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02-28-2018, 08:41 PM | #1 |
Wizard
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Is Amazon likely to acquire a Big 5 publisher? And, if so, what would it do with it?
Is Amazon likely to acquire a Big 5 publisher? And, if so, what would it do with it? I intend this thread to be more a bit of fun with a thought experiment. Though there have been rumours from time to time that Amazon may acquire a Big 5 publisher, it has not so far come to pass, nor am I aware of any current plans or rumours. Though it is not impossible, the advantages to Amazon in doing so are probably diminishing with time. Though there is one huge advantage which cannot be discounted. That is, of course, the intellectual property. The value of the rights held by any Big 5 publisher to their back catalogue and other books is very significant.
I'm not going to do a long post now on either question, though I have given the matter some thought and find it quite fascinating. There would be significant advantages and opportunities for Amazon in such an acquisition, but also some very real pitfalls. I am interested in hearing what others think on these questions? |
02-28-2018, 08:58 PM | #2 |
Grand Sorcerer
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02-28-2018, 10:10 PM | #3 |
Is that a sandwich?
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No, since Amazon just purchased Ring it seems they are going in a different direction.
I could see them buying a transportation company. |
02-28-2018, 11:03 PM | #4 |
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03-01-2018, 02:14 AM | #5 | |
Wizard
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As to agency pricing? Yes, I do expect it would go, because I would not expect Amazon to try to preserve print book sales at the expense of ebooks, which would almost certainly be far more profitable for it. Also interesting, of course, is what Amazon would do with the distribution and print sides of the business. |
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03-01-2018, 08:27 AM | #6 |
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If the price is right, of course it would.
They'd have to be stupid to pass on the opportunity to pick up all that backlist and active contracts. Life-plus-seventy copyrights are valuable. (As for regulatory approval, since the "Big 5" aren't all that big in terms of market share and APub is only a midsize publisher they can easily secure regulatory approval. Note that APub books aren't intentionally --or literally--Amazon exclusive. They are available to all vendors via Ingram, including ebooks. So neither post-merger size nor verticality is likely to be much of an issue.) Which BPH would they buy? Well, since most are foreign-owned, the only one likely to ever be available is S&S, which is owned by CBS and controlled by the Redstone family, which is having a bit of top level turmoil. http://money.cnn.com/2018/02/01/medi...lks/index.html The way the BPH pecking order breaks down, PRH controls almost half their market share, Murdock's HarperCollins, a quarter, S&S a third, Hachette, a sixth, and MacMillan the rest. Profitwise, though, MacMillan is reasonably profitable (for a publisher) while S&S is marginal and Hachette is breakeven at best. So again, the best candidate for a sale is S&S. Which makes up about ten percent of the US market. (Hachette is in dire need of better management but it'll be a cold day in the nine circles when the French allow Amazon to buy even a small disposable piece of Lagardere.) Again, no likely objection to the hypothetical sale. Now, what would they do with the BPH? While it would surely be tempting for Amazon to fire all the S&S staff and move the work to Grand Rapids, Michigan with the bulk of APub, Brilliance, etc. (Or maybe to HQ2) the big value of S&S to Amazon would be their political influence-buying operation and their distribution channels. After all, B&M bookstores can afford to boycott APub books (3-4% of the pbook market) but they could hardly afford to boycott S&S plus Apub. (~15%) So their most likely changes would be: 1- improve their backend tech and online marketing (like Bezos has done for the Washington Post). They would finally have a good website. 2- increase their operating budget (like Bezos has done for the WP), especially for buying politician memoirs 3- switch their baseline contract terms, for new deals, to Apub terms (reportedly a 50-50 split of net on ebooks). 4- no change of management structure initially. Amazon tends to give plenty of autonomy to businesses they acquire as long as their performance meets expectations. So it should be business as usual for a while. Of course one would expect the rest of NYC publishing to ostracize S&S staff and freeze them out of the "normal" day to day collusion lunches and gatherings so there would be a fair amount of attrition among the executive suite, improving financials notably as the golden parachute gang "self deports". 5- Agency has been very, very good to Amazon so I doubt they would abolish it openly. But since the publisher sets the price and S&S would have access to Amazon big data, they could set the prices to the most profitable price points and use Agency as a tool to gain S&S market share. The others would either have to follow suit or abolish Agency altogether. Which might drive Apple out of the ebook business. So yes, I can see Amazon buying S&S from the Redstones. It wouldn't impact tbeir bottom line much (buying RING is a better use of their cash.) but it would annoy the heck out of the other BPHs. A worthy goal all by itself. |
03-01-2018, 08:41 AM | #7 | |
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I wouldn't expect an Amazon-controlled publisher to be the first to abandon Agency. Not as long as the others give it free antitrust cover. (Do note that APub books are quietly Agency priced. 30% to Kindle, 70% to Apub. They just price them to maximize sales, not per unit margin.) And Amazon does care about print. Yes, it is low margin but Amazon *likes* low margin if the volume is high enough. They do promote print through Createspace and KDP PRINT, after all. And Apub. And AmazonBooks. Amazon isn't proud, they'll make money wherever they can. Last edited by fjtorres; 03-01-2018 at 08:44 AM. |
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03-01-2018, 11:34 AM | #8 |
Cheese Whiz
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Isn't Amazon already a major publisher? I don't see the benefit to them of buying a sick dead tree publisher.
