A Fickle Business

When Penguin Random House (PRH), the biggest trade books publisher in the world, decided to merge with smaller rival Simon and Schuster (S&S) in 2022, the US government sued to stop the deal under antitrust laws to prevent a monopoly. By November, the deal had collapsed.

But beyond the legal battle, the antitrust trial bared some hard and striking truths about the world of publishing. Here are some facts that emerged.

No one in publishing knows which factors merge to make a bestseller, not even the ones publishing the maximum number of bestsellers. Markus Dohle, the head of Penguin Random House, said on record that everything in the book business is “random.” The judge described the industry as one of “risk-taking” and said every book was “a gamble.” The publisher of a major imprint called the business “fickle.”

Although publishing is a thriving business growing in double digits year-on-year, with tens of thousands of titles released every year, the trial highlighted a surprising fact: A minuscule percentage of books generate the vast majority of profits. During their testimony, PRH executives said that just 35 per cent of books the company publishes were profitable and that just 4 per cent of the titles accounted for 60 per cent of their profits. Mr. Dohle said, “It’s the books that you don’t pay a lot for and become runaway best sellers.”