Penguin Random House: How big is big enough?

It should be less about Amazon and more about going direct

Call me skeptical but I feel the merger between Penguin and Random House is less about creating “greater scale” and more about simple consolidation in a shrinking industry. Which organization is more likely to create the truly innovative, disruptive products of tomorrow’s publishing industry: a behemoth like Penguin Random House or some start-up working out of the proverbial garage? My money’s on the latter.

And if it’s really all about creating scale to deal better with Amazon, well, how big is big enough? Aren’t either one of those operations already large enough to manage Amazon? If not, are the two combined really going to make a difference there?

I’m not convinced the way forward for the big six is to get even bigger so they can push back on Amazon. The real solution is to create another distribution channel so they’re not ¬†as dependent upon Amazon tomorrow as they are today. It’s called a direct channel and none of the big six are making much progress building one out. Yes, it requires a strong consumer brand. Yes, it means they need to build a site that offers compelling reasons for consumers to buy from it rather than Amazon, which is no small task. And yes, it also means they need to abandon DRM.

Instead of just merging I’d rather see one of the big six stand up like this small publisher and say “we’ve walked on eggshells for far too long…it’s time for us to get serious about building that direct channel and not worry about how our existing channel partners will react.”

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