Profitability and size

A note from Mad Max Perkins draws my attention to a couple of interesting stories about the best size for a publishing company. The trend, over the last thirty years, in both the UK and the USA, has been for publishers to get bigger and bigger. Often the big publishers are themselves part of even bigger multinational conglomerates.

Only recently, at the London Book Fair, a fairly astute observer of the publishing scene, Tim Hely Hutchinson, was quoted as saying that he thought this trend was likely to continue. However, within a day or two of that, Viacom and Liberty Media have both announced that they intend to go against the trend and dismantle some of their huge empires into smaller chunks.

As if that wasn't confusing enough, there is an interview in the Financial Times (link provided by booktrade.info) with Peter Olson, the chief executive of Random House, in which he says the RH is managing to make good profits despite the failure of competitors such as Penguin. The word is that RH's success comes from modelling the business partly on the company's German parent. Costs and back-office functions are co-ordinated centrally, but publishing units, including Doubleday and Bantam, operate almost autonomously in their dealings with authors.

'We are a microcosm of Bertelsmann," says one RH insider. "We often have two or three of our own houses bidding for the same book. It means we get more than one look at it.'

At first sight it seems distinctly odd to have two or three bits of the same company bidding against each other, but perhaps the 'secret of success', if there is one, is to have these autonomous units within an umbrella. Go figure, it's beyond me. I suspect it's all random anyway -- and absolutely no pun intended. What I mean is, this year RH, next year HC, and so forth.

The FT article, by the way, will probably go into register-or-you-can't-read-it mode before long.