Book market

Amazon dominates the digital book market

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The ongoing saga over whether the United States will allow Penguin Random House and Simon and Shuster to merge continues. Markus Dohle, CEO of the biggest publisher, Penguin Random House, lamented his company’s declining market share in book sales as he testified in favor of a $2.18 billion merger with Simon & Schuster.

Dohle told the judge in an antitrust trial in federal court in Washington that about half of the books sold in the United States last year came from publishers outside the Big Five. He testified Thursday that the shift to e-commerce platforms such as Amazon has “leveled the playing field” between big and small players.

The DOJ alleged that the combination will concentrate power between four publishing houses instead of five. Publishers have argued that the merger will instead increase competition and payments to authors. The government focused its argument on how the biggest publishers have cornered the market for buying author books and argued that the merger would give the combined company almost half of the market for buying best-selling books. The defense focused Thursday on Penguin’s smaller share of the book sales market.

Daniel Petrocelli, attorney for Penguin and its parent company, referenced a December 2019 presentation that showed Penguin’s share of retail book sales fell from 25% to 21% since the 2013 merger between Penguin and Random House. In his testimony, Dohle expressed frustration with Penguin’s inability to keep up with industry growth and said the merger would help the company recoup its share. He testified that e-commerce platforms level the playing field because they rely on algorithms that decide which books are “discoverable.” During questioning, Dohle said his company hires data scientists and pays Amazon to improve placement.

The trial, which began on Monday, has already prompted testimony from bestselling horror author Stephen King. King, known for many bestsellers such as “IT” and “Carrie,” spoke out against consolidation and warned of the impact it could have on authors’ livelihoods.

I think it’s very telling that the world’s largest book publisher pays Amazon a large sum of money to get its titles advertised. This shows that small, medium, and even the largest publishers see value in paying Amazon to feature their books.