An American Editor

November 26, 2012

The Merger Apocalypse

It has been a while since I wrote about ebooks and books in general. For the most part, nothing new or exciting has been happening once you move away from the hardware side of things. But the merger of Random House and Penguin is a comment-worthy event.

In the past, consolidation has been very bad for professional editors. Somehow these mergers and purchases needed to be paid for and with supposedly declining sales in bookworld, the way to pay for the merger was to cut expenses. The primary way to cut expenses has been to cut costs in areas that consumers do not see or notice until too late, thus primarily in editorial and book production.

Past consolidations have resulted in layoff of editorial and production personnel and in lowering of fees paid to freelance editors. In preconsolidation days, there was competition for editorial services, so freelancers could easily raise prices. In postconsolidation days, competition has been greatly reduced, there are fewer publishers to compete with each other for editorial services and thus the (successful) downward pressure on pricing. Freelance editors have little place to turn when where there was once two there is now but one job opportunity (publisher).

The merger of Random House and Penguin, who combined will account for approximately 25% of traditionally published (as opposed to self-published) books, is likely to spur a second merger, that of HarperCollins and Macmillan (or perhaps it will be HarperCollins and Simon and Schuster), who combined will account for at least another 20% of that market. And when pricing for freelancers is set, it will be set companywide — it will make little difference which imprint of the RandomPenguin colossus a freelancer works for, the pricing will be fairly uniform, and increasingly depressed. Or so experience says.

I understand why the merger is occurring: somehow a company has to combat Amazon and Apple and the most logical way is to make it so that Amazon and Apple cannot ignore the publisher’s demands because neither can forego stocking 25% of traditionally published books. (And let us not forget that Amazon is working to build its own publishing behemoth as a foil to these publisher tactics.)

Yet there is another possibility. What if one or both of these megapublishers — RandomPenguin or HarperMacmillan — decides to combat Amazon and Apple directly? It strikes me that the way to do it would be to buy Barnes & Noble. Buying B&N would give them immediate access directly to consumers. They could set terms for distribution with their captive company (bring back agency pricing) and tell Amazon and Apple they, too, can have access to these books but on the same terms as B&N. It would put the publishers back into control quickly, and B&N could be bought cheaply — a couple of billion dollars ought to do it.

Another possibility, although one that would likely have limited success, would be for publishers to start a “first edition” club only for brick-and-mortar stores. B&M stores would be given the exclusive opportunity to sell to consumers collectible first edition-first printing-author signed hardcover books that come with an included ebook copy. If done smartly, it could be an incentive for consumers to enter a b&m bookstore. I think, however, publishers would blow it simply because they seem to blow everything else.

The bottom line is that just as these consolidations are likely to be bad news for editors, they are likely, too, to be bad news for consumers and for sellers like Amazon and Apple.

The consolidation of the publishing industry has been ongoing for 30 years. The problem is that there are fewer large publishers to consolidate today than 30 years ago. It strikes me that if the Justice Department doesn’t think that Amazon dominates the ebook retail market in the United States and that it never did, it would be hard pressed to oppose these consolidations or even the purchase of B&N by a combination of the megapublishers because their market position would be less than that of Amazon.

Are we in for interesting times in publishing? I think more worrisome than interesting. If book quality is noticeably declining preconsolidation, what will it be postconsolidation? If editorial incomes are in decline, how much more rapid will that decline be postconsolidation? If book prices are on the rise, how much faster will they rise postconsolidation?

The question that comes to mind, however, is this: Would RandomPenguin have come about if Amazon were not acting like the Wal-Mart of ebook world? I have no inside information but I suspect that the answer is no, the merger would not have been proposed. I think it is fear of the Amazon vision of the future that is driving this merger, with the final straw being the court’s decision to approve the settlement in the agency pricing case. That settlement gives publishers little leeway against Amazon in the absence of controlling a large enough portion of the market that Amazon cannot do without that portion’s product, which would be the case with RandomPenguin controlling 25% of the traditionally published market.

The more I think about the megapublishers joining to purchase B&N, the more I think it would be a smart move. There are a lot of ways that publisher ownership of the chain could effect cost savings, and with good planning, the physical stores could be made relevant again. More importantly, B&N’s online store is already a well-established and well-known destination for books for consumers, which would relieve publishers of having to create a new online presence and drive traffic to it, a difficult task. And, as noted earlier, it would provide leverage for dealing with Amazon and Apple.

What do you think?

July 14, 2010

Striking Workers and American Editors

In the news in recent days have been articles about worker problems at Foxconn’s China factories (where Apple and Dell products are made) and about Chinese workers striking for better work conditions and pay — something one would never have expected to read about following the 1989 Tiananmen Square protests. More recently, there was an article about the inability of Chinese factories to hire younger Chinese workers who prefer not to work than to work for “slave” wages and under “slave” conditions.

Although not directly related to editing or to American editors, I do think these are a precursor of what we will see in coming years in other rapidly developing countries, such as India — the places to which publishers are currently flocking to get editorial and production services at significantly lower costs. I think that the financial class divide that exists in these countries, which is what enables the significantly lower prices, is rapidly being threatened by the interconnectedness that the Internet Age has brought to the world.

Although today is not a great time, compensation wise, to be an American freelance editor, the tides may be turning. I’ve noticed an increase in complaints about editing quality and an increase in requests from offshore book packagers to hire American editor services for American book projects. Counterbalancing this trend, however, is the increase in people who are claiming to be professional freelance editors and who are willing to work for the 80¢ a page that is being offered, for what amounts to a developmental edit rather than a copyedit (for a discussion of types of editing, see Editor, Editor, Everywhere an Editor).

Recently, this was brought home to me as I was hired to reedit a project that supposedly had been edited by a “professional” editor. The client ended up paying twice for the same work, and although the client got a bargain with the first editor — at least fiscally for editorial services — it turned out to be not much of a bargain when my fees were added to the pile.

But, as I began this post, the awakening of other editors around the world to what constitutes a fair wage can only harbor good things for American editors. Although we have lost our price competitiveness in recent years, the cycle is changing.

I was reviewing my company’s financial history a few weeks back in preparation for a discussion I will be participating in, and was struck by how price conscious publishers have become as a result of consolidation in the publishing industry. In the early years of my 26-year career, I could bank on a yearly fee increase; perhaps not a large increase, but an increase nonetheless. That seems to have ended in the mid-1990s.

I think the culprit is consolidation into megapublishers whose tentacles reach worldwide. The accounting departments, which justifiably look to the bottom line, see that they can pay an editor in country Y $1.50 a page and thus think that editors in country Z who want $3 a page are overpriced. There is little recognition of the differences between Y and Z and no consideration of the experience and knowledge of the individual editor.

The other trend, besides no fee increases since the mid-1990s, is the pressure to lower prices. Publishers seem to need (or want) to increase profit margins at the expense of editorial, probably because they think — and perhaps correctly — that most readers won’t notice if editing is lacking, but it is harder to do away with the typesetting and printing.

Of course, as with everything else there are countermeasures to each of these trends. The question becomes, however, how willing are freelance editors to take those countermeasures. From what I have seen so far, few are willing to do so, preferring to complain and struggle than to find a workable solution.

Create a free website or blog at WordPress.com.

%d bloggers like this: