3

THE EMERGENCE OF PUBLISHING CORPORATIONS

The emergence of large publishing corporations is the third factor that has shaped the evolution of English-language trade publishing in recent decades. For many observers, this is the most striking change that has taken place in the world of publishing, so it may seem odd that we come to it only at this stage; but I have postponed until now the analysis of this development for good reasons. It is vital to see that the field of trade publishing does not consist only of publishers: there are other players who inhabit this field and who exercise a great deal of power within it, and we will never understand what happens within publishing firms unless we see that their actions are to some extent responses to forces and developments that lie outside their direct control. Large publishing houses may seem to be the major players and to have a great deal of power (and, indeed, they do); but in the book supply chain, the publisher is in many ways just another intermediary, a player in the middle, and the power of the publishing house, however large it is, is always hemmed in by and traded off against the power of two other key players in the field: the power of the retailers, on the one hand, who largely control access to the customers, that is, the readers; and the power of the agents, on the other, who largely control access to the content and to the creators of content, that is, the authors. The publishers themselves are middlemen who, thanks to the developments that have transformed the field, are in the position of players who have to compete with others for access to the most highly valued content and for the attention of consumers, and those who decide which books should be brought to the attention of consumers, in an increasingly crowded marketplace.

The rise of the modern publishing corporation has to be understood in this context. Of course, the growing role of large corporations is not unique to the publishing world: large corporations have become increasingly important players throughout the media, information and communication industries, and indeed throughout the economy as a whole, and many of the corporations that have acquired major stakes in publishing are diversified media conglomerates with interests in other sectors of media and entertainment.¹ But the way that consolidation has occurred in the field of trade publishing, the reasons for it and the consequences of it are in some respects unique and are closely interwoven with the two other developments that have shaped the evolution of this field.

There can be little doubt that the rise of large corporations has transformed profoundly the landscape of trade publishing, so much so that today it bears little resemblance to the publishing world that existed half a century ago. In the 1950s and before, there were dozens of independent publishing houses in New York, Boston and London. Among the better-known American houses were Random House, Simon & Schuster, Scribner, Doubleday, Harcourt, Harper, Boni and Liveright, Henry Holt, Dutton, Putnam, Viking, Alfred Knopf, Farrar, Straus & Giroux, William Morrow, W. W. Norton, Houghton Mifflin and Little, Brown, to name just a few. London had its own plethora of independent trade houses, including Macmillan, Longman, John Murray, Routledge and Kegan Paul, Heinemann, Allen & Unwin, J. M. Dent, Chapman & Hall, Gollancz, Jonathan Cape, Faber, Secker & Warburg, Michael Joseph, The Bodley Head and Penguin. Many of these houses were run by individuals who either owned the company outright or had a substantial stake in it, and other members of the family were commonly involved in the business. These publisher-owners were often men of strong character and opinion – and they nearly always were men. They knew what they wanted to publish and they built their lists on the basis of their own judgement and taste – and, as they grew larger and delegated more responsibility to editors, on the basis of the judgement and taste of their editors. Editors tended to work at the same publishing house for many years, often for their entire career, and authors tended to remain loyal to the house that published them. In some houses meetings were rare and decisions were taken by publisher-owners or editors or both. ‘We have a rule at Random House’, explained Bennett Cerf in his memoirs, ‘that our senior editors can accept any book they want without question, unless an enormous advance against royalties is involved, in which case we have a discussion about it. There are two ways of doing this at Random House. One is regular meetings, committees, which I loathe and detest and won’t go to. The other method is, when I want a meeting I call together the people I need, and we talk – which is the way I think a publishing business should be run.’² These businesses were run with varying degrees of efficiency and financial discipline. Some, like Random House, flourished and grew into large and successful publishing companies, while others fared less well. Horace Liveright, Bennett Cerf’s former employer and the publisher of many celebrated authors from Ezra Pound to William Faulkner, famously squandered his resources on everything from lavish parties and excessive advances to Broadway musicals and Wall Street speculation; he was eventually forced out and died penniless in 1933, the same year that the firm was declared bankrupt.³

By the early 1960s the landscape of trade publishing in the United States and Britain, which had been characterized by a plurality of independent publishing firms, had begun to change. Large corporations began to take an interest in the publishing industry at the same time as many of the owners of publishing houses became interested in selling. A wave of mergers and acquisitions swept through the industry, beginning in the early 1960s and continuing through to the present day. By the 1990s the shape of the industry had changed dramatically: in a field where there had once been dozens of independent publishing houses, each reflecting the idiosyncratic tastes and styles of their owners and editors, there were now five or six large corporations, each operating as an umbrella organization for numerous imprints, many of which still bore the names of previously independent houses that were now part of a larger organization, operating with varying degrees of autonomy depending on the strategies and policies of the corporate owners. How can we explain this dramatic transformation of the field?

The rise of the publishing corporations is a complex story which defies simple explanations. To make sense of this transformation we have to see that there were many different factors involved, some personal, some structural, and that each merger and acquisition involved some specific combination of these factors depending on the circumstances of the individuals and organizations involved. We also have to see that there were ‘push’ factors and ‘pull’ factors, in the sense that there were some factors that inclined or impelled a publishing house to sell and other factors that made a corporation interested in buying. Among the push factors was the fact that many of the great trade houses in both the US and the UK were founded in the early part of the twentieth century by entrepreneurial individuals who, from the 1960s on, were beginning to think about retiring from the business and about how best to secure the future of the publishing house in their absence, while at the same time enabling them to realize some value from the time and effort they had invested in the firm over many years. Another push factor that played a role in some cases was the fact that some of the traditional, family-owned trade houses began to find it increasingly difficult to operate in a financially viable way, because the business was being run inefficiently, or because it was undercapitalized or because it was unable to compete effectively in changing circumstances (or some combination of these elements); in short, they were struggling, and the sale or merger of the firm was seen as a way of solving what had become an intractable set of financial problems. The pull factors were a range of strategic considerations that varied from one corporation to another and changed over time; they included, among other things, the search for synergy, the drive for growth, the desire to expand overseas and, more specifically, the wish to establish or increase a foothold in the English-language market, whether that was the US or the UK or both.

Although it involves a degree of oversimplification, it is helpful to distinguish two main phases in the process of consolidation, the first extending from roughly the early 1960s to the early 1980s, the second from the early 1980s to the present. Each was characterized by its own distinctive set of pull factors which encouraged large corporations to take an active interest in acquiring trade publishing houses. These two phases display some elements of continuity but also demonstrate how fickle business strategies can be, with large-scale corporate acquisitions soon followed by disillusionment and divestiture. As one perceptive commentator remarked, ‘The history of the book illustrates generously the paradox – by no means confined to this industry, however – whereby strategies that dominate one period are replaced by others, which can go all the way to representing a total reversal of policy.’⁴

The ‘synergy’ phase

The first phase was characterized by the active involvement in the publishing field of large corporations that had substantial stakes in other industries, including information, entertainment, education and the emerging computer industry. For senior managers in these corporations, publishing houses looked like attractive acquisitions because they seemed to offer the prospect of providing content that could be repurposed for other sectors of the business and vice versa – in the way, for example, that books might be turned into movies or movies into books, or the content of books might be adapted for the ‘teaching machines’ that were being contemplated by some of the key players in the nascent computer industry. This idea of ‘synergy’, whether it was between different media formats or between equipment (‘hardware’) and content (‘software’), provided a compelling and seemingly cogent management rationale for large corporations to acquire publishing houses: it was a powerful pull factor. At the same time, many of the successful trade publishers in the 1950s and 1960s were houses that had been founded by entrepreneurial individuals in the 1920s and 1930s who were reaching an age when they were contemplating retirement and considering how best to deal with the problem of succession, sometimes in the absence of obvious family heirs to continue running the business. Merging with a competitor and/or selling to a corporation were, from the viewpoint of some publishing houses, ways of solving the succession problem: they were powerful push factors.

The history of Random House in the late 1950s and early 1960s illustrates the interplay of these factors very well. Having been founded by Bennett Cerf and Donald Klopfer in 1925, Random House had grown into a large and successful publishing company with many well-known writers on its list – James Joyce, Sinclair Lewis, William Faulkner, Gertrude Stein, Truman Capote, John O’Hara and many others. But by the late 1950s Cerf and Klopfer were becoming concerned about what would happen to the company if one of them died. ‘Donald and I knew that the real value of the company had increased each year, but nobody knew by how much,’ wrote Cerf in his memoir.⁵ ‘If its value was too high, how could the survivor afford to buy the other half, and how could the widow of the one who died raise enough cash to pay the estate tax?’ They began to think seriously about changing the financial standing of the company. The first major change came in 1959, when they arranged for a financial institution on Wall Street to sell 30 per cent of their stock to the public. ‘This marked a big change,’ reflected Cerf, ‘since the minute you go public, outsiders own some of your stock and you’ve got to make periodic reports to them. You owe your investors dividends and profits. Instead of working for yourself and doing what you damn please, willing to risk a loss on something you want to do, if you’re any kind of honest man, you feel a real responsibility to your stockholders… From then on, we were publishing with one eye and watching our stock with the other.’⁶ Six months later, flush with cash from the stock issue, the next significant change in Random House’s fortunes occurred: they bought Knopf. Cerf had long admired Alfred Knopf and the list that he and Blanche Knopf had built since Alfred had founded the firm in 1915; with a talent for finding the best European authors and an unwavering dedication to high-quality production standards, Knopf was widely regarded as the very definition of quality publishing. In 1959 Alfred and Blanche’s son, Alfred A., Jr (‘Pat’ as he was generally known), left the family firm to found Atheneum Publishers with two friends, depriving Alfred and Blanche of an obvious successor. They knew that Cerf and Klopfer were interested in buying Knopf so they invited them to make an offer; they did in April 1960 and the Knopfs accepted. A year later Random House acquired Pantheon, which had been started in 1942 by two German refugees, Kurt and Helen Wolff.

With the business expanding, large corporations began to take an interest in Random House. ‘Big computer houses and business-machine companies were going into education with their teaching machines and saw the potential value of having a publishing company in their fold – especially one with a list like ours… so approaches began to be made by huge companies. Everybody was listening, and so were we.’⁷ Discussions with Time-Life were called off when it became clear that the US Department of Justice would be likely to oppose a merger on antitrust grounds. When they were approached by RCA, they responded positively, ‘because it was one of the great corporations of the country’. Cerf held out for $40 million and the deal was done in late December 1965. Random House was now owned by RCA, whose principal interests were in radio and television technology and who was, in the early 1960s, one of the major corporate players in the emerging computer industry.

