BROOKE GLADSTONE This is On the Media, I'm Brooke Gladstone. This month, the CEO of Penguin Random House stepped down following the failed $2.2 billion takeover of its rival Simon & Schuster. The merger was blocked when a federal court ruled in favor of the Department of Justice in an antitrust suit.
NEWS CLIP This merger would have created a mega-merger, a publisher that would have been roughly 49% of the market for bestselling books.
NEWS CLIP While they may appeal, they lost. And in fact, there is a $250 million payment that may go to Simon & Schuster. That's a paramount unit, by the way.
BROOKE GLADSTONE The trial, which took place this summer, was a three-week peek at the industry's leading lights and their critics, each wielding terms like backlist and book-tok and anticipated top sellers, which is where publishers invest most of their hopes and resources. On behalf of the prosecution, lawyers, experts and even a sneaker clad, self-styled freelance writer named Stephen King spoke up. He stood as a government witness for less-established writers deeply suspicious of publishers' vows to keep competition alive.
NEWS CLIP King told the court the suggestion the two companies would still bid against each other for books is as ridiculous as the idea that a husband and wife would compete to buy the same house.
BROOKE GLADSTONE Although this particular merger was blocked, Simon & Schuster is still on the market, and two other major publishers, Hachette and HarperCollins, have expressed some interest. Katy Waldman writes about books and culture for The New Yorker. She told me earlier this year that the DOJ, the Penguin Random House trial, revealed a lot about the current state of the publishing industry. She said the prosecution's argument against the merger was that both writers and readers would suffer if the Big Five. Penguin-Random House, HarperCollins, Macmillan, Simon & Schuster and Hachette shrank to only four.
KATY WALDMAN So the idea is that if there are fewer buyers for book contracts, the authors are going to have to lower their prices and they're going to get lower advances. The DOJ's argument is basically that that is going to result in fewer titles being published and also less diverse books being published. The DOJ is basically saying you have particular books that are going to make you most of your money and you know which ones those books are going to be because those are the books that you pay the highest advances to.
BROOKE GLADSTONE It strikes me that if everybody knows what's going to be the bestseller, as the DOJ contends, wouldn't that drive the prices of those books up?
KATY WALDMAN You can look at the data, you can look at past successes, and you can anticipate that something may do well, but you can't know for sure. And so, you know, in a risk-averse industry, if there are fewer companies able to take that kind of wager because they're wealthy enough, because they're dominant enough, the size of the advances will go down.
BROOKE GLADSTONE So the government found an expert witness, data scientist Nicholas Hill, who's taken part in past antitrust cases. His most memorable contribution to the argument that publishers were focused on a top seller market that you could predict and plan for was something called the GUPPI Index that stands for gross upward pricing pressure index.
KATY WALDMAN He was basically predicting what share of the market combined Penguin Random House, Simon & Schuster, Colossus would occupy. That is what the GUPPI is trying to elucidate. And then separately, he made a really big contribution to the government's case that authors behave differently at $250,000 advance or more cut off point
BROOKE GLADSTONE They buy expensive bottles of champagne?
KATY WALDMAN I mean, they may do that, too, although actually, if you think about that advance paid out over a series of years, I'm not sure that they're living entirely so large. It's really that the type of book that that advanced level symbolizes is the type of book that would benefit from things that only the Big Five or the Big Four can really provide, which is reputation, breadth of marketing, breadth of distribution, relationships with librarians and booksellers. The works that we embrace as the next big thing. The books that are making publishing houses most of their money — that doesn't just happen magically. That is because so many resources are devoted to helping those books succeed.
BROOKE GLADSTONE So the publisher's case, you said they had presented their industry in a, quote, tenderly drawn portrait of gamblers, guessers and dreamers — sung by Kris Kristofferson, I guess. They argued that it's a business of passion, not numbers.
KATY WALDMAN Yeah. I mean, what we were hearing from the executives of the Big Five who were called to testify is that publishing is a labor of love. It's a game of chance. And there's really no such thing as an anticipated top seller because you can't anticipate what will fly off the shelves. It is all just starry-eyed adventurers who believe in a project and devote their resources to it. And sometimes it works and sometimes it doesn't.
BROOKE GLADSTONE Markus Dohle, CEO of Penguin Random House, told the judge that they're not going to shutter any of their imprints, that he'll allow them to compete with each other as though they were independent and that competition wouldn't decrease.
KATY WALDMAN I mean, it is possible, but I think especially juxtaposed with the very data-driven economic consultant presentation of Nicholas Hill, it was just hard to believe that that kind of promise, that sort of in good faith, we're all rowing together vision was coexisting with, you know, publishers trying to dominate the marketplace. And there was actually a moment when Nicholas Hill took the stand and he was asked about Dohle's promise. And he said that is not legally binding, and it's somewhat ludicrous to me that we're even talking about it in court.
