Online retailers, with their huge influence in the ebook market, have been exerting a lot of pressure on book publishers. Apparently, to counter that, two of the largest English language publishers, Penguin and Random House, have joined hands through a new deal.
Given the huge influence online retailers, such as Amazon and Apple, have on the ebook market, book publishers have been under a lot of pressure. Moreover, a number of recent court rulings have given back the retailers the right to have a greater say in the pricing of the books.
For example, Amazon, in particular, is able to sell books from notable publishers at a price which is very lucrative for the users, yet doesn’t sit well with the very publishers. Naturally, this has cut down the profit margins of the publishers.
The parent companies of the two largest publishing houses, Pearson and Bertelsmann, have now come together in a joint venture to counter that. Bertelsmann has a majority stake with its 53 percent share whereas Pearson is also close with the remaining 47 percent share in the new venture.
We don’t know the details of the deal yet, but word has it that it rakes well between $2 billion and $3 billion, which is also the overall value of the venture. The duo is hoping that by joining hands, they can reduce their costs, enhance their profit margins and tackle internet retailers, such as Amazon, far more effectively.
This is manifest in the words of Pearson’s CEO, Marjorie Scardino, “Together, the two publishers will be able to share a large part of their costs, to invest more for their author and reader constituencies and to be more adventurous in trying new models in this exciting, fast-moving world of digital books and digital readers.”