With the sale to RCA, Cerf stepped down as president and ceased to be the towering presence in the publishing house that he had been since its beginnings in the 1920s. Under his successor, Bob Bernstein, Random House grew rapidly during the following decade, tripling its sales to $97 million by 1975. But as with many of the early corporate takeovers of publishing houses, RCA eventually grew tired of its new acquisition and decided to sell Random House in 1980. The large corporations that became involved in publishing during the first phase of mergers and acquisitions became disillusioned for two main reasons. In the first place, it soon became clear that the hoped-for synergies were not going to materialize in anything like the way that some senior corporate managers had persuaded themselves they would. They discovered that ‘teaching machines’ were a figment of the technological imagination at the dawn of the digital revolution, so the need to control content that could be fed to these machines quickly vanished. They also discovered that, while the idea of turning books into movies sounded good in principle, in practice the movie rights were increasingly controlled by agents rather than publishers, so owning a publishing house was no guarantee that the parent corporation could convert successful books into successful movies. In short, synergy turned out to be a myth.

The second reason why some of the large corporations became disillusioned is that growth and profitability in trade publishing proved to be consistently modest. Large corporations that took over publishing houses often did so in the belief that by introducing stricter financial controls and more professional business practices, they could achieve double-digit growth and profitability. However, despite determined efforts, they generally found that the levels of profitability in trade publishing remained stubbornly low, often below 10 per cent (in contrast to some other sectors of publishing, like educational, professional and STM – scientific, technical and medical – publishing, where profit margins of 20 per cent and above were not uncommon). Corporate managers were also frustrated by the cyclical and unpredictable nature of trade publishing and the strains this placed on cash flow. A trade publisher can have a big hit that produces a sudden influx of cash and can then have a fallow period when they are paying advances and suppliers but the money is not coming in. This makes it very difficult to manage cash flow and very difficult to budget for steady growth from one year to the next. With synergies failing to materialize and financial returns well below levels that could be achieved in other sectors, trade publishing did not seem like such a good investment after all. Patience faded and some of the large corporations bailed out.

The growth phase

The second phase of mergers and acquisitions in trade publishing, which began in the early 1980s and has continued to the present, was characterized by a different set of push and pull factors. Solving the succession problem remained a push factor for some publishing houses, but by the 1980s the field of trade publishing had begun to change in ways that put growing pressure on those houses that remained independent and gave them additional reasons, of a structural rather than personal kind, to sell to a large corporation. With the growth of the retail chains, the volume of sales that could be achieved with bestselling titles increased dramatically, but the costs and the risks increased too. Agents had become key players in the field and they were able to play publishers off against one another, and many successful authors expected to be rewarded with higher advances. As the scale of the advances increased, it became harder and harder for those independent publishers that remained to compete for the best authors. ‘When you had 40 smallish companies all paying as little as possible for books, the competition was over something else,’ explained one senior manager who lived through the changes. ‘But when money became king, the colour of your petticoat was a lot less important. We always had a very beautiful petticoat, but you have to be within shooting distance of the competition.’ The owners and managers of those companies that remained independent could see that they were being squeezed out of the market for content. In earlier decades, they could deploy both their symbolic capital and their economic capital to attract and retain authors, but with the changes taking place in the field, they now needed a much greater quantity of economic capital to stay in the game. The colour of their petticoat was not enough – they had to have deep pockets too. Selling to a large corporation, which would give them access to much greater resources, was a means of survival in a field where the stakes had risen so high that it was difficult for them to continue on their own.

On the pull side, the kinds of corporations that were interested in acquiring trade publishers in the US and the UK changed, as did the reasons for wanting to acquire them. While large American public corporations became increasingly disillusioned with trade publishing and sought to divest themselves of the houses they had bought, various international media conglomerates, often based outside the United States and Britain and in most cases with an existing interest in publishing, became increasingly interested in acquiring them. Two German media conglomerates, Bertelsmann and Holtzbrinck, both with large stakes in the publishing industry in Germany and elsewhere, became key players in the field of English-language trade publishing, as did the French conglomerate Lagardère, owner of the largest publishing house in France, Hachette Livre. Other key players were Pearson, the British-based media conglomerate, and News Corporation, the multimedia conglomerate founded by Rupert Murdoch. The reasons why these media conglomerates wanted to acquire trade publishing houses in the United States and Britain varied from one conglomerate to another but three factors were particularly important.

First, media conglomerates with substantial publishing interests in German or French were always going to have limited growth opportunities, both because they would reach a point where antitrust legislation would prevent them from expanding further in their domestic markets and because their opportunities to expand overseas would be limited by the restricted use of their languages. For these conglomerates to grow their publishing businesses, they would need at some point to expand beyond their original domestic fields; and given the global dominance of the English language and the importance of the American and British publishing industries in the global arena, acquiring a major stake in the US and/or UK publishing field was a particularly attractive way of achieving this growth. Second, for those media conglomerates that operated in English but originated outside the United States, such as Pearson and News Corp, acquiring a major stake in the US was always going to be important, given the sheer scale of the US market and its importance as a creative centre. This was just as true in trade publishing as it was in the other sectors in which these conglomerates were involved, whether it was educational publishing (as with Pearson) or newspapers, film and television (as with News Corp).

The third reason why these media conglomerates became highly acquisitive in the fields of English-language trade publishing is rather different and stems from what we could call ‘the growth conundrum’. The conundrum arises because every corporation needs to grow and to generate a good level of profitability. The precise way in which this imperative is articulated and experienced will vary from corporation to corporation and will depend on whether the corporation is publicly quoted or privately held, among other things. But there is no escaping the imperative. The problem with trade publishing in the US and the UK is that these are very mature markets which have been largely static for many years; total sales of trade books in these markets tend to increase by about the rate of inflation year on year, but not much more. So the basic challenge that senior managers have to face in these corporations is this: how do you achieve significant growth year on year when the market is essentially static? That is the growth conundrum.

There are various ways of trying to deal with this challenge but three strategies are particularly important. First, you can try to take market share from your competitors. There are several ways to do this: you try to improve your hit rate and publish more bestsellers than your competitors; you try to squeeze your competitors in certain genres or subfields where you think you can grow your market share by strategically expanding your publishing activity; you try to bring a bestselling author to your list by outbidding his existing publisher when the agent goes out with his new book; and so on. Second, you can look for ways to achieve incremental growth within your principal market by opening up new channels and selling into non-traditional outlets (sometimes called special sales), like museums, gift shops, clothing retailers, etc., and by increasing sales outside your principal market – for example, by increasing your business overseas. And third, you can acquire other publishing houses. Most of the large publishing groups do all three of these things simultaneously. They constantly try to increase their market share by improving their hit rate, etc., they’re constantly trying to poach bestselling authors from their competitors and they’re always on the lookout for new acquisition opportunities.

The great advantage of acquiring other publishing houses is that it enables a conglomerate to grow and increase its market share very quickly. It provides a rapid growth spurt that bypasses the long and laborious process of investing in new publishing initiatives and growing organically. Depending on the acquisition, it might also enable the conglomerate to expand in areas where it is relatively weak, thereby producing a more rounded publishing programme. Growing through acquisitions not only enables you to solve the growth conundrum (at least temporarily) and meet the growth imperatives of the corporation, it also can bring other advantages that come with increasing scale, like giving you more leverage in the marketplace when negotiating with retailers and suppliers. But there are many potential drawbacks too – the quality of the list may be uneven, the price may be too high and the costs involved in merging the companies may be excessive, just to mention a few. Moreover, as the process of consolidation continued through the 1980s and 1990s, the pool of available companies to purchase became smaller in both the US and the UK, and hence the opportunities to grow through acquisition became ever rarer.

In addition to the growth conundrum, there was another structural factor, alluded to in an earlier chapter, that played an important role in the mergers and acquisitions of publishing houses: the need to achieve vertical integration between hardback and paperback lines. As the paperback revolution that began in the 1930s and 1940s gained momentum in the 1950s and 1960s, it became increasingly clear to the larger publishing houses that they needed either to develop their own paperback lines or to acquire paperback houses so that they could issue their own paperback editions rather than licensing them to external paperback houses. Not only would this enable them to build their backlist and increase their revenue in the long term instead of ceding control of the copyright to a third party, it would also put them in a much stronger position vis-à-vis agents and authors, since they could pay full royalties on paperback sales rather than 50 per cent of the royalties (as was normally the case if paperback rights were licensed to a paperback house). However, the more that the hardback houses began to develop or acquire their own paperback lines, the more important it was for the paperback houses to protect their own supply chain either by acquiring hardback houses or by launching their own hardback imprints and developing the capacity to publish hardback or paperback originals in-house. Stand-alone paperback houses found that their sources of supply were drying up, while hardback houses that had traditionally relied on the sale of paperback rights to offset high advances and provide large injections of cash found themselves in an increasingly vulnerable position, placing further pressure on those that remained independent to join forces with a vertically integrated group.

While I have divided the process of consolidation in trade publishing into two phases involving different players and different strategies or rationales, it is important to stress that these phases do not fall neatly into the two time periods I distinguished. There are some major trade publishers, like Simon & Schuster, that continue to be owned by a large American corporation (CBS in this case), and others, like Little, Brown and what is now called Grand Central Publishing, that have only recently been sold by a large American corporation to a foreign conglomerate (Time Warner sold them to Hachette in 2006). Nevertheless, while there are legacy corporate structures in the field of trade publishing, this should not obscure the broad structural shift that has taken place. (The rumour has circulated for years that CBS would be happy to sell Simon & Schuster if they could get the asking price, said to be $1 billion.) The process of consolidation in trade publishing has been underway since the early 1960s, but the world of corporate trade publishing in the early twenty-first century is not the same as the world that began to emerge with the first corporate takeovers in the 1960s and 1970s.

