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The Authors Guild Responds to DOJ Plan to Stop Proposed PRH/S&S Merger


Update 11/05/2021: Now that the Authors Guild has fully reviewed the DOJ’s complaint and legal claims therein and the Authors Guild Council and Authors Guild Foundation Board have had an opportunity to meet to discuss DOJ’s suit to block the proposed merger between Penguin Random House and Simon & Schuster, it issues this official Position Statement HERE.

In response to today’s announcement by the U.S. Department of Justice (“DOJ”) that it plans to sue Penguin Random House (PRH) to stop its proposed merger with Simon & Schuster (S&S), the Authors Guild has issued the following statement:

“Today’s decision by the DOJ was unexpected given that so many other major mergers and acquisitions in the publishing industry have gone through recently and over the last few decades with nary a raised eyebrow, leaving us with only a handful of companies dominating the industry. More importantly, the decision raises the bigger question that goes beyond traditional publishers to the consolidation of distribution channels and Amazon’s monopsony of book retail.  We look forward to working with the Biden Administration on antitrust reform that gets to the root of the problems in the industry, whereas the proposed merger was just a symptom.”

Amazon’s domination of book retail, which has only been exacerbated by the pandemic, gives it the ability to extract unreasonable terms from publishers, especially smaller ones. Indeed, in the past, Amazon referred to its strategy toward smaller, independent publishers as the Gazelle Project, named after Bezos’s comment, that Amazon “should approach these small publishers the way a cheetah would pursue a sickly gazelle.” Amazon’s demands for high fees and its most favored nations provisions have put huge financial pressure on the publishing industry, with many traditional publishers feeling that they must grow through acquisitions and mergers to successfully compete in the business. As we said in our letter to DOJ last January,

The Department of Justice must begin today to proactively restructure the entire U.S. market for books in ways that also deal with the danger posed by Amazon. In this way alone will the Department fulfill its mission of protecting the interest of the public as a whole, and of every reader and author in the United States, from dangerous concentrations of power and control over America’s authors, editors, booksellers, and readers, and over public debate itself.

The Authors Guild has opposed consolidation among publishers going back five decades to the 1970s when we issued reports and statements and testified in front of Congress. It is this decades-long procession of mergers and acquisitions in the industry that has left us with only 5 major publishers today.

When PRH’s purchase of S&S was first announced last year, the Authors Guild issued a statement opposing any further consolidation:

Less competition would make it even more difficult for agents and authors to negotiate for better deals, or for the Authors Guild to help secure changes to standard publishing contracts—because authors, even best-selling authors, wouldn’t have many options, making it harder to walk away. The history of publishing consolidation has also taught us that authors are further hurt by such mergers due to editorial layoffs, canceling of contracts, a reduction in diversity among authors and ideas, a more conservative approach to risk-taking, and fewer imprints under which an author may publish. 

We are pleased that, in its complaint, the DOJ recognizes the central role of authors ability to earn a living in the availability of important books, something that the Authors Guild has been arguing for years to the DOJ:

[R]educing author pay means “[f]ewer authors will be able to make a living from writing” which, in turn, “will have an impact on the output.” By reducing author pay, this merger would make it harder for authors to earn a living by writing books, which would, in turn, lead to a reduction in the quantity and variety of books published. 

This issue affects not just the bestselling authors discussed in the complaint. Our last authors earning survey showed a 42% decline in authors’ earning over the ten years from 2008-2018, down to a mean income of just $20,3000 in writing income for full time authors. This means it takes very little further loss of income for authors to have to curtail or stop writing and take on other work. As Authors Guild’s past president James Gleick said, “When you impoverish a nation’s authors, you impoverish its readers.” He noted that more books are being published than ever, but that books of quality often demand time and research that can’t be sustained if an author also needs to teach and lecture to make ends meet.

In announcing the decision, Attorney General Merrick Garland said, “Books have shaped American public life throughout our nation’s history, and authors are the lifeblood of book publishing in America. But just five publishers control the U.S. publishing industry.”

The DOJ’s statements recognize the burden book authors currently face and we hope that today’s decision is a signal that the DOJ may be finally expanding the definition of antitrust to consider the impact on creators. But unless the Biden Administration and Congress address antitrust reform in relation to Amazon’s practices, preventing the PRH/S&S merger will do little to reduce harm to authors and the publishing industry as a whole, and may injure mid-list authors short term.