Temple beautiful

In 2009 I started to blog about publishing with a few groundrules and the idea that I would not chase the news. There are plenty of voices capable of commenting on the most recent developments in publishing, and I didn't feel I would add a lot of value if the blog turned into a set of "me-too" posts.

The day that I presented the first draft of "The library within us" at this year's Books in Browsers conference, Penguin and Random House announced their plans to merge. The timing gave a bit more weight to one of the more frequently tweeted lines, "The opportunity in abundance will not accrue to the incumbents." It also made me slow to comment on the merger.

Not chasing the news is different from not reading it. Many substantial articles and commentaries have examined the idea of combining Penguin and Random House. Some of the more useful coverage can be found in these three pieces:

It's worth adding that I find some coverage that I don't agree with "useful". Gara's arguments in favor of scale assume that Amazon is powerful because it is big. I'd argue that, in the area of digital content, it is powerful because it has effectively met emerging demand while using proprietary file formats to lock in customers.

Ashlock and Chromy observe that mega-mergers might hurt innovation, as evidenced in the track record seen in the music business:

"Look at the earnings (or lack thereof) reports for Pandora, Spotify and Grooveshark for evidence of what happens when mega-labels reign. With increased e-book prices, draconian terms dictated to libraries, and prohibitive DRM strategies, book publishers' behavior has hinted at a similarly unhappy future for books as for music."

Davidson picks up on the innovation theme, using turn-of-the-century U.S. Steel as a metaphor:

"Its predecessor companies competed by finding new ways of making steel at ever-lower prices. But after J. P. Morgan merged three companies into one behemoth, he discovered a better way to profit. Because all steel producers bought iron ore from the Mesabi Range in Minnesota, U.S. Steel bought most of the range and locked much of the rest of it in long-term contracts. As a result, the company hardly worried about competition; it had little need to innovate or compete on price, which made everything from cars to soda cans more expensive. Worse, it left a massive industry unprepared for the growth of innovative Asian companies during the 1970s and 1980s."

This is one of the evolving questions of the digital age: do we need to get bigger, or do we need to get better? In comments that followed the announced merger, senior executives tried to underscore that the combined entity would have the resources to innovate.

There was a time when publishers could innovate while remaining relatively small and close to their authors. Prevailing wisdom has evolved to claim that innovation depends on your ability to build yet another pyramid.

Perhaps the two companies will soon acknowledge that selling books in proprietary formats only increases the power of the companies they most fear. If they did, I'd feel better about the prospects for this Temple Beautiful.

Brian O'Leary

About Brian O'Leary

Founder and principal of Magellan Media Consulting, Brian O’Leary helps enterprises with media and publishing components capitalize on the power of content. A veteran of more than 30 years in the publishing industry and a prolific content producer himself, Brian leverages the breadth and depth of his experience to deliver innovative content solutions.