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Welcome to Brick Cave Books

Penguin/Random House merger confirms digital change

by Bob Nelson

It was released yesterday that Bertelsmann (owner of Random House Publishing) and Pearson (owner of Penguin) have agreed to pursue a merger. The combined company would be owned (almost equally) by it's parents, generate about $4 billion dollars a year in revenue, and eventually create one imprint.

But what does this mean?

Amazon is winning


$4 billion dollars is a lot of money make no mistake. But take in mind that Amazon generated $48 billion dollars in 2011 (granted, not all from books and publishing), and you begin to see a difference is size. Amazon doesn't break out sales performance to such a detail as to know how much revenue their self publishing programs such as KDP and Createspace generate, so a true comparison is hard to come by. It is obvious, however, that Amazon IS making it easier (and more profitable) for authors to use these tools and circumvent the traditional publishing process.

The important message here is that in the battle of content control, traditional publishers are losing the battle, because more retailers such as Amazon, Barnes and Noble, Kobo and Apple are forging direct relationships with smaller presses and authors, bypassing the need for a traditional publisher.

Bookstore are Nervous


Independent bookstores are becoming even more nervous. Like traditional publishers, independent bookstores have, for the most part, relegated their relationships with self published authors and small presses to the back burner, preferring the ease of working with large publishers to make sure popular books continue to get marketed by someone else and driving business into their store.

Indeed, the large publisher and bookstore owner have been in the same boat, frantically trying to bail the water out for some time.

The Shift is Continuing


The transition to a new publishing model continues, and it goes beyond publishing. At some point, there will be stabilization, just as there was in the music industry, because there will always be a place for larger publishers. But it is undeniable that the shift in power continues, and the key is the relationship between the producer (author) and the user (consumer), and finding the best tools to bring them together.

 

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