Antitrust in the Publishing World One Year Later

 

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    On October 31.2022 Judge Florence Y. Pan of the US         Circuit in Washington, D.C. issued a permanent injunction  barring the proposed merger between Penguin-Random   House and Simon & Schuster on ant-trust grounds. A year   later, what does the publishing landscape look like? 

    Simon & Schuster is still up for sale, although as of August 23,2023 Paramount has accepted an offer. So, as long as nothing goes wrong, this merger will probably take place in the next few weeks. Interesting that Paramount is selling the printing division of it's operation to someone smaller than Simon & Schuster. It seems to me that it would be smarter to spin it off, but perhaps being a legacy business that is too expensive. 

    In the immediate aftermath of the decision, CNBC's Bob Pisani wrote an op-ed about the injunction. And he is not wrong, writing a book, wanting to be an author is crazy. "A 2018 survey of 5,067 authors conducted by the Authors Guild found that the median income of the authors surveyed had fallen to $6,080 in 2017. That’s down about 50% from 2007, when a joint Authors Guild/PEN survey reported $12,850 in median income (note: I {Bob Pisani} am a member of the Authors Guild)." 

    There is some dispute in many of my circles as to what that means, but Pisani, with both his business ear and reporters ear puts what he means to rest a paragraph later. "That is the median income. Earnings from book income alone was a paltry $3,100, indicating that authors were supplementing their incomes through speaking engagements, book reviewing, or teaching." 

    In short, his meaning is plain--don't be an author.  And it's no wonder, Penguin Random House presented during their testimony appalling facts facing authors today, only about 1 in 3 books turns a profit. And less than 4% of the top selling books account for 60% of profits. Did the judge believe them? She should have. 

The New York Times put forward it's own research showing that in 2021, according to BookScan, fewer than 1% of the more than 3 million books it tracks sold more than 5,000 copies. BookScan is the data complier of note for the publishing industry, tracking about 85% of sales of books from their point of purchase. That's a comprehensive data set. 

But what did I see as I read through the summer? Let us gather a few of the facts, and see what has and has not been supported by the data. The oldest books I have read so far have been the leatherette bound editions that my library still has. We purchased a number of them, I am actually quite confident that a librarian way back in the 1980s purchased the entire set. Most of these books clock in at about 20, which for books that have lasted 40 years is not a bad bargin. I have no idea how many were originally purchased, but of the possible 66, this blog as reviewed xxx of them.  A quick tour of my library shelves, and I can tell you that there are several more there. I don't know exactly which ones, but there are several. But there are also several that were either not returned to the library or damaged along the way. 

The oldest paperback I have read seems to be Rutland Place, by Anne Perry. This book was published in 1990 and at the time cost $5.99. I put it through the inflation calculator at the time an determined that between then and this year the inflated value of the book would be 13.94. And yet, of the newer edition Anne Perry paperbacks we have read, those go for between 16 and 17 dollars in the Ballantine Trade Paperbacks edition of 2018. That is margin expansion. Part of that may be due to the rise in popularity of Anne Perry after 1994, but it is margin expansion nonetheless. Perry's books of this time range from about 225 pages to about 300. The lesser paged books clocking in at 16 and the longer books, both closer to the original release date and longer are 17. 

Now what about our Agatha Chrisites? She writes much shorter books, the longest of which, to date, has been about 230 pages. When I'm not reading the leatertte editions, I am getting newer trade paperbacks. She is the best selling author of all time, behind literally Shakespeare and the Bible. again, the paperbacks range in price from 5.99 to 15.99 with one, dating from what I believe is 2011 in at 12.99. That's interesting, because like Perry these books have been expertly edited and do not need more work to "keep them fresh". 

On to hardcovers. The leatherettes we have already mentioned. This is a style of book that has gone the way of the dinosaur. I don't remember even the last time I saw a Bible for sale in a leatherette edition, although I do own one from the 1980s that was a gift to me when I started kindergarten. Why that kindly old lady thought giving a five-year-old a leatherette version of adult bible was a good thing, I will never know. A hard cover kids, easy reader version, I get. But I digress. And a quick search on Amazon shows that these types of editions are extremely rare these days. 

Let us take a moment to look a bit closer at three books over the course of the last few years. 

The Sins of the Wolf, Anne Perry 1994 $21.50

Reverie, Zee Lacson, 2021 $20

Desert Star, Michael Connelly, 2022 $29

The release date of the Sins of the Wolf First Edition is fall of 1994. The library owned it on 9-13-1994 and the book jacket says the price was $21.50. This is the same 6 x 9 dust jacket as Zee Lacson's Reviere. A book that retails for a about $20. 

I  would like to note that these books are the same size as far as the hard cover binding goes. But Zee's book has 100 fewer pages than the other book, at 275. Let us do some math, shall we? Zee's book is 73% of the length of the 1995 Random House published book. So, in 1995, if we hypothesize that the price of the book would have been proportional, then the book would have sold for $15.77. For the sake of argument, since I did not see books actually priced at that rate at that time, let us say that the marketing division would have rounded that up to, just to make it an even number, $16.00. Now let us put that through the inflation calculator and we get: $32.31. To be fair, the third book in this series does retail for $33.00. 

Now come to think of it, if we look back at say, the latest Michael Connelly, a book that came out just last year. we see that the book, one that is longer than the 1994 book, but not by much, about 20 pages, so I will say they are the same length, retailed for $29.00.. The inflation adjusted price of the 1994 book is $43.42.That looks like margin compression to me, meaning that the public is less likely to buy a paper book than they were in 1995. I cannot believe a publishing house would sell a book for less than what the market demand says that it is worth. So, between the advent of e-books and the rise of Amazon undercutting the small, locally owned bookstore, we have seen the worth of a hard cover paper book cut by one third. 

When you hear authors complaining, now you know what the complaints are about. In the last 20 years, I am sure they have felt the squeeze. It's been great for libraries, but it's not so great for authors. Those who are big enough, get paid, those who are tiny, get crumbs. 

I don't doubt that margin squeeze is a thing with publishers. And I don't doubt that the business realities they put forward are true. But I do believe, as do many authors, that publishers don't provide what they think they provide. In short, we believe it is not our fault that they are bad at their jobs.

The price of that Simon & Schuster sale is several hundred million dollars less than than the Penguin offer and by a much smaller press. While that should not make a difference to the book market, the real test is going to be that median income number published by the Author's Guild. Let us see what the future holds. 

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