BROOKE GLADSTONE Let's talk about when the Big Six turned into the Big Five. It was in 2013 when Penguin and Random House merged, leading to the behemoth it is today. Penguin Random House now seems to dominate a quarter or more of the book market. What did we learn from that merger?
KATY WALDMAN So in 2013, there were no promises not to shutter any imprints, and indeed imprints were shuttered. A lot of positions were made redundant. mid-list contracts were canceled.
BROOKE GLADSTONE Define the mid-list.
KATY WALDMAN Sure. Consider like an Avengers movie or maybe like a James Patterson novel. Those are the million dollar advances. Books that we're pretty confident are going to sell no matter what. Your mid-list titles are maybe equivalent to your Sundance winners — very artfully constructed vessels of craft that have some support behind them, but are not the big crowd pleasers. And those are the places that I think a lot of people in the industry look to, hoping for newness and freshness and literary evolution.
BROOKE GLADSTONE Dohle also said Success is random. Best sellers are random. That's why we are the Random House. And the president of Viking said that he'd passed up Marie Kondo's book, The Life-Changing Magic of Tidying Up and Where the Crawdads Sing. So there is no algorithm that picks a bestseller. That was their point, right?
KATY WALDMAN Yes. There are no sure things in publishing. At the same time, publishing houses are being somewhat disingenuous if they don't acknowledge that they are very good at detecting, sleuthing out those patterns and then making decisions that will help them recreate prior successes. You know, you hear a lot of joking and snarking about the girl in the window, the girl with the tattoo in the window, the girl on the train with the tattoo in the window. Yeah. I mean, these books are getting deals because publishers think that they have a shot at getting that goose to lay another golden egg.
BROOKE GLADSTONE Right. Everything is about comparables. I hear that from frustrated would-be novelists all the time. Unless the book is done before they say, Well, we think you're a great writer, but we just don't have the category.
KATY WALDMAN I've gotten a little bit ahead of myself in terms of cynicism. Sometimes what unites these books as literary achievement —- good books that read like other good books. However, there are whole swaths of literary achievement that are possible that these publishers have not permitted themselves to explore. The really hacky version is you have genre fiction that is reproducing itself in an uninspired way.
BROOKE GLADSTONE You have observed the-woman-in-the-window and the girl-on-the-train-type books feature unreliable, messy, alluring female narrators who see a crime, but maybe they're just alcoholic. And there's weird quasi-feminism in it. But if you think too hard, you just become depressed about the state of the world.
KATY WALDMAN Yes. I think you've entirely summed up my aggravation, my exasperation with that particular template. And I will also throw out a few other easy clichés of book publishing successes. There is the pop science: Here is how cyrillic runes reveal the flight patterns of hummingbirds, which will help you get more sleep and kill it at work.
BROOKE GLADSTONE That explains everything.
KATY WALDMAN Exactly. Explain everything is the crucial point there.
BROOKE GLADSTONE And who's the master of that genre?
KATY WALDMAN I feel bad invoking him because he probably did it better than most. But Malcolm Gladwell is the king, inspiring a thousand lesser flowers to bloom. But to be a little bit more serious about it, there are worthy types of books that are important but that are being presented as the only option for new writers. And I'm thinking about the lyrical immigrant novel of loss and the fiction of black trauma. These things are not bad on their face, but if debut writers of color feel like they're the only space that will receive them, that's a real constraint on their imaginations and a deep disservice not only to them, but to us, to readers.
BROOKE GLADSTONE They are offering an in to groups that previously had few doors of entry. You cited a New York Times study in 2020 that showed 95% of widely read authors in 2018 were white. They were looking at a dataset of 3000 authors. There are writers who say, unless you're a person of color or trans or something, you can't get a book published anymore. But you say this is really sour grapes.
KATY WALDMAN Yeah, well, I think Joyce Carol Oates was someone to pity the plight of the white male writer recently. But 95% of widely read authors are white, and there have been strides made. But it's such a drop in the bucket, and that long history has been shaping our perspective on literary quality for a really long time. And I think that that's a tough hurdle to clear.
BROOKE GLADSTONE This trial seems to be unearthing the age-old clash between art and commerce. Has this lawsuit pushed you to think about this internal conflict in a different light?
KATY WALDMAN Yeah, I've heard the strongest versions of the case for exclusively art and exclusively commerce, and neither has been satisfying. I guess what I would say is I felt the gravity and the pull of this sort of romantic vision of publishing that they're not hedge fund managers. They have gone into the business of creating art and publishing books. And it is not entirely wrong to think that they want to create beauty. But I also think that hearing from executives, the farther you get away from the editorial assistant and the closer you get to the C-suite, I think the logic becomes much closer to any other business. And so the government's points along those lines hit home.
BROOKE GLADSTONE Katy Waldman is a staff writer for The New Yorker's Books and Culture Section. Katie, it's been a pleasure. Thank you so much.
KATY WALDMAN Brooke, it was so lovely to talk to you. Thank you.