So why are large American corporations uninterested in trade publishing today, whereas European media conglomerates are willing to acquire and retain trade publishing houses in the US and UK? ‘It’s a Wall Street thing,’ explained one senior executive of a large US publishing group. ‘Since publishing was a slow growth or no growth, low margin, capital intensive business, Wall Street would look at whoever it was – Paramount, CBS, Viacom, Time Warner – negatively if they felt they were trying to build that asset. They always pretended to be trying to get rid of it, which kept Wall Street at bay.’ For Wall Street, book publishing is not just old media, it is old, old media – ‘Compared to a Google or whatever, commercial television is perceived as old media. So we are labelled as really old media.’ Moreover, for these large American corporations, book publishing was a very small part of their portfolio – ‘We were hardly a blip on their radar,’ said another senior executive. ‘I mean if we had a bad year it wouldn’t have made any difference to them.’ Why hold on to a business that represents a tiny fraction of your overall revenue, where margins are much lower than in your other businesses and where the prospects for growth are minimal? Not easy for a corporate executive with his eyes focused on Wall Street to give a convincing answer to that question. For the European conglomerates, by contrast, book publishing is a big part of what they do. For them, investing in American and British trade publishing is an effective way of achieving growth outside their domestic European markets, of gaining access to the American and British markets and of acquiring a foothold in publishing fields that operate in the English language, thereby enabling them to sell into all those parts of the world where English is used either as a primary or as a secondary language. In some cases the European conglomerates remain in private ownership – the German media group Bertelsmann, for example, is majority owned (76.9 per cent) by the Bertelsmann Foundation, a non-profit organization set up by the founding Mohn family, and the remaining 23.1 per cent is owned by the family itself. They don’t have to deal with the Wall Street quarterly mentality and they can afford to take a longer-term strategic view. So the large American corporations and the European media conglomerates have very different orientations that are rooted in their different circumstances and the differing financial pressures they face.

The dominant publishing groups in the US

The outcome of this process of consolidation was that by the end of the 1990s there were four large and powerful publishing groups in the field of US trade publishing. The largest group by a considerable margin was Random House. RCA sold Random House for $60 million in 1980 to S. I. (known as ‘Si’) Newhouse, a wealthy businessman who owned a range of newspapers, magazines and cable television stations. Newhouse made further acquisitions in the course of the 1980s and 1990s and then sold the entire Random House group for just over $1 billion in 1998 to Bertelsmann. Bertelsmann had already entered the field of US trade publishing by acquiring Bantam Books in 1980 and Doubleday in 1986, merging them into the Bantam Doubleday Dell publishing group (Doubleday had acquired the paperback publisher Dell in 1976). With the acquisition of the Random House group, Bertelsmann became the largest trade publishing group in the US and, indeed, in the world. By 2007 Random House’s global revenues for trade and mass-market publishing were around $2.39 billion; $1.27 billion of this, or around 53 per cent, was accounted for by sales in the US.⁸ Random House’s numerous imprints in the US now include Bantam, Delacorte, Dell, Doubleday, Broadway, Crown, Knopf, Pantheon, Anchor, Vintage, Ballantine and Modern Library (see appendix 1 for a more extensive list of the imprints of the major publishing corporations).

The three other large trade publishing groups in the US were Penguin, HarperCollins and Simon & Schuster. Penguin is owned by Pearson, the UK-based media conglomerate. Pearson had acquired Penguin in 1971. In 1996 they bought the Putnam and Berkley publishing group, which had been owned by MCA since 1975, and merged it with Penguin in the US to form Penguin Putnam, subsequently rebranded as the Penguin Group. By 2007 Penguin’s global revenues for trade and mass-market publishing were around $1.69 billion, and Penguin’s US revenues were around $1 billion or 60 per cent of the total. Apart from Penguin and Putnam, Penguin’s many US imprints now include Viking, Gotham, Riverhead, Dutton, Berkley and New American Library.

HarperCollins is owned by News Corporation, the international media conglomerate controlled by Rupert Murdoch. HarperCollins was formed through the merger of Harper & Row, which News Corp acquired in 1987, and the old British publishing house William Collins Sons & Co., the remaining shares of which News Corp acquired in 1989 (News Corp had already acquired a 30 per cent stake in Collins in 1981, through its subsidiary News International). By 2007 HarperCollins’s global revenues in trade and mass-market publishing were around $1.29 billion, of which US revenues were around $903 million or 70 per cent of the total. HarperCollins’s US imprints include William Morrow, Avon and Ecco; it also owns the religious publishing house Zondervan, publisher of the hugely successful book by Rick Warren, The Purpose Driven Life.

The fourth major trade publishing group in the US is Simon & Schuster, which has been through a number of ownership changes since the mid-1970s. Founded in 1924 by Richard Simon and Max Schuster, Simon & Schuster was acquired in 1975 by Gulf & Western, a large and diversified American corporation with interests in many different industries, from construction and manufacturing to leisure and film. In 1989 Gulf & Western was restructured and renamed as Paramount Communications, which was itself acquired in 1994 by Viacom, a large American media conglomerate. In 2000 Viacom purchased CBS, but in 2005 Viacom/CBS split into two companies and CBS inherited Simon & Schuster. While Simon & Schuster ranks fourth among the large trade publishers in the US, its business is much more US-focused than is the case with its three larger competitors. In 2007 Simon & Schuster’s global revenues in trade and mass-market publishing were around $886 million, of which $730 million or 82 per cent were in the US. This strong focus on the US market is linked to the fact that since 1975 Simon & Schuster has been owned by publicly quoted US corporations that did not see further acquisitions in trade publishing, whether domestic or overseas, as an investment priority. With the acquisition of Macmillan in 1994, Scribner and The Free Press were added to Simon & Schuster’s trade division, but much of Simon & Schuster’s growth in consumer publishing was organic and they were not able to acquire overseas assets to expand internationally. ‘The inability to acquire continued to plague us through the 1990s and early part of this century,’ explained one senior executive at Simon & Schuster. ‘So we have never had the opportunity to buy in the way that our major competitors did.’

Beneath these four large publishing groups, there are a number of medium-sized groups and companies that are active in the field of US trade publishing. These include what was until 2006 the Time Warner Book Group, which was the book publishing division of the Time Warner media conglomerate. Before Time Inc. merged with Warner Communications, Time Inc. had acquired in 1968 the old American publishing house Little, Brown, which had been founded in Boston in 1837. When Time and Warner merged in 1990 to form the Time Warner multimedia and entertainment conglomerate, Little, Brown was combined with Warner Books to form the Time Warner Book Group. In 2001 Time Warner merged with AOL, the giant internet services and media company, and in the reorganizations that followed the merger Time Warner sought to divest itself of various assets, including its book publishing division. The Time Warner Book Group was eventually sold to the French media conglomerate Hachette for $537 million in 2006. Hachette retained the Little, Brown imprint but changed the name of Warner Books to Grand Central Publishing. Hachette was already the largest publisher in France, the UK and Australia and New Zealand, and the second largest in Spain; with the acquisition of the Time Warner Book Group, it was now a serious player in the field of US trade publishing as well.

Another medium-sized player in US trade publishing is the family-owned Holtzbrinck group. The Holtzbrinck group was founded in Germany in the late 1940s, when Georg von Holtzbrinck collaborated with others to start a book club. In the 1960s this book club took over S. Fischer Verlag, one of Germany’s leading publishing companies, and subsequently acquired other publishing interests in Germany. Holtzbrinck entered the field of US trade publishing in 1985, when it acquired the trade book division of Holt, Rinehart & Winston, which it renamed the Henry Holt Book Company. In 1994 it bought Farrar, Straus & Giroux, which Roger Straus decided to sell to Holtzbrinck after having held out against the corporations for many years. Holtzbrinck purchased a 70 per cent interest in the Macmillan Group in 1995 and acquired the remaining shares four years later. Holtzbrinck’s US trade imprints now include Henry Holt, FSG, St Martin’s Press and Picador.

The French media conglomerate Vivendi made a brief foray into the field of US trade publishing by acquiring the Boston-based publisher Houghton Mifflin in 2001. With its origins dating back to the 1830s, Houghton Mifflin was one of the older American publishing houses. In the nineteenth century it published some of the best-known American writers including Henry Wadsworth Longfellow, Ralph Waldo Emerson, Nathaniel Hawthorne, Harriet Beecher Stowe, Mark Twain and Henry David Thoreau, and throughout the twentieth century it maintained a trade division alongside a rapidly expanding programme of educational publications for schools and colleges. In 2001 Houghton Mifflin was acquired by Vivendi Universal for around $2.2 billion. However, Vivendi’s growing financial difficulties forced it to sell off some of its assets, and in 2002 Houghton Mifflin was sold for $1.66 billion to a consortium of private investment firms led by Thomas H. Lee Partners and Bain Capital and including funds from the Blackstone Group. In 2006 Houghton Mifflin was sold again, this time to the educational software publisher Riverdeep for $3.36 billion. Founded by the Irish entrepreneur Barry O’Callaghan in 1995, Riverdeep entered the field of US educational publishing in the late 1990s with several acquisitions, including The Learning Company. In 2007, following the acquisition of Houghton Mifflin, the group acquired Harcourt Education, which includes the Harcourt trade publishing division, from the Anglo-Dutch publishing corporation Reed Elsevier. The group created from Riverdeep Software, Houghton Mifflin and Harcourt was then renamed Education Media and Publishing Group. The position of the Houghton Mifflin Harcourt trade division within EMPG remains somewhat unstable. It was offered for sale in March 2009 but withdrawn from the market when the offers received – rumoured to have been in the region of $250 million – were lower than expected.⁹ A restructuring of the company’s finances in 2009 and 2010 helped to reduce the large burden of debt that had been accumulated by EMPG and eased some of the financial pressure on the trade division.

Table 6 shows the 12 largest players in the field of US trade publishing in 2007–8. Bertelsmann-owned Random House remained top with US trade revenues of $1.266 billion; Penguin ranked second with US trade revenues of $1.015 billion; HarperCollins ranked third with estimated US trade revenues of $903 million; and Simon & Schuster ranked fourth with US trade revenues of $730 million.

