NEW YORK (Associated Press) — The Justice Department’s effort to block the Penguin Random House and Simon & Schuster merger isn’t just a showcase of the Biden administration’s tougher approach to corporate mergers, it’s a rare moment to put the publishing industry itself on the curb.
During the first week of the expected two- to three-week trial in US District Court in Washington, publishing executives at Penguin Random House, Simon & Schuster and elsewhere, along with agents and authors such as Stephen King, exchanged opinions and resurrected and revealed disappointments. About financial numbers they preferred to discuss in private or talk back to the reporters.
Marcus Dohley, CEO of Penguin Random House, testified about correspondence in court that reflected tensions between him and other Penguin Random House executives: “I apologize for the emotional language.” “These are private text messages to my closest collaborators in the company.”
The government is trying to prove that the merger will reduce competition between bestselling authors, reduce their progress and reduce the number of books. The Department of Justice maintains that major publishers, which also include Hachette, HarperCollins Publishers and Macmillan, already dominate the market for popular books and writers and have made it nearly impossible for any smaller publisher to penetrate.
Penguin Random House and others argue that the market is dynamic and unpredictable, with competitors from college presses to Amazon.com making the best sales.
Like any other self-contained society, bookmakers speak in a shorthand and follow habits that are instinctive to themselves and sometimes unclear to outsiders. For U.S. District Judge Florence Y. Bane and for attorneys on every side, the trial was in part a translation project.
It was also a chance to hear from some of the industry leaders under oath.
William Morrow Group president and publisher, Liate Stehlik, said she made only a limited effort to get a novel by Dean Koontz, who published with Amazon.com, because its sales were declining.
Award-winning author Andrew Solomon explained that he chose to publish his popular Noonday Demon with Scribner, an imprint of Simon & Schuster, in part because Scribner has sales and marketing resources that small businesses lack.
Penguin Books president and publisher Brian Tartt agreed with the judge’s suggestion that profit-and-loss assessments of potential book acquisitions are “truly fake” and do not reflect actual costs. Tartt also testified that he passed a bid to Marie Kondo to sell “the life-altering magic of the arrangement” because he “didn’t know what to do with it”.
Jonathan Karp, CEO of Simon & Schuster, acknowledged that an industry popular term, “middle list writer”, long associated with a broad and daring team of non-commercial authors, a middle-class type of publishing, is essentially a bogus and polite way of not classifying Anyone a writer from the “low list”.
In response to a question by the judge, Karp also said that while publishers value all the books they receive, overpriced books — money guaranteed to the author no matter how the book is sold — require special attention.
“If you really like the book,” he said, “you should jump through the hoops.”
Sometimes, a glossary may be required to follow some of the common terms in the industry:
– Obtained. This occurs when the book sells enough for a refund of the advance payment and the author can start collecting royalties, although some books can generate a profit for the publisher even when no profits are made. (Executives acknowledged that most new books don’t turn a profit.)
Background menu. This refers to old books, an invaluable resource for publishers, who rely on them as stable sources of revenue.
Beauty contest. This occurs when two or more publishers present similar developments and non-financial terms such as marketing skills or the allure of working with a particular editor determine the winner.
– 10% topping. This refers to when the agent asks the publisher to not only match the higher competing offer, but add 10% more.
—All Access Books: As defined by Dohle, these are very inexpensive books, such as those offered by Amazon.com through their Kindle Unlimited e-book subscription service, that hurt the industry in general by forcing down prices and, inevitably, offering author.
Witnesses from Dohle spoke to Michael Beach, CEO of Hachette Book Group, at length about their love of business and what they said was the paramount mission of bringing ideas and stories to the public. But publishing is a profitable business, and even the most idealistic authors and CEOs are alert to the bottom line.
Through internal emails, testimonials, and both live and videotaped testimonies, the trial blocked internal rules and strategies around book acquisitions and failures when the book in question moved elsewhere.
At Simon & Schuster, editors must send “justification” reports to senior management to get approval for deals worth $200,000 to $250,000 or more. In the William Morrow collection, a division of HarperCollins, the figure is $350,000. Tart also requires approval of deals worth $250,000 and above, while Dohle has testified that he must sign deals of $2 million or more.
Publishers love to share stories of favorite collectibles. The Beach Collection from David Foster Wallace to Keith Richards. Carp members include the late Senator Edward Kennedy, D-Massachusetts, and Bruce Springsteen.
But the experience highlighted disappointments and missed opportunities – the source of “gallows humor,” as Tarte called it. Not only did he pass Kondo’s book but about Delia Owens’ blockbuster film Where the Crowdads Sing. In Hachette, they keep a list of “The Ones That Got Away,” deals for which the publisher made $500,000 or more but lost.
Karp testified that Hachette had bid on Simon & Schuster for a new book by Ben Carson, the famous neurosurgeon who was the housing secretary for former President Donald Trump. At one point, the Department of Justice cited internal emails to indicate that Simon & Schuster had lost three bidding competitions to Penguin Random House in one week.
Karp also spoke about a book he had already acquired, an expected work by a spiritual leader with a large following.
“Unfortunately, his followers did not follow him to the library,” Karp said.
AP Business Business Writer Marcy Gordon in Washington contributed to this report.
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