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Book of love: Penguin and Random House to tie the knot

October 29, 2012|By David Lazarus
  • The merger of Penguin and Random House could lead to higher book prices and less diversity of titles.
The merger of Penguin and Random House could lead to higher book prices and… (Milvets Library )

Call it Fifty Shades of Consolidation.

Publishing giants Penguin and Random House are getting hitched as their respective corporate parents, Britain's Pearson and Germany's Bertelsmann, merge their publishing units.

The marriage will bring under one roof fantasy novelist Terry Pratchett, "Fifty Shades of Grey" author E.L. James and 2012 Nobel prize winner Mo Yan. The new entity will be called Penguin Random House.

"The consumer publishing industry is going through a period of tumultuous change, propelled by digital technologies and the giant companies that dominate them," said Pearson Chief Executive Marjorie Scardino.

"The book publishing industry today is remarkable for being composed of a few large, and a lot of relatively small companies, and there probably isn't room for them all," she said. "They're going to have to get together."

That could mean higher book prices and less diversity of titles, if consolidation in other industries is any indication of how this will play out for consumers.

Telecom companies, airlines, banks -- it's hard to think of a single high-stakes merger that's resulted in lower prices and more innovation. It's pretty simple: The less competition you have, the less pressure there is to fight for customers.

And with fewer bookstores, the action in the future will focus on digital downloads and ebooks. With only a handful of major players, it seems likely that sellers will be free to set their own prices, rather than reflect the actual cost of distributing literature in digital form, which is fairly minuscule.

For those who love to read -- admittedly, a dying breed -- this isn't good news.


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