Last week, the DC District Court opinion was released to the public after Judge Florence Pan ruled to block Penguin Random House’s 2.2-billion-dollar acquisition of fellow Big Five publisher Simon & Schuster. AWP commends the ruling and asserts that competition is a crucial part of a healthy publishing landscape. In addition to proving the US Department of Justice’s case, the 80-page opinion is a wealth of information for writers looking to better understand the publishing industry.

Highlights of the Case

• The case was founded on the principle of monopsony, a “market condition where a buyer with too much market power can lower prices or otherwise harm sellers” (2).
• US book sales totaled 11.5 billion in 2019 (1).
• Penguin Random House is the largest of the Big Five with $2.5 billion in annual revenue (1).
• Simon & Schuster is the third largest with $760 million (2).
• If the merger were to go through, PRH would have 3 times the market share of the next closest competitor (2).
• Acquiring editors often bid against each other to secure titles, but some publishers do not allow their imprints to bid against each other, requiring a “house bid.” (PRH does not allow imprints within the same division to bid against each other, and where bidding is allowed, there is evidence of bid coordination.) The less competition there is, the lower the advance payments to authors will be (14–15).
• The DOJ found that the market is already "prone to collusion" among publishing houses to create mutually beneficial conditions for auctions (61).

Some Eye-Opening Publishing Statistics

• The Big Five (PRH, Harper Collins Publishers, S&S, Hachette Book Group, and Macmillan Publishing Group, LLC) occupied 60 percent of the trade book market in 2021 (3).
• Only 35 of every 100 books make a profit (5).
• The top 4 percent of titles generate 60 percent of the profit (5).
• The Big Five acquire a large number of titles to hedge their bets—knowing that many will fail, a model similar to portfolio investments (6).
• Literary agents advocate to get authors the biggest advance possible since many titles don’t earn out and that will be all the money they will receive for their work (8).
• Only 2 percent of books earn advances of $250,000 or more, but these 2 percent account for 70 percent of total advance spending by publishers (27).
• The Big Five account for 91 percent of top-selling books (27). 

The court opinion draws back the curtain on the publishing industry and provides much-needed transparency into its operations and culture. In addition to concluding that competition is crucial to better pay for authors, one major takeaway from the data is that publishers outside of the Big Five have significantly less market share and resources and, therefore, need our support, both as readers and as authors looking to publish.

As PRH has already stated that it plans to appeal this ruling, AWP will continue to follow this case, advocate where possible, and inform members of the outcome. We understand the need for a diverse market within publishing. Multiple paths to publishing allow for more writers’ voices to be heard, making it crucial to prevent the consolidation of the industry.