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03-01-2018, 12:00 PM | #9 |
Wizard
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03-01-2018, 12:08 PM | #10 | |
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Year old ranking: https://www.publishersweekly.com/pw/...ublishers.html Remember, Amazon doesn't publicize ebook sales and, because of the B&N/ABA boycott the only B&M stores consistently carrying APub is AmazonBooks stores. All dozen or so. They account for maybe 10% of ebook sales on Kindle but zero elsewhere so figure maybe 8% of the ebook market. Online print sales, they run 0.4% so when it comes to print sales they rank more like a micro press. Another way to look at it is number of titles published per year: the randy Penguin has been putting out 15-17,000 titles a year, while Amazon is growing into the very low thousands (2000?). So, they're big compared to BAEN's 80 books a year or so, but not big enough to match even Hachette. Not yet, anyway. If their full numbers were known tbey'd probably rank somewgere between Scholastic and Sterling (B&N). Almost certainly closer to Scholastic but that's a guess. Now, profitability, they probably rank in the top five but that is more a reflection of the problems at Hachette, HMH, etc. There would be real value for Amazon to buy S&S and improve their iffy finances. Hachette, not so much. (Got to remember that Hachette US is the old Warner Books operation plus a bunch of corpses they've bought up since. There's a few jewels but in general their portfolio is pretty poor compared to the other big US publishers.) . |
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03-01-2018, 12:52 PM | #11 |
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03-01-2018, 08:17 PM | #12 |
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Amazon does not need to buy a publisher. They are already are heavily invested in AI, and can just create their own James Patterson and Nora Roberts etc.
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03-01-2018, 08:44 PM | #13 | |
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Fair use is for excerpts, not the whole work, and is an American doctrine. The big five are multi-nationals. Outside the US, copyright tends toward the absolute, as we learned in this disgraceful episode: https://www.timeshighereducation.com...-express-anger |
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03-01-2018, 11:57 PM | #14 | |
Wizard
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I think S&S would fit beautifully into Amazon, though I'm afraid I don't see Caroline Reidy as an Amazon executive! On reflection I also agree with you about Hachette. The French would probably see an Amazon acquisition as being a cultural disaster of epic proportions. With PRH 75% owned by Bertelsmann last I heard, HC part of News and McMillan owned by Holtzbrinck S&S does seem to be the likely target if Amazon does choose to go this way. |
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03-02-2018, 07:23 AM | #15 | |
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(Funny how those publishing multinationals are all owned by "Dynasty" families, huh?) They're transitioning control of the family empire so if the daughter isn't as impressed as the old man by owning a low margin, minimally profitable cash churner she might put it up for auction. Murdock has already made multiple offers to buy it every time they have a lean year but the senior Redstone kept refusing to sell. The daughter might have other ideas. (In fact, she does. He split the family empire into two and she is looking to reassemble.) Thing is, if S&S goes up for sale there is no guarantee Amazon can get it. Other media companies might overbid, Google, Apple, or Facebook might want the influence peddling power, or S&S execs might quietly steer the sale towards another BPH. Personally, I think the latter is the most likely scenario. The BPHs have been angling to consolidate to two megarcorps for years. Long term it's a competition between Bertlesmann and the Murdocks. Bertlesmann ate Penguin and Murdock has been after the weaker players, S&S and Hachette, ever since. Harlequin was more of an appetizer. What he really wants is S&S and its IP catalog, much stronger than Hachette. Plus, of course, the political books division. Everybody wants that. I'm sure Reidy agrees with you, that she won't be a good fit in the Amazon empire, so if she hears the Redstones are ready to sell she'll alert the others that S&S is in play, giving them time to hold a private auction. Most media mergers are negotiated under the table long before the bankers/accountants are brought in. You rarely get a bidding war like the one going on over SKY. https://www.reuters.com/article/us-s...-idUSKCN1GD5G2 Bottom line, Amazon could benefit from buying a bigger publisher and grab a mid-tier player but I doubt they are willing to overpay enough to outbid the Murdocks. So HMH or Scholastic is more likely than a true BPH. Not that any big buy is likely. Just theoretically possible. Amusing thought experiment considering the ongoing clash between the reactionary BPH culture and the entrepreneurial Amazon culture. |
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