August 25th, 2022

Dear Readers,

Last Friday, a federal judge heard closing arguments in the Department of Justice’s antitrust case against Penguin Random House (PRH) and Simon & Schuster (S&S). The trial will determine whether PRH, the country’s largest publisher, can buy its rival, as it has planned to for nearly two years. The Biden administration has argued that the acquisition would stifle competition, hurting authors who depend on bidding wars between publishing houses for their livelihood. Critics have cautioned that the merger would lead to layoffs and further constrain diversity in an already homogeneous industry. If the case is decided in the publishers’ favor—a ruling is expected in November—it will be only the latest development in a decades-long tendency toward consolidation in the industry. (PRH is itself the result of the 2013 merger between Penguin Group and Random House.)

For this week’s newsletter, I spoke with Jewish Currents contributor Dan Sinykin, a professor of English at Emory University who studies the history of conglomeration in American publishing. His second book, The Conglomerate Era (forthcoming from Columbia University Press), will explore how corporate consolidation has shaped literature. We discussed the stakes of the trial and conglomeration’s impact on the literary landscape. Our conversation has been edited for length and clarity.

Best,

Nathan Goldman

Managing Editor

Nathan Goldman: Why is the DOJ suing to prevent PRH from acquiring S&S?

Dan Sinykin: PRH and S&S are two of the five largest publishing houses in the US, which colloquially go by “the Big Five.” PRH is considerably bigger than the rest, and S&S is the third-largest. The DOJ is trying to stop them from merging on antitrust grounds. It’s a bit unusual for the government to try to block a merger where there are still going to be four major companies. But the post-merger company could have anywhere between a third and half of market share.

The case the DOJ is making is surprisingly limited. They’re not arguing that this is going to harm consumers, but that it will harm a tiny sliver of authors—those who receive advances of $250,000 or more, which corresponds to only 2% of trade book contracts. The idea is that there are many times when PRH and S&S are competing head-to-head toward the end of auctions; an author might get $650,000 if this was one company, but because there are separate companies bidding against each other, that author gets $850,000.

NG: Given that the case is so narrowly focused, what’s at stake beyond these very large advances being slightly curtailed?

DS: In a way, this trial is the continuation of a decades-long power battle between the publishing industry on the one hand, and agents and authors on the other. Before the 1970s, the power balance between authors and publishers tilted heavily toward publishers. It was in the ’70s that agents learned how much leeway there was for them to fight back on behalf of themselves and their authors. Agents started to pull some of the power away from publishers. But in the decades since then, the consolidation of publishing has been slowly eroding the power of authors and agents.

The Association of American Literary Agents and the Authors Guild, which is the largest labor organization for writers, are both opposed to the acquisition. For them, it represents a power shift toward PRH. Agents and authors worry that PRH, which already has a third or half the market share in books purchases, will have more leverage to dictate terms around author contracts, jeopardizing some of the things that agents have won for authors, like various kinds of subsidiary rights and favorable royalty rates.

In this sense, this merger would have much farther-reaching consequences, extending beyond the top 2% of authors and potentially changing the terms of contracts in a way that would affect every author. And if PRH makes these kinds of changes, other publishers will likely follow.

Another larger consequence of the merger has to do with workers in the industry. At the trial, the head of mergers at one of the companies said that the merger will enable “headcount synergies,” which is an incredible corporate-speak euphemism. What he’s saying is that there would be a number of S&S employees on the chopping block. This is an industry that for a long time has compensated its employees poorly, and gotten away with it because of the supposed spiritual benefits of the work—it’s a passion, so you’re not supposed to ask for more. Conglomeration exacerbates that because it gives executives more power over the lower-end employees. And that has ramifications for diversity. As many have pointed out, a longstanding reason for the whiteness of publishing is because the people who can afford to work in it are people who come from privilege, and people who come from privilege also tend to be white.

NG: How has this tendency toward conglomeration played out in the industry over the past decades?

DS: Most of the culture industries—film, TV, and radio—were all highly centralized and consolidated fairly early on, but for a long time, book publishing wasn’t. That changed in the 1960s, when The Times Mirror Company, a conservative newspaper dynasty in LA, bought New American Library (NAL), which was the most important mass market publishing house at the time. In a bad omen for the future of conglomeration, they immediately diced up NAL with the help of McKinsey consultants, and within the next few years, NAL’s great editing team was scattered in various places. Following the acquisition of NAL, the publishing industry began to be conglomerated.

For the most part, this was not too worrisome to people outside the publishing business because many of the acquisitions were pretty benign—parent companies weren’t dictating too much of what their acquisitions did. But eventually, as parent companies began demanding growth quotas, conglomeration incentivized being more profit-oriented. Beginning in the ’70s, the parent companies began to implement more forms of bureaucratic rationalization—things like profit and loss forms, which are ubiquitous in the business today—to ensure that the bottom line would be prioritized.

The same era saw the rise of wholesalers and book chains. Previously, when booksellers bought directly from publishers, things were really slow and hard to do at scale. But starting in the ’70s, all of a sudden, publishing houses had this ability to create super hits—books that could sell on a mass scale—through this combination of conglomerate publishers, book chains, and the rise of marketers and publicists, who began eroding editors’ autonomy within publishing houses. These authors generated such incredible brand recognition that publishers could count on them to sell for the rest of their career. So the late ’70s is when you start getting your Stephen Kings, your Danielle Steels, your Michael Crichtons. That was one of the early results of conglomeration.

