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Justice Department declares that authors are important, monopolies are bad.

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November 2, 2021, 12:33pm

In welcome news for fans of both books and strong antitrust regulation, the US Department of Justice filed a civil lawsuit today to block Penguin Random House’s acquisition of Simon & Schuster. The complaint, filed in the U.S. District Court for the District of Columbia, details how the proposed merger would “would likely result in substantial harm to authors of anticipated top-selling books and ultimately, consumers.”

Penguin Random House would control close to half of the market for the acquisition of publishing rights to anticipated top-selling books. Penguin Random House’s next largest competitor would be less than half its size. Post-merger, the two largest publishers would collectively control more than two-thirds of this market, leaving hundreds of authors with fewer alternatives and less leverage.

The complaint also gets into the bidding process, giving some recent examples of how competition between houses can drive up advances for the author. “The head-to-head competition between Defendants has allowed authors of anticipated top-selling books to secure higher advances and other favorable terms.”

In addition to its impact on authors, the merger would also make business more difficult for small presses, many of whom rely on Penguin Random House or Simon & Schuster for distribution services.

(Honestly, the complaint is a pretty good primer on the publishing process. For instance, if you have friends or family members who won’t stop asking why you don’t just self-publish your book, you can refer them to paragraph 34: “Self-publishing does not include the breadth of editorial, distribution, and marketing services that are important factors in whether a book will become commercially successful.”)

As to Penguin Random House’s claim that the merger is a necessary step to “provide a counterweight to Amazon’s alleged buying power,” the complaint cites Penguin Random House executives, who told the board of the publisher’s parent company Bertelsmann that the merger would advance their goal of being “[e]xceptional partner for Amazon.” Yikes!

Well, to quote the first paragraph of the DoJ’s complaint, quoting Penguin Random House’s Global CEO, “Books matter…” Glad to see the government standing behind that one.

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