Table 6 The 12 largest trade publishers in the US, 2007–2008

There is a significant drop down to the next group. Following the acquisition of the Time Warner Book Group, the Hachette Group ranked fifth in the field of US trade publishing, with estimated US trade revenues of $507 million. The largest independent player in the field of US trade publishing is John Wiley, with US revenues in its professional/trade division amounting to $390 million (although this figure will include revenue from the sale of professional and academic books as well as trade titles). The educational and children’s book publisher Scholastic moved up to seventh in 2007–8, thanks to the phenomenal success of the seventh and final volume of the Harry Potter series, Harry Potter and the Deathly Hallows, which was released in July 2007 and became the fastest selling book of all time, selling 11 million copies on the first day in the UK and US. This one title alone more than doubled Scholastic’s revenue for the year, adding $270 million to a revenue line which, without the new Harry Potter, would have stood at $153 million; in 2008–9 Scholastic slipped back down to tenth place. The Holtzbrinck Group, with estimated US trade revenues of $225 million, ranked eighth. Rodale, an independent publisher based in Pennsylvania which is particularly well known for its health and fitness books and which published the hugely successful The South Beach Diet in 2003, ranked ninth, with estimated US trade sales of $193 million. Thomas Nelson, which ranked tenth with estimated US trade sales of $190 million, is a religious publisher based in Nashville; it was bought by the private equity firm InterMedia in 2006. Following the acquisition of Harcourt, the Houghton Mifflin Harcourt Group ranked eleventh, with estimated US trade sales of $180 million. Sterling, which publishes a range of how-to and general interest books and was bought by the superstore chain Barnes & Noble in 2003, ranked twelfth, with estimated US trade sales of $150 million.

In terms of market share, Random House had around 13 per cent of the US trade market, Penguin around 10.5 per cent, HarperCollins around 9.4 per cent and Simon & Schuster around 7.6 per cent. Taken together, these four groups accounted for around 40.6 per cent of US trade sales in 2007–8. The Hachette Group and the Holtzbrinck Group are commonly ranked as fifth and sixth among the ‘big six’ US trade publishers. Taken together, these top six publishing groups, all owned by large media corporations and conglomerates, accounted for just under half – 48.2 per cent – of total US trade sales. The top 12 publishers taken together accounted for 63.7 per cent of the total.

The dominant publishing groups in the UK

By the 1960s and early 1970s, a generation of entrepreneurial British publishers – Jonathan Cape, Michael Joseph, Jamie Hamilton, Stanley Unwin, Victor Gollancz and Allen Lane, among others – were reaching the ends of their productive careers and the publishing companies they had started or reinvigorated faced succession problems and uncertain futures. At the same time, North American corporations with existing interests in publishing began to look acquisitively at British trade houses, attracted by the common language and a weakening pound. One of the first North American corporations to do this was the Canadian-based Thomson Organization, as it was then known. Roy Thomson had begun his career in the media industries by starting up a local radio station and buying a local newspaper in Timmins, Ontario in the early 1930s. During the next two decades he expanded the business by acquiring a stable of Canadian newspapers and other companies. In the early 1950s Thomson turned his attention to the UK, acquiring the Scotsman and a range of other national and regional newspapers. He also diversified into other areas, including book publishing, buying Michael Joseph in 1961, the Scottish publisher Thomas Nelson in 1962 and Hamish Hamilton in 1965, though his company would subsequently divest itself of these as it shifted its focus to information, educational and professional publishing.

The paperback publisher Penguin, which had been founded by Allen Lane in 1935 and had grown into a major force in British publishing by the 1950s, went public in 1961 and soon found itself the object of growing interest from the American publisher McGraw-Hill, which increased its holding in Penguin from 10 to 17 per cent in the course of the 1960s.¹¹ Shortly after Allen Lane died in 1970, Penguin was merged with Pearson Longman, partly in order to avert an American takeover, which Lane had feared. Pearson had begun as a small construction company in Yorkshire, in the north of England, in 1844, and had expanded into the media business in the 1920s by acquiring a group of provincial newspapers. In 1968 Pearson acquired the book publisher Longman, which had been founded in 1724 by Thomas Longman and passed down through several generations of the Longman family until it became public in 1948. Following the Longman and Penguin acquisitions, Pearson increased its international stake in educational publishing, acquiring the educational businesses of HarperCollins, Simon & Schuster and Prentice Hall, and provided Penguin with the resources to expand in the field of trade publishing. Penguin bought Viking Press in 1975, an acquisition that both greatly increased Penguin’s US presence (Viking, with sales of $15 million, was three times the size of Penguin’s US business)¹² and greatly strengthened Penguin’s position in the world of American hardback publishing, which made up three-quarters of Viking’s business. In 1983 Penguin acquired Frederick Warne, which gave it control of the copyrights of Beatrix Potter’s children’s books, and two years later it bought Hamish Hamilton and Michael Joseph from Thomson, two hardback houses that enabled Penguin to achieve a much higher level of vertical integration in the UK. In 1986 Penguin bought the New American Library, one of the top five US paperback houses with a strong presence in mass-market publishing, and ten years later it acquired Putnam Berkley, which had been bought by MCA in 1982 and was now being divested by them. Putnam Berkley, with its strong emphasis on frontlist commercial fiction, brought a new range of highly successful authors to Penguin’s US list, including Tom Clancy, Patricia Cornwell and Dick Francis. With the financial backing of Pearson, Penguin had transformed itself in three decades from a leading UK paperback publisher into a major international publishing corporation with a diversified, vertically integrated list and a strong presence in both the US and the UK.

The distinguished and once-independent British publishers Chatto & Windus (founded in 1855) and Jonathan Cape (founded in 1921) merged in 1969, following the death of Jonathan Cape in 1960. The aim of the merger was to achieve certain economies of scale by providing centralized warehousing, distribution and infrastructural services, while maintaining the distinctiveness and editorial autonomy of each house. In 1973 they were joined by The Bodley Head (founded in 1887) to form Chatto, Bodley Head and Jonathan Cape or CBC, and in 1982 the group acquired the feminist publishing house Virago (founded in 1972). This unique constellation of British publishing houses survived until 1987 when, following several years of disappointing financial results and mounting debt (the group reported pre-tax losses of 2.5 per cent in 1985 and 1986 and net debt of £3.4 million by December 1986),¹³ the group was sold to Random House for £20 million. For Random House, which was seeking to expand its overseas presence, the acquisition of CBC provided an excellent foothold in the UK. (Virago extracted itself from the sale through a management buyout and remained independent until it was sold to Little, Brown, then part of the Time Warner publishing group, in 1996.) Random House further strengthened its presence in the UK by acquiring Century Hutchinson in 1989 for £64 million. Century Hutchinson had been formed in 1985 when Century Publishing, a start-up founded in 1981 by Anthony Cheetham, acquired Hutchinson, founded in 1887, from London Weekend Television, which had bought Hutchinson in 1978 in the hope – largely disappointed – that it could be productively combined with its television interests. When Bertelsmann acquired Random House in 1998, Bertelsmann’s existing UK interests, which included Transworld, became part of Random House UK, turning it into one of the largest UK trade publishing groups.

The companies that eventually came under Hachette’s control in the UK evolved through a complex series of mergers and acquisitions. Like Century Hutchinson, some of these were instances where a relatively youthful start-up took over an old established house, either because the older house was facing succession problems or because it had fallen on hard times and was looking for ways to strengthen its position. In 1991 Anthony Cheetham, who had started Century and merged it with Hutchinson before selling it to Random House, founded a new company, Orion, and acquired Weidenfeld & Nicolson, the prestigious house which had been founded by Lord Weidenfeld, a refugee from Austria, in 1949; Weidenfeld, who was in his seventies, was attracted by the idea of selling the company, 80 per cent of which he owned, to someone with whom he had had business links in the past. In 1998 a majority of the shares of Orion were sold to Hachette, who acquired the remaining shares in 2003. In 1998 the group acquired Cassell, whose imprints included Victor Gollancz, and in 2002 Hachette greatly increased its stake in the UK market by acquiring the Octopus Publishing Group.

Octopus had been founded in 1971 by the publishing entrepreneur Paul Hamlyn. Hamlyn had gained some experience with start-ups, having established Paul Hamlyn Books as a remainder merchant in 1949 and expanded it into a leading mass-market publisher before selling it to the International Publishing Corporation in 1964 for £2.275 million. With Hamlyn’s commitment to publishing books for the widest possible market (‘I only understand one kind of publishing and that is books of wide appeal that improve the quality of life from the stomach to the mind’),¹⁴ Octopus grew rapidly, from a turnover of £1.85 million in 1972 to £30.75 million in 1982.¹⁵ Octopus went public in 1983, with Hamlyn retaining 67 per cent of the capital. In 1985 Octopus acquired William Heinemann, a house that had been founded in London in 1890, had acquired Secker & Warburg in 1956 and had been taken over by Thomas Tilling, an industrial conglomerate, in 1961; Tilling was itself taken over by BTR, another industrial conglomerate, in 1983, and BTR sold Heinemann to Octopus two years later for a 35 per cent stake in the newly merged company. Two years after that, in 1987, Octopus was sold to Reed International for a hefty £535 million, ‘at the peak of the acquisitive euphoria sweeping over publishing’.¹⁶ Following Reed’s merger in 1993 with Elsevier, the large Dutch STM publishing corporation, and after several years of disappointing results, Reed decided to dispose of its trade publishing interests. The adult trade division, including Heinemann and Secker & Warburg, was sold to Random House in 1997 for a relatively modest £17.5 million, while the illustrated books division was reborn as the Octopus Publishing Group through a management buyout. In 2001 the Octopus Publishing Group was acquired by Hachette.

The third strand to Hachette’s British stakeholding came through its acquisition of Hodder Headline from WH Smith in 2004. Hodder Headline was created through the takeover of an old English publishing house, Hodder & Stoughton, founded in 1868, by a start-up, Headline, which was founded in 1986 by the publishing entrepreneur Tim Hely Hutchinson. Hodder & Stoughton was a family business, 80 per cent owned by the descendants of the founder, Matthew Hodder. In the late 1980s it found itself in difficult financial straights, in need of additional capital and with no institutional shareholders to call on. For Headline, which had launched in 1986 with an avowedly commercial frontlist and had gone public four years later, the attractions of acquiring an old house, nearly half of whose revenue was backlist, were evident enough. Headline acquired Hodder & Stoughton for £49 million in 1993, despite the fact that it was much smaller than its older acquisition (Headline’s turnover in 1992 was around £16 million, compared to Hodder & Stoughton’s turnover of around £56 million).¹⁷ The newly formed Hodder Headline was subsequently sold to WH Smith, the high-street retailer, for £192 million in 1999. In 2002 WH Smith added John Murray to Hodder Headline. Founded in 1768, John Murray had remained a family-run business for over two centuries and had published some of the greatest English authors, including Lord Byron, Charles Dickens and Jane Austen, but with an annual turnover of around £8 million it was no longer in a position to compete with its larger and better-resourced competitors. However, as WH Smith found itself facing increasingly tough competition in the retail marketplace, it decided to sell Hodder Headline, which was bought by Hachette for £223 million in 2004, with Tim Hely Hutchinson remaining as CEO. With Hachette’s acquisition of the Time Warner Book Group in 2006, Time Warner’s UK book businesses, including Little, Brown, were added to Hachette’s UK operations.