NG: How did authors and agents respond to the onset of conglomeration? And what was the government’s role in intervening or allowing it to happen?

DS: In the ’70s, literary editors, writers, and the Authors Guild started to freak the fuck out. They understood that there had always been a balance between celebrity memoirs and crosswords and cookbooks and literary books, but conglomeration was threatening to shift that balance such that literary books might become utterly negligible. In 1977, Herman Wouk, John Hersey, and John Brooks wrote this press release on behalf of the Authors Guild where they raised the alarm, saying that conglomeration was going to destroy literature and that things were getting too centralized, and asking the government to step in through a Senate hearing or an antitrust case.

So authors and agents have been calling for the kind of antitrust case we’re now seeing for 45 years. What’s crazy is that the Senate was receptive. There was a senator from Ohio, Howard Metzenbaum, who took it up on a subcommittee. In 1980, there was an antitrust hearing about whether or not the book business should be broken up. E.L. Doctorow testified on behalf of breaking up the conglomerates as the representative from PEN; [the modernist poet] Archibald MacLeish testified. It was very similar to what we’re seeing now where you have all these famous authors on the one hand, and on the other hand, there are the CEOs of these publishing companies coming in and saying, “Publishing is as diverse as ever, everything’s going great.” A few months after the hearing, Ronald Reagan won the presidency on an anti-antitrust platform and created a very hospitable environment for acquisitions and mergers within the same industry. Before, there had been some actual limits to that strategy, so corporations were acquiring companies in other industries. But under Reagan, things got substantially worse.

NG: In the wake of this consolidation, what have been the business models for publishers outside conglomerates?

DS: Today, we have three large buckets. We’ve got the conglomerate presses, and within them, a gazillion imprints that were once their own thing but are now working within the logics of conglomeration.

Then we’ve got the nonprofit presses. In the ’80s, all of the anxiety and fear among literary types found an outlet in the creation of the nonprofit literary movement. Folks started thinking: If theaters, symphonies, and opera houses can get nonprofit funding to subsidize them without having to be utterly dependent on the market, why can’t books? The nonprofit presses that came out of that moment—Graywolf, Coffee House, Feminist Press, Dalkey Archive—are now this really important alternative that emerged in resistance to conglomeration.

And then we’ve got the independents. To me, the most interesting of these is W.W. Norton, which is an employee-owned cooperative. Norton publishes all these textbooks, anthologies, and critical editions that are essentially built into English departments, and this gives them a really strong profit margin. Higher ed offers Norton a buffer that allows them to do things on the trade side that they maybe couldn’t do otherwise—it also allows them to avoid being bought. Interestingly, Norton came up over and over again in the trial. PRH and S&S want to paint Norton as a viable competitor to suggest that there is more competition than the government is making it seem.

NG: What impact has the conglomeration of publishing had on the diversity of published authors?

DS: Different business structures create different incentives, which in turn shape the horizon of possibility for what can be published. Conglomerate publishers operate with an inherently conservative logic: They try to reproduce trends that already exist. For instance, each new book needs to have “comparable titles”—previously successful books it can be compared to. This means that there are only so many nonwhite writers that fit the requirements of conglomerate publishing. There was this great piece by Richard Jean So and Gus Wezerek in The New York Times a couple years ago showing the extraordinary whiteness of conglomerate publisher lists. Today we’re in an odd moment because of post-George Floyd political shifts within publishing. But until the last two years, publishing was just an extremely white industry. It was very difficult for a nonwhite writer trying to get published in the ’90s, when the whole publishing industry was overtaken by the logic of conglomeration. Toni Morrison edited at Random House for 16 years and would say, “They’ll really only have room for one of us at a time.”

Because nonprofits are mission-driven, and those missions often entail diversity, they will pursue writers of color, but these writers are also structurally tokenized. And still, there are certain kinds of nonwhite writers that nonprofits tend to want.

NG: If PRH is allowed to buy S&S, will it be a death knell for American literature?

DS: First of all, my sense is that the judge seems sympathetic with the DOJ. So it wouldn’t surprise me if she blocks the merger. In that case, a likely scenario we might see is S&S merging with either HarperCollins or Hachette. Their CEOs actually testified against the PRH merger, in part because they would like to purchase S&S themselves. Those mergers would probably go uncontested, unlike the one with PRH, which is just so much bigger than anyone else.

If the merger does end up happening, it will be an incremental continuation of the same trajectory we’ve seen in publishing for decades. It’s a mistake to think that the ongoing conglomeration will lead directly to the destruction of literature. A lot of interesting things are generated in resistance to conglomeration. The nonprofit presses exist as a direct result of it. There’s a dialectical relationship to what kind of literature is made possible because of conglomeration; it’s not simply a one-sided foreclosing of the possibilities for literature. And even within the conglomerates, authors always bring creativity to structural limits.

In order to see what’s truly limiting the possibilities for what kind of literature is published, you actually have to look much more broadly, at the class structure in the US, like who gets to go to MFA programs, who actually gets opportunities, and the deep nepotism involved in mentor–mentee relationships that all happen before you even get to an agent submitting a query to a publishing house. The merger between PRH and S&S draws our attention to this much larger set of networked problems, but in and of itself, this case is a drop in a 50-year bucket.