBook industry to the wholesale model and put pricing decisions back in the hands of retailers.

We'll see what happens.



U.S. Justice Department Threatens to Sue Big Publishers Over eBook Pricing

[Click here for an update to this blog post] 

So the news finally comes that the U.S. Justice Department is threatening to sue Apple, Inc. and the five big pubs: CBS Corp.'s Simon & Schuster Inc.; Lagardere SCA' s Hachette Book Group; Pearson PLC' s Penguin Group (USA); Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and HarperCollins Publishers Inc., a unit of News Corp. What's the deal, you ask? Overpriced eBooks spurred by the deceased CEO of Apple in coroboration with the big five. Thanks to that popular Steve Jobs biography by Walter Isaacson, the former CEO of Apple is quoted as saying, "We'll go to the agency model, where you set the price, and we get our 30 percent, and, yes, the customer pays a little more, but that's what you want anyway." This caused the big pubs to take the fight to Amazon, telling them they had to sign an agency model contract or they wouldn't be a vendor for new and popular titles from the biggest names in the industry.

Of course Amazon caved, which is why you saw eBooks from the big five go from $9.99 to $14.99 (Apple's "most favored nation" clause states that none of the participating publishers could sell their books for less with competing vendors). Add to that the fact that B&N's chief executive poo-pooed to the Justice Department during a deposition, arguing that abandoning the agency model would in effect give the dominant eBook player (Amazon) even more market share than it already had. You see, Amazon was clever enough to discount eBooks to $9.99 or less, essentially selling them at a loss to drum up Kindle business, which it did quite effectively. At the end of 2011 more eBooks sold through the company than hardcover books. This had never been done before, and it speaks to the swift rise of the eBook market. The problem with this rise is that Amazon is at the forefront, and Amazon is a company that does not rely on brick-and-mortar locations to sell its wares. This gives them a major edge over rivals, and that edge allows them a great deal of control. Beyond this, they launched a legimate publishing arm and went so far as to set up shop in New York City, mere blocks from their rivals, who also rely heavily on their services, seeing Amazon accounts for a large percentage of direct-to-consumer book sales.

So Amazon is the main enemy here, and the sole reason Steve Jobs colluded with the big five to drive up prices in the eBook industry, so that Amazon could not gain a monopoly and dictate prices across the board. Barnes & Noble, you see, cannot compete with the low ball pricing Amazon was dishing out. The market cap of both companies could not be more contrasted as well, B&N being a relatively small player in this arena. The big five, wary of Amazon's dominance, feel more akin to companies like B&N, however, who isn't seen as competition, particularly since it has since sold off its publishing arm. With the demise of Borders, B&N's stance as a going concern takes on even more weight today. So in essence, Steve Jobs, along with the big five publishers acted out of desperation it seems, though some would say greed. I believe it's a little of both. Whatever the case, the Justice Department alleges that antitrust laws were broken. So a lawsuit is on the horizon, and it could change the way eBooks are priced and sold.

I have complained about the $15 price point from its inception, and I do believe this slap on the wrist is a good thing, but it looks like things will get ugly before long. Hey, since eBooks doubled business in 2011, bringing in a whopping $970 million, according to a survey conducted by the Association of American Publishers, its no wonder claws are being bared. With more and more people opting for eReaders these days, sales are likely to increase as well, but prices do need to come down.

We at 711 Press have long believed in fair eBook pricing, and our business model has not and will not be affected by the efforts of the traditional pubs.

We are for the people, and you can rely on us for affordable, quality fiction for many years to come!