Table 7 summarizes the top ten UK publishers by revenue in 2007, using data from Nielsen BookScan.¹⁸ Hachette’s estimated UK trade revenues in 2007 of £298.8 million made it the largest player in the field of UK trade publishing, giving it a market share of 16.6 per cent, its numerous imprints in the UK now including Hodder & Stoughton, John Murray, Headline, Octopus, Orion, Weidenfeld & Nicolson, Gollancz, Phoenix, Little, Brown and Virago. Random House, with estimated UK trade sales of £263.4 million in 2007, occupied second place with a market share of 14.6 per cent; its more than 30 imprints in the UK now include Jonathan Cape, Chatto & Windus, William Heinemann, Harvill Secker, Bodley Head, Century, Hutchinson, Ebury, Transworld, Doubleday, Bantam, BBC Books and various paperback imprints like Vintage, Arrow, Corgi and Black Swan. Penguin ranked third with estimated UK trade sales of £177.3 million in 2007 and a market share of 9.8 per cent; in addition to Penguin, its imprints in the UK include Allen Lane, Viking, Hamish Hamilton, Michael Joseph, Dorling Kindersley and the Rough Guides. HarperCollins, with estimated sales of £142.7 million in 2007, ranked fourth with 7.9 per cent of the market; its imprints include Harper Press, Collins, Fourth Estate, Voyager and Avon. Together, these four corporate groups accounted for nearly half – 48.9 per cent – of UK trade sales in 2007 (retail and internet).

Table 7 The ten largest trade publishers in UK, 2007

The fact that independent publisher Bloomsbury occupied the fifth position in 2007 was due largely to the tremendous success of the seventh and final volume of the Harry Potter series, for which Bloomsbury controls the UK rights. Bloomsbury had estimated sales of around £74.7 million in 2007, but roughly half of this (£37 million) was accounted for by Harry Potter and the Deathly Hallows alone. The sales of this book pushed Bloomsbury up to fifth position in 2007 and increased Bloomsbury’s market share to 4.2 per cent, though by 2008 Bloomsbury had fallen back to sixth place, with sales of £43.3 million, and its market share had fallen to 2.4 per cent.¹⁹ The Holtzbrinck Group, which acquired a 70 per cent stake in Macmillan in 1995 and purchased the remaining shares in 1999, would normally occupy the fifth spot (to which it returned in 2008), but with estimated sales of £61.4 million in 2007, it is considerably smaller than the four main groups. In addition to Macmillan, Holtzbrinck’s trade imprints in the UK include Pan, Picador, Tor and Sidgwick & Jackson. The top ten publishers, taken together, accounted for nearly two-thirds (63 per cent) of UK retail sales.

The four largest publishing groups in the field of UK trade publishing are also among the five largest trade publishing groups in the US. The only significant differences are that Hachette is much more dominant in the UK than it is in the US (although the acquisition of the Time Warner Book Group has moved it up to number five in the US) and Simon & Schuster is a much more significant player in the US than it is in the UK (a consequence of the fact that its American corporate owners did not historically make available the resources it would have needed to expand internationally, as noted earlier).

Concentration and creativity

For the large publishing corporations, the main advantages today of further acquisitions are twofold: they enable them to achieve quick top-line ²⁰ growth in a mature and relatively static market, thereby increasing their market share and providing them with the benefits that stem from that (such as greater leverage in their negotiations with suppliers and retailers); and they provide opportunities to improve the bottom line by streamlining and rationalizing back-office operations and publishing services, such as finance, production, sales and distribution. But there are risks associated with the increasing size of publishing corporations, one of which is the danger that it will impinge on and damage the creative activities that lie at the heart of the publishing firm. This is one of the key questions that all large publishing corporations have to face: how to reconcile the economies that can be achieved through greater scale and rationalization with the creative editorial work upon which the future success of the corporation ultimately depends. How do they deal with it?

Different corporations have responded to this question in different ways. In a somewhat oversimplified fashion we could distinguish two basic approaches – what we could call the centralized model and the federal model. Each model is an ideal type in the Weberian sense – that is, an idealization of reality that highlights some features at the expense of others. The centralized model was probably more prevalent in the early phases of corporatization, when acquiring corporations were inclined to try to rationalize and reshape the publishing houses they acquired. In more recent years the federal model has come to be seen by many senior managers as a more effective way to organize a corporate publishing group, although in practice there are many different gradations of federation.

The centralized model seeks to achieve the maximum benefits of economies of scale by combining forces wherever possible and reorganizing all aspects of the publishing operation, from back-office systems and publishing services to sales, marketing and editorial. Following a merger or acquisition, the company acquired is relocated to the premises of the parent company (or, in the case of large-scale mergers or acquisitions, new shared premises are found), thereby achieving significant reductions in overheads. The business and financial operations are merged, often leading to redundancies and further cost savings. The sales forces are also merged to create a single integrated sales force for the whole company, again with further savings. The editorial operations will also be restructured; lists will be recombined and possibly rebranded to reflect a new vision for the publishing company. Different types and genres of publishing may be reassigned to new or different imprints – e.g. an imprint for literary fiction, one for commercial fiction, one for science fiction, one for non-fiction, one for lifestyle, one for sport, and so on. The old names of acquired companies may be given a new identity in this process – what was once a general trade publisher may be rebranded as a publisher of a particular type or genre of books. Some of the old names might disappear, or be retained only as part of a new name. The company that emerges from this process of reorganization will be restructured from top to bottom. It will not be a continuation of the old companies under different ownership but will be a new company with a new vision of itself and of the way it is seeking to position itself in the field. It will also be much leaner and more efficient than the old companies, operating as separate entities, would have been – in terms of overheads and operating costs, not 1 + 1 = 2 but 1 + 1 = 1.5 (or less).

The federal model is less radical in terms of the extent of restructuring. It seeks to reap the benefits of economies of scale while at the same time preserving some of the autonomy of the old publishing units. As one senior manager put it, reflecting on the way they set out to restructure the organization following a major acquisition, ‘We had to be big and small at the same time. We needed to be really big where it mattered and we needed to be really small where it mattered.’ It matters to be big when you are dealing with suppliers like printers and negotiating with retailers, where size gives you leverage and power. It also helps to be big when it comes to providing publishing services like warehousing, distribution, finance and IT, where you need to invest substantial sums of money in order to gain efficiencies and where you can achieve real economies of scale. However, in a creative industry like publishing there are areas like editorial where it matters to be small:

The benefits of being small are that you’re working with creative talent and they don’t want to feel like they’re working with a sausage machine. So they need to have their editor, the publicist, the production person who cares about them, etc. – the person they know they can speak to. They need the personal contact; they don’t want to feel that they’re working with just anyone. The other thing about being small is if you’re a small group of people passionate about a small range of books then each one will get attention, whereas if you’re a big organization that looks at books just in terms of which are the biggest, and spends all of its time on the ones that are the biggest, there will be lots of books that don’t get attention in terms of publicity, marketing, etc. So you need to be big where it matters and small where it matters.

Another reason why it matters to be small in a business like trade publishing is that there is a large element of judgement and personal taste involved in the acquisitions process – in deciding which books to buy and how much to pay for them – and a large element of luck involved in which books turn out to be successful. Not everything is a matter of luck, to be sure, and there are things you can do to inform and guide acquisitions decisions – you can look at the historical performance of similar titles, you can introduce more formalized budgeting procedures, you can give sales and marketing directors some role in acquisitions decisions, and so on. Most of the corporations (and indeed most trade publishers, whether they were part of corporations or not) introduced procedures of this kind in the course of the 1980s and 1990s. But at the end of the day there is an inescapable element of judgement and taste involved in the acquisitions process, especially when it comes to taking on new authors who lack an established track record, and an ineliminable element of luck involved in the success or otherwise of certain books, and if you try to standardize and rationalize the acquisitions process too much you run the risk of inhibiting the very creativity upon which the success of the organization depends. Sometimes an editor’s decision to follow his or her instincts and take on a book that has been rejected by others turns out to be an inspired move and the book turns out to be a huge success. The small independent trade houses are particularly well attuned to benefit from this kind of serendipity – the story of Harry Potter is the classic example but is by no means an isolated case. But there are many in the corporate groups who believe that in a creative industry like trade publishing, the devolution of editorial decision-making to small editorial teams operating with a high degree of autonomy within certain financial parameters is the best way to maximize your chances of success. As one senior manager in a large corporation put it, ‘We’re giving somebody a playing field and we’re putting fences around the edge of it and saying, “If you want to cross one of those fences, you have to ask a question. But if you’re playing in the field you can do what you like.” You give people a lot of scope, but you provide a framework within which they operate.’

Figure 5 Major publishing corporations on the centralized–federal spectrum

Any particular publishing corporation at any particular point in time can be situated somewhere along the centralized–federal spectrum, from highly centralized at one extreme to a loose federation of publishing units with minimal centralization at the other (see figure 5). HarperCollins has traditionally been situated near the centralized end of the spectrum, whereas groups like Hachette and Holtzbrinck have tended to situate themselves at the federal end, with corporations like Simon & Schuster, Penguin and Random House somewhere in between – Simon & Schuster and Penguin probably being a little more centralized than Random House (at least in the UK, where the senior management of Random House publicly advocates a federal model). The most decentralized of the federal groups allow some of the publishing houses they own to retain their own premises and they maintain separate sales forces for different imprints or divisions, even though these arrangements increase the cost base. ‘You can’t do a halfway house on this federal thing,’ explained a senior manager at one of the most decentralized groups. ‘You can only maintain the imprints separately if they are totally separate, by which I mean if they control their own sales, their own marketing, their own art, their own publicity. So they have to have a very different flavour.’

