Pearson and Bertelsmann have agreed to merge their publishing units, Penguin and Random House, respectively, creating what should be the largest publishing company in the world when the merger closes in the second half of 2013 (subject to regulatory approval).
But what’s the point of the merger?
According to the companies themselves, the scale that a combined operation brings will allow Penguin Random House to make more investments (in digital and international expansion) and, perhaps more importantly, cut costs. In a merger of this size, there should be considerable efficiencies in nearly everything the companies do in print (print, distributing and warehousing) and in many other functions, like technology, operations, accounting and legal.
But an even more significant reason for the merger might be that a larger publishing company will have more leverage to negotiate with its largest trading partner, Amazon.
That said, the combined revenues of Penguin and Random House in 2011 were about $4 billion; in that same year, Amazon took in about $48 billion.
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The rest of the day’s top news:
What the Penguin Random House Logo Might Look Like (DBW)
We plied several graphic designers to give us their quick takes on the question.
Rapid Reaction: Five Thoughts on the Random-Penguin Merger (Forbes)
Five quick thoughts about what the Random House-Penguin merger means. Related: Letter From Random CEO to Agents | Letter From Random CEO to Employees | Letter from Penguin CEO to Employees.
What the Random-Penguin Merger Means to You (DBW)
If you’re an author or agent wondering if it will be harder or easier to sell your work; if you’re an employee of either company wondering about job security; if you’re a bookstore owner or librarian wondering about the supply of product; or if you’re simply a book lover – you’ll want to know how the merger of Random House and Penguin impacts your life.
It’s a Bird, It’s a Plane… (GalleyCat)
It’s Captain Random House! The satirical Twitter account has some choice things to say about the merger announcement.
Ebooks up, Sales Down at Penguin (DBW)
In its third quarter of this year, Penguin saw strong ebook growth but sales overall are down.
More Thoughts on Random Penguin, From the Source (Pub Lunch)
Publishers Lunch caught up with Random House chairman and CEO Markus Dohle to talk about the merger. He says that it’s about top-line growth and not synergies and that the new firm will “expand readership” in the U.S.
Google’s New iPad Killer (Wired)
Google unveiled its Nexus 10 tablet yesterday. The device is intended to compete with other larger tablets, like the iPad. The device offers impressive specs, including a screen with higher resolution than even the iPad and a price point ($400 to start) that many consumers could live with.
Barnes & Noble Launches Nook in the UK (DBW)
The company is launching an ad campaign in the country to promote its Nook Simple Touch GlowLight e-reader, which is on sale there as of yesterday.
Start-up Moglue Offers Simple Way to Make Interactive Ebooks (TechCrunch)
Moglue, which allows users to create interactive books without having any programming skills, has launched new functionality and new pricing: It now supports Android devices and includes new pricing that allows authors to keep 100% of royalties.
You Should Read EPUB on Your Kindle Fire HD (The Digital Reader)
Whether by indifference or design, Amazon has made if fairly difficult to download and read EPUB files on the Kindle Fire HD. Nevertheless, you should read EPUB files on your Kindle Fire HD. Here’s why.
Image credit: Joe Encarnacion, creative director at Hatchback Studios