Most of the large corporations don’t go this far, since the more you decentralize, the less you are able to reduce the cost base and gain the economies of scale that can be achieved from consolidation. So typically they will organize the imprints into clusters or divisions that are treated as separate profit centres. Each imprint may have its own marketing and publicity staff, although in some cases these may be centralized at the division level. Production and sales will typically be centralized for the group as a whole, although some divisions might retain their own production department and sales force – many different permutations are possible. It is a balancing act with profitability on one side and creativity on the other, and senior managers are constantly looking at how to achieve the kind of balance they think would be best for their organization. They keep this question under constant review and may change their position over time, depending on the financial pressures they face and on what they see, at any particular point in time, as the most effective way to structure their organization. Moreover, the way that one branch of a corporation in a particular country, such as the UK, positions itself on this spectrum may not be the same as the way that another branch of the same corporation in another country, like the US, positions itself – these branches may operate with considerable autonomy and the senior management may be given a large degree of latitude by their parent corporation to organize their branch as they see fit.

Given that different corporations, and even different branches of the same corporation, position themselves differently along the centralized–federal spectrum and that the more federal groups devolve a great deal of autonomy to their imprints or divisions, it follows that there is a great deal of variability in the ways that the different corporations and imprints operate. The world of corporate publishing is, in practice, a plurality of worlds, each operating in its own way. Certain procedures are common to them all but the ways in which editors and others operate vary considerably from one corporation to another, and even from one imprint to another within the same corporation. A corporate headquarters, like Random House’s imposing skyscraper at 1745 Broadway in New York, may look to the casual observer like the house of a well-ordered bureaucracy where all procedures have been formalized and standardized, but in reality it is more like a conservatory that houses a plurality of micro-environments, each of which is allowed to grow its own exotic varieties of vegetation provided that it meets certain conditions.

Let us step inside one of these micro-environments for a moment. ‘Star’ is an old imprint that was acquired some while ago by a house that has gone through several changes of ownership over the years and is now part of a large international corporation with a major stake in publishing. Star is a prestigious imprint that once had its own offices in midtown Manhattan but now occupies one of the upper floors of a large corporate building. It is unique in some ways, partly because of its history and its standing: in terms of symbolic capital, it is richly endowed. But it now lives alongside numerous other imprints in one of the worlds of corporate publishing. Many of those who work for Star have lived through two or three changes of ownership, they’ve seen corporate bosses come and go and experienced various cycles of reform. But for the most part they’ve successfully buffered themselves from it all. ‘There is an unspoken rule,’ explains one senior editor who has worked at Star for some 30 years, ‘put one toe out of the elevator to interfere with us and we will cut you off at the knees. And the only thing that enables us to take that attitude is profitability. As long as we make the money, we can tell them to go fuck themselves. It’s as simple and as old-fashioned as that. The second that goes wrong, we’ve had it. If we stop being profitable, the incursions will start.’

At Star, editors continue to have a great deal of latitude to buy the books they want, and decisions about what to buy are taken in one-to-one discussions between the editor and the publisher – that is, the head of Star. ‘Our editorial meetings – which happen once a month if X [the publisher] can be bothered to have it, and he has always had a deep dislike of meetings, so months can go by with no meeting at all – these meetings exist only for the editors to announce what they have bought. The editorial meeting does not exist to have a discussion about what we should buy.’ When an editor wants to buy a book, he or she must prepare a case. This will include doing a profit and loss sheet or ‘P&L’. The P&L is a financial summary of the likely revenue that will be generated and costs that will be incurred in publishing a book. It typically uses a standard template into which certain variable numbers are plugged – e.g. first-year hardcover sales, subsequent paperback sales, prices, etc. The template applies certain fixed charges, such as cost of sales, royalties, discounts, returns, marketing costs, overhead charges, etc., and shows the projected financial contribution of the book – that is, the net profit or loss.²¹ By estimating the royalties that would be paid if the sales forecast turned out to be accurate, the P&L also gives the publisher some indication, in theory at least, of the level of advance that he or she might sensibly pay for the book. But the P&L is at best a rough approximation of the financial performance of a book; it may provide some helpful guidelines but for many editors and publishers the P&L is a kind of corporate fabrication. ‘They’re a total fabrication, on top of which nobody looks at them,’ said the former publisher of Star, now retired. The corporate managers introduced P&Ls as a way of trying to instil a greater degree of financial discipline into the acquisitions process, but editors and publishers know that the numbers can be made up to reflect what you want to do. Here’s what happens, explained the former publisher of Star:

I’m going to buy a book. To justify buying a book we have to fill out a profit and loss statement. Now suppose I am buying your biography of Vanessa Bell, and you’re just about to start five years of research and three years of writing about her. And I’m supposed to justify the $50,000 advance. So I’m supposed to know how many copies we’re going to print, how many pictures we’re going to have, what paper’s going to cost, what the price of a book is going to be, and most important, how good it is. Well, it’s clearly a wank – there’s no way that any possible person can do it. And so you say to your assistant, ‘We’re spending $50,000. Work up figures that make sense and stick them in.’ Everybody knows they’re lies.

While not irrelevant, the P&L is not the crucial part of the case the editor has to make. Much more important is simply the editor’s judgement of the quality and importance of the book and its likely sales based on a reading of the proposal or manuscript and her experience and knowledge of the market. Commercial considerations will come into play as an integral part of the assessment of the project and its potential, but not to the exclusion of quality. ‘Sure, I think very much of commercial considerations,’ said one senior editor. ‘If we don’t make money as a company, nobody will be here. But at the same time, I never walk away from talent. If I see terrific talent, even if I don’t believe we’re going to make money on that book, I wholeheartedly embrace it.’ The editor might ask one or two colleagues down the corridor to look at some material to get some other opinions, she might consult with someone in publicity or sales to get their views on promotion prospects and she might talk with the paperback publisher to get his view of the book’s paperback potential – this additional input will help her to form a judgement about whether to press ahead with the book and, assuming that the feedback from colleagues is positive, build a case. The purpose of building the case is to persuade the publisher that she should be allowed to buy or bid for the book – this decision is taken in discussion with the publisher, but ultimately it is the publisher who has the final word. The former publisher of Star put it like this:

An editor would come to me and say, ‘I’ve just read this book, I really love it, I think we should do it.’ I say, ‘Fine, give it to me.’ I read it that night. The next morning I would say, ‘Fine, I don’t like it as much as you do but you love it so let’s buy it.’ And she would say, ‘What can we spend?’ And my head would be the P&L statement. After 30 seconds I’d figure out what I thought it might sell, what the paperback rights might go for, whether it had a bookclub chance, whether we might sell foreign rights and I’d say ‘You can spend $35,000.’ That was the P&L. Publishing was a very simple matter: a successful publisher or editor is right more often than he’s wrong. No one is right 100 per cent of the time, or even 80 per cent of the time. That’s the business. And if you don’t lose too much money on the ones that don’t work and if there’s an opportunity to make a good deal of money on some of the ones that do work, you’re in profit.

So long as Star is profitable and meets its financial targets, then the business and finance people will leave them alone. ‘If you make your numbers, you’ll be fine. If you don’t make them, all the rules are off and that’s very clear,’ explained one senior editor. Those at the top of the corporation value the imprint both for the financial contribution it makes and for the quality of its books, quality as measured by things like prizes, Nobel Laureates, front-page reviews in the New York Times Book Review and so on – there are many different ways of attesting to quality. This is part of the mystique of the imprint, ‘and the one thing corporate owners are scared shitless of is messing with mystique,’ said another senior editor. ‘Mystique is what they don’t understand. All they know is, if it works, don’t break it.’ The experience of the former publisher reflected this:

I had lunch the other day with [AB], who was the president of the corporation when I was there. I said to him, ‘You know, [A], in my 19 years of working with you, you never once asked me a question about [Star]. All you wanted was my advice on how to run the corporation.’ He said, ‘Well, I don’t think that’s true.’ I said, ‘Believe me, I would’ve noticed. Nor did you ever bother to say “Well done.”’ He said, ‘Well, that’s true, because I knew you were running it wonderfully and it was making a profit and you knew far more about how to do it than I did. I couldn’t contribute anything, so why would I even think about it?’

Of course, not every imprint will have the same experience as Star, nor will their procedures be the same. Star occupies a unique position in the field, thanks in part to the prestige attached to its name and its consistent record of success in both financial and symbolic terms. The culture of the house has been maintained with a remarkable degree of continuity over four decades and several changes in corporate ownership, a continuity linked to the fact that it has had very few changes at the head of the house and many of its senior editors have remained in place despite the changes. Not all trade houses have been so fortunate.

Let us step inside another trade house, ‘Cedar Press’, which now occupies several floors in an attractive office building in central London. Cedar was bought by a large corporation some while ago. For many years Cedar was left to get on with what it was doing, with minimal interference from the corporate owners. But as the company began to make further acquisitions, it grew too large to operate as a single entity and it was broken into separate divisions, with different imprints clustered into different divisions. A difficult period financially coincided with retirements at the top and new senior management was brought in. Some of the publishers and senior editors who had been at Cedar for many years left at that time; others were encouraged to go. Individuals from outside were brought in to head up some of the divisions and imprints, which helped to instil a new culture in the organization. What had been a very male culture – ‘sharp, clever, slightly cynical’ – became something quite different: younger, more female, more oriented to success. One senior editor who lived through the changes and still works for Cedar today described the transformation like this:

It’s become more success-oriented, more figures-driven; I would say that the commercial enterprise has moved much more to the centre. There probably was a sense that by the 1980s we had become rather remote and elitist and that some of our competitors had taken the commercial ground from under us, and we probably did need to rediscover that. And I think that’s been the main force of the last ten years or so – to build up again the core commercial popular fiction area. One of my colleagues once said to me that our job was to manage [Cedar’s] decline gracefully, and I thought that was a rather charming thing to be doing, whereas there’s none of that here. It’s very success-oriented. You get an email at 4 o’clock most afternoons saying ‘We’re number one with this’ or ‘We sold 100,000 of that.’ There’s a constant celebration of commercial success.

In this new, more commercial culture, it is much more difficult for an editor to buy a book. In the past, if you were an editor of a certain seniority, you could almost certainly buy a book you wanted to buy. It had to go through the publisher but he would almost always say yes. But now it is much harder, the hurdles at the beginning are much higher. Why? ‘Because they want to cut down on the numbers being published and they’re only interested in really big books. There’s not much truck for or patience with small books any more. There was a time when it would have been fine to publish a book that sold four or five thousand copies in hardback and then went on to sell eight to ten thousand paperbacks, but now it’s like why did we bother?’ There are exceptions. An editor might still be allowed to publish some poetry books, for example, even though no one expects them to sell more than a few thousand copies. But these are exceptions. Even if books often turn out to do less well than you hoped when you bought them, you have to start out thinking they might be big. ‘Some time ago I published books which I knew were going to be small, in the hope that in some ways they were either classic books potentially or might backlist at high levels, or that the author might go on to write big books, whereas now I think there’s a feeling that if you know it’s going to be small than we shouldn’t do it.’

In the past, Cedar was very much editorially driven, and sales and marketing were rarely involved in the acquisitions process. ‘I remember a meeting – this is going back a very long way – that was attended by the head of sales and marketing, a very nice man named [MN]. I was unsure about a proposal and I happened to say in the meeting, “[M], I’d like to talk to you about this proposal I’ve got.” The head of the company, who happened to be at the meeting, asked me to stay behind, and he said, “[Philip], I’m going to teach you one thing: you’re the editor and you don’t ask sales and marketing what books to publish.” That’s unimaginable here now.’ Now an editor has to make a case for a book he or she wants to buy, and has to get a few key people to sign up. The proposal has to go through a local editorial meeting and then an acquisitions meeting that is attended by the managing director of the division and the publishers of the various imprints but also by the head of sales, the head of marketing and various other people. It can be a tough meeting – ‘It’s certainly not a pushover.’ Proposals can get turned down. Editors try to avoid mishaps by preparing the ground as well as they can in advance. ‘I think politically the best thing to do is to make it a shoo-in by having enough people on your side before you go to that meeting, and particularly the guy who chairs it, the MD, because if he’s on your side then you’re fine. Even though the little meeting liked your proposal, if you take it along to the big meeting without any support it could go anywhere, you’re just opening it up to anything – I mean I’ve seen people humiliated there. It’s not quite as bad as I understand some newspaper meetings are every morning but it can get a bit rough.’

From the viewpoint of the management at Cedar, subjecting proposals to more intensive scrutiny is all about refining judgements and balancing risks. It’s not a matter of replacing the power of the editor with the power of sales and marketing, let alone the power of the accountants. It’s more a matter of clarifying what kind of book it is, what its market is likely to be and what sales prospects it can realistically be expected to have. One senior manager at Cedar put it like this:

I think all acquisitions decisions still start with the editor. Editors are still allowed to do something on a whim and that’s right; they need to exercise judgement and taste and be entrepreneurial and risk-taking. But I think it’s no bad thing that the voice of sales and marketing has become more powerful so that those acquisition decisions can be more informed. If someone is buying a book, the sales person wants to know what kind of book it is and how much the editor loves it, and then the sales person can say, ‘Well, given the type of book, the best scenario is X and the worst scenario is Y. I can give you those two levels, then it’s up to you.’ But a publishing house where the acquisitions decisions are entirely run by sales and marketing would be a complete disaster, and not least because you have to spot new trends and some authors and books invent new markets. And at the end of the day, if you’re talking about a piece of brilliant literary fiction, what can a sales and marketing person say? You’ve got to rely on the taste of the editors.

The publishing manager who is responsible for the division sees the acquisitions process as the building of a portfolio of risk. There are some areas of the portfolio where you have to take big risks on new writers, ‘because tastes and fashions constantly evolve and brilliant new talent can emerge from anywhere’. But this has to be counterbalanced by books that have much more predictable sales. ‘I don’t know how one would quantify it,’ the manager explained, ‘but perhaps 20 per cent of your commissioning is very risky and new and some of it will work and some of it won’t.’ While the house can and should continue to take on new writers, the books have to be carefully chosen and there can’t be too many, simply because they represent one of the riskiest categories in the publisher’s portfolio of risk.

We have briefly stepped into two micro-environments in the world of corporate publishing, each unique, each very different from the other and each characterized by its own culture, procedures and practices. Every imprint and micro-environment displays its own peculiar traits; even within the same publishing corporation, two imprints or divisions on different floors or different parts of the same building may operate in very different ways. Publishing corporations are far from being faceless bureaucracies where everything has been standardized and homogenized, and the more the corporation adheres to a federal model, the more variability there is likely to be. Nevertheless there are certain common themes that can be discerned across the different publishing corporations – let me highlight a few.

In the first place, all publishing corporations are organized into divisions or companies, and imprints are generally clustered together in these divisions. The management structure varies from corporation to corporation and it tends to be more complex in those corporations that are organized along more federal lines, but there is always a clear line of power and authority, so that, for example, the editors report to the heads of the imprints (often called publishers), the publishers report to the head of the division, and the heads of the divisions report to the president or CEO.

Depending on the corporation, publishers or heads of division are vested with a great deal of power in terms of deciding which books to take on and how much to pay for them. In some houses or imprints, decisions about which books to buy are taken by the publisher in discussion with the editor; in other houses they are taken by the publisher and the editorial director in discussion with the editor. It is up to the editor to sift through the submissions from agents, read proposals and manuscripts and decide which books he or she is interested in buying. The editor may ask one or two other editors for their opinions (especially if the editor is relatively new or junior) but they will very rarely (if ever) go out of house for an opinion. The editor may consult with sales and marketing staff, especially when the stakes are high, and may also consult with the publisher of the relevant paperback imprint whose support can be crucial for some books (namely, those for which the sales in paperback are expected to account for a substantial part of the book’s revenue); the more commercial the imprint or house, the more important the views of sales and marketing staff tend to be. These consultations are all part and parcel of making the case for buying a book. The editor has to persuade the publisher (or the publisher and editorial director) that they should be allowed to buy the book, and learning how to make this case effectively is a central part of the editor’s craft. ‘It’s a bit like fly fishing,’ explained one editor at an imprint in a large corporation. ‘You have to pick your spot and pick your moment, look at the light on the water, choose your fly carefully, drop it in at exactly the right place and hope something happens. It’s like that here. You have to pick your moment and present a book in a way that will catch the publisher’s imagination and enable her to see how it could work and how it could help build the list.’

Editorial meetings, or acquisitions meetings, exist in many divisions or imprints but their role varies considerably from one corporation, division or imprint to another. Often these meetings are formal occasions in which decisions that have already been taken are simply reported; editors may also report on the proposals or manuscripts they have received from agents and which they are actively pursuing, report on the outcome of auctions, etc. No decisions are actually taken at the meetings and the discussion is primarily an exchange of information. However, in some divisions or imprints, the acquisitions meetings do have a more substantive role. In some divisions, acquisitions decisions taken at a lower level – e.g. between the editor and publisher in an imprint of the division – have to be presented at an acquisitions meeting of the division where sales and marketing directors as well as publishers may be present; editors may have to line up outside, wait their turn and then go in and make their pitch. In meetings of this kind it is vital for editors to do their homework in advance, get key people on board before the meeting and, crucially, make sure that their publisher is fully behind them. But even when everything has been carefully prepared the outcome cannot be guaranteed, since a great deal can depend on what happens in the meeting itself and how the head of the division, who in this setting has the ultimate power to decide, responds to the book and the pitch.

In all publishing corporations – and, indeed, in independent trade houses too – editors are expected to complete a P&L for each book they buy. However, while the completion of a P&L is a routine part of the acquisitions process, financial calculations of this kind generally play a less important role than many outside observers tend to think. All publishers and editors may not be as cynical as the former head of Star but many share his view that calculations of this kind are procedural formalities that have little bearing on the actual process of deciding which books to buy and how much to pay for them. Most experienced editors and publishers have an intuitive idea of how much they should pay for a book and they don’t need a P&L to tell them what the numbers should be. ‘Usually the number I give my boss is just based on my ballpark sense in my head of what it’s worth,’ explained one senior editor. ‘I think we can all do a P&L backwards in our head.’

In every corporation there are rules that govern advances and stipulate how much can be authorized by whom. A publisher or head of division will have the authority to approve an advance up to a certain level, say $200,000 or £100,000. After that, he or she will have to get the approval of someone higher up the chain of command, such as the president, who may have the authority to approve an advance up to another level, say $500,000 or £250,000. Anything more than that will have to be authorized by someone higher up the chain, such as the CEO. There will also be rules governing competition between the imprints or divisions. In some cases different imprints or divisions of the same corporation will be allowed to bid for the same project, provided that there is at least one outside bidder; in other cases the corporation will make a house bid, on the understanding that if they are successful then the agent and author can choose which imprint to be published by; and so on.

Every publishing corporation operates with budgets. The budget is the key place where the financial requirements of the corporate owners intersect with the practical business of running the publishing organization. It is a central feature in the life of the publishing corporation and a great deal of time, effort and thought goes into the annual exercise of constructing it. The budget also places considerable financial pressure on the heads of divisions or imprints, to whom specific financial targets are allocated each year on the basis of the final budget that is agreed with the corporate owners. One of the key tasks and responsibilities of senior managers in the publishing corporation is to translate the budget into concrete financial targets and decide how to distribute these targets among the heads of the various divisions or imprints. For the heads themselves, this means that every year they are presented with targets that they have to try to meet, and they in turn have to work with the publishers for whom they are responsible to decide what they can do to meet their targets.

It follows that middle management – the publishers and heads of divisions – are often those who experience the greatest pressure in publishing corporations. They are the switching points, as it were, where the financial requirements of the corporate owners are translated into the practical need to generate extra sales, either by buying new books or by extracting more out of the books that have already been bought. Editors, for their part, are often shielded from this pressure and left to get on with their jobs; it is not uncommon for editors to be completely oblivious to, or only dimly aware of, larger financial issues. ‘Part of my role is to protect other people in the company from that pressure everyday,’ explained one division head, ‘because I think it’s wrong to put too much pressure on commissioning editors and publishers. It can paralyse them.’ But for the middle managers, focusing on the budget and doing everything they can to meet their targets is a constant source of pressure – ‘It is definitely a stressful process and I know my numbers every day.’

Five myths about publishing corporations

We shall probe further into the workings of publishing corporations in later chapters but first I want to dispel a few myths about them, some of which have been perpetrated or perpetuated by the memoirs of some former employees.

Myth 1: The corporations have no interest in publishing quality books. All they are interested in publishing is commercial bestsellers. Of course, the corporations are interested in publishing commercial bestsellers (and so too are many of the independent publishing houses). But to say that they are not interested in publishing books of quality is simply wrong. Of course, ‘quality’ is a slippery term; even in commercial fiction, there are good thrillers and bad ones. But leaving aesthetic questions aside, it is important to see that all of the large publishing corporations have imprints or divisions that are explicitly concerned with publishing literary fiction or serious non-fiction. These imprints or divisions are unlikely to be the biggest and the best resourced, but the mere fact that they exist at all attests to a certain commitment on the part of the large corporations to publishing books of quality. Why do they do this? Why don’t they simply axe those parts of the list that are less commercial in character and concentrate their resources on publishing books that are likely to sell in larger numbers?

Three reasons. First, quality books can sell well if you get the right ones. They can also sell for much longer than many of the more commercial books, which means that they can help to offset the reliance of the large corporations on frontlist publishing. So there are good financial reasons for publishing quality books. Second, most of the publishing corporations seek to develop a balanced list, where commercial fiction and popular non-fiction are complemented by books of a more serious kind. To some extent this is a matter of personal taste and predisposition on the part of senior managers, but it is also a matter of creating a diversified portfolio of risk. Since it is very difficult to know where the next runaway success will be or which author will become successful in five years’ time, it makes sense to hedge your bets by spreading your risks. Third, symbolic capital matters to most large publishing corporations; it is not just a matter of financial success. Winning a major literary prize is not quite as good as getting picked by Oprah or getting on the bestseller list, but it does matter. It reaffirms the judgement of the editor or publisher and it brings some kudos to the organization. If it is a major prize, it can also increase the visibility of the author and the book and have a significant impact on sales. So to varying degrees, the large publishing corporations are committed to publishing books of quality, and it would be difficult to argue that the rise of publishing corporations has resulted in a clear decline in the quality of books being published, or that today books of quality are being published only by the independents – there are countless examples that would belie the latter claim. Having said that, it is undoubtedly the case that the sales thresholds that quality books have to meet in most corporations are high (and have got higher in recent years) and that current market conditions make it increasingly difficult for the large corporations to do this kind of publishing, as we shall see.

Myth 2: The owners of large corporations exercise a baleful influence on the editorial content of the publishing houses they own, obliging them to realign their editorial output so that it is consistent with the political values and beliefs of the owners and censoring content that might be perceived as contrary to the corporation’s interests. There are cases where corporate owners have sought to influence the editorial output of publishing houses – a notorious example being the decision by HarperCollins to cancel the book by Chris Patten, the former governor of Hong Kong, which was critical of the Chinese government.²² This was undoubtedly a clumsy and ill-judged move on the part of HarperCollins and they paid heavily in terms of bad publicity, but instances of this kind are rare. Corporate owners are generally content to remain at a distance from the editorial activities of the publishing companies they own. They want and expect their publishing houses to deliver good financial results, but they do not want to get involved in day-to-day decisions about whether to publish a particular book or author. To the extent that there is pressure on the editorial autonomy of a publishing house, it is more likely to take the form of a kind of mild nepotism (such as an expectation that the house will publish a book by the owner or a senior figure in the corporation) or a subtle kind of self-censorship on the part of publishers and senior managers rather than overt pressure from corporate bosses. Publishers and senior managers simply avoid taking on the kind of book that could give rise to friction. They have enough to worry about in terms of maintaining good relations with their owners, and they don’t want to add to their list of worries by publishing books that could ruffle feathers in the corporate HQ. (‘You need to be sensitive,’ is how one former CEO put it. ‘If you worked for Disney, would you publish a book that was anti-Mickey Mouse?’) The senior managers of the publishing houses owned by large corporations very rarely, if ever, experience pressure that could be interpreted as a clear threat to their editorial independence, though the absence of pressure of this kind is no doubt due in part to the fact that senior managers adjust their publishing practices in ways that minimize the risk of conflict of this kind.

Myth 3: The corporations don’t experiment with new authors. They’re only interested in publishing established authors who write books according to tried and tested formulas. Nothing could be further from the truth. Indeed, the really surprising thing about the large publishing corporations is not that they are unwilling to experiment with new authors but, on the contrary, that they are willing to do so with such reckless abandon. They are desperate to find new talent and are willing to pay very large sums of money for books by first-time authors when they think they have the potential to sell well. We’ll get a better idea of why this is so when we examine the factors that shape the buying decision in chapter 5. But here let us simply note that when we’ve understood these factors, we’ll see that the real problem is not with new authors, who in some ways are in a privileged position in the field, but rather with those authors who have published one or two or several books that have not sold as well as the publishers had hoped. The publishing corporations are not uninterested in new talent, but they are impatient with talent that has not proved its mettle in the marketplace.

Myth 4: In the large publishing corporations, editors have lost the power they once had in the traditional publishing houses. Sales directors, marketing directors and accountants are the new power brokers and they decide what gets published. There is an element of truth in the first sentence, but the second sentence simply doesn’t follow. It is true that in many traditional publishing houses, editors often had a great deal of scope to decide what to publish, and sales and marketing staff were generally not involved in these decisions. The publishing model was essentially linear: editors and publishers decided what to publish, marketing staff marketed it and sales reps sold it. In the course of the 1980s and 1990s, this traditional linear model was replaced in many publishing firms – not just in the publishing corporations but in many independent houses too – by a more dialogical and consultative model in which the views of sales and marketing staff were actively taken into account in the acquisitions process. Editors were encouraged to get the views of sales, marketing and publicity staff for certain kinds of books, especially when it was clear that the stakes would be high. If acquisitions meetings were introduced, sales and marketing directors were commonly asked to attend. Partly this was in order to inject a sales and marketing perspective into the deliberations – what kind of market is this book likely to have? which channels can we sell it into and in what quantities? what kind of publicity could we get for it?, and so on. Partly it was also in order to ensure that the house was behind the book and that the enthusiasm was widely shared so that the chances of turning it into a success were maximized. But none of this implies that the editor has become powerless in publishing corporations and that the key acquisitions decisions are now taken by sales, marketing and financial staff.

Practices vary from corporation to corporation and imprint to imprint but in all corporations and imprints it is still the editors who are the driving forces behind new book acquisitions. They are the ones who scrutinize proposals and books and decide which ones they want to buy. They will generally have to make a case for buying the book, and in some imprints or divisions they will have to present the case at an acquisitions meeting, as we have seen. In many imprints, editors no longer have the kind of free hand to acquire books that they once had. But this does not mean that sales and marketing directors are the new power brokers. The more commercial the imprint, the more power the sales and marketing directors are likely to have, but even in avowedly commercial houses it is the editors and publishers who drive the acquisitions process. If there is anyone who has acquired an enhanced range of powers in the acquisitions process, it is the heads of the imprints or divisions, who in most cases are the individuals whose support is now vital. And many of these individuals have risen through the editorial side of the business and are as attuned to editorial matters as they are guided by sales, marketing and financial concerns.

None of this is to say that sales issues have not become more central in the acquisitions process – they have. But editors have become much more conscious of sales issues too, and have incorporated an awareness of sales figures and an understanding of changing market conditions into their own modes of assessing new book projects. The importance of sales and the market is not something that is simply imposed on recalcitrant editors by an increasingly powerful triumvirate of sales, marketing and finance directors; it is something that editors themselves have internalized and incorporated into their own practices.

Myth 5: Editors no longer edit. It is a common charge that editors in the large publishing corporations no longer edit in the way they once did. It is said that, with the rationalization and bureaucratization that usually follows mergers and acquisitions, editors are now handling too many books and are too busy going to meetings and preparing material for sales and marketing to have time to edit. Whether it is structural editing or line editing, there is simply no longer the time for editors working in imprints or divisions in the large publishing corporations to do this properly. The result, it is said, is that quality invariably declines – inconsistencies go unnoticed, errors are not picked up and the text does not benefit from the careful eye of an editor who knows how to turn a promising manuscript into a good book. If authors want their books to be properly edited today, they would be better off asking their agents to edit or employing a freelance editor to do the job. Is there any truth to this charge?

It is undoubtedly the case that editors vary in the degree of their conscientiousness when it comes to editing: some are known to be careful editors, whereas others have a reputation for being cavalier. Houses vary too: some are known for the care and attention that their editors give to their books, whereas others have a reputation for churning out large numbers of books and hoping some will catch on – the proverbial spaghetti against the wall. It is also undoubtedly the case that most editors in all publishing houses – large or small, corporate or independent – are expected today to do a lot more administrative work and this makes growing demands on their time. And there will always be individual cases where authors may feel let down by their editor, sometimes because the editor who had originally signed up the book has moved to another house, leaving the author and the book with someone who did not acquire it and may not have the same degree of commitment to it or share the author’s vision. But it is difficult to see any substance in the view that, as a general trend, editors in the large corporations do less editing today than editors did in the past, let alone that they no longer edit at all.

At many imprints in the large New York publishing corporations, it is common for an editor to edit around 8–12 books a year – at most, one a month. Of course, they have many other things to do; much of their time is spent reading proposals and manuscripts which are being offered by agents, and for each book they buy there will be many that they lose to other houses. But an editor will typically invest a good deal of time and effort in the 8–12 books that they will be putting into production each year. How much time they will put into a book depends entirely on the book – some need a lot of work, others may need relatively little. Most books go through at least one rewrite at many imprints. It is not uncommon for an editor to read a manuscript once very carefully, write a letter to the author with comments – this can vary from two pages to 30 or 40 pages, with an average being 8–10 pages. The editor may read a revised manuscript and provide a further set of comments before deciding whether the manuscript is ready to go into production. This is a part of the job that most editors take very seriously. If, after one or two edits, they are reluctant to do more work on a manuscript, it may be because they feel they’ve reached a point where the author just couldn’t make the book any better, not because they no longer have any time to edit.

My intention in dispelling these myths is not to offer an uncritical defence of corporate publishing or to suggest that all criticisms are unfounded. It is simply to suggest that some of what passes for criticism is cloaked in misunderstanding and uninformed by what actually happens in the day-to-day activities of those who work in the large publishing corporations. The corporations come in for a lot of flak but there is a great deal of fine publishing that goes on within them. Later I shall offer a critical reflection on the current state of trade publishing but I shall seek to do so in a way that is grounded in a careful analysis, developed in the following chapters, of how the industry works.