How Raw Capitalism Is Devouring American Culture
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“It’s really painful,” says Ira Silverberg, a veteran editor (Grove/Atlantic, Serpent’s Tail) and agent (Sterling Lord Literistic) now serving as director of literature for the National Endowment for the Arts. ”I’m sure I’ll have tons of former colleagues looking for work, and they won’t find it. Regardless of what [executives] say, it’s going to be a smaller business.”
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Publishing has seen various kinds of corporate mergers and acquistions going back three or four decades, as independent or family-owned companies have been absorbed by corporate masters. Random House, the largest and perhaps most prestigious American publisher, was bought in 1998 by the German company Bertelsmann. Things have been reasonably quiet since then.
So why is this larger shift happening now?
It’s no secret that the recession and slow-growth economy – and the long-standing flattening of middle-class wages that predates it – has bled nearly all cultural entities and venues. The process can be cumulative: Every time an independent bookstore closes, it makes things a little more difficult for publishers; when a chain, like Borders — which helped put those bookstores out of business — itself tanks, it makes things a lot harder.
But the biggest issue is digital technology – e-books, Amazon, Kindles — which has put downward pressure on author advances, which now stand, by some estimates, at about half of what they were just four years ago. The digital revolution has effectively marginalized traditional publishers, as the center of financial gravity shifts from Manhattan to Silicon Valley and Seattle. “Like record labels, publishers have become arms suppliers in the cold war between technology companies,” Robert Levine writes in his 2011 book “Free Ride,” about the Internet’s damage to the culture business.
These developments all come just a few months after the Department of Justice decision that ruled in favor of Amazon and against five publishers and Apple, whom it accused of colluding to fix prices for e-books. On the surface, this ruling keeps prices lower. But as media watcher David Carr wrote in the New York Times after the April ruling, there’s a high cost paid for the low prices. The DoJ, he argues, went after the wrong monopoly, since Amazon controls somewhere between 60 and 80 percent of the e-book market (and controlled roughly 90 percent in 2010). “That’s the modern equivalent of taking on Standard Oil,” he wrote, “but breaking up Ed’s Gas ’N’ Groceries on Route 19 instead.”
Blocking the publishers from setting prices seems, at first, like a victory for the customer.
“But pull back a few thousand feet,” Carr writes, “and take a broader look at the interests of consumers. From the very beginning and with increasingly regularity, Amazon has used its market power to bully and dictate. It leaned on the Independent Publishers Group in recent months for better terms and when those negotiations didn’t work out, Amazon simply removed the company’s almost 5,000 e-books from its virtual shelves. The Seattle Times just published a series with examples of how Amazon uses its scale not only to keep its prices low, but also to keep its competitors at bay.”
So these signs of publishing contraction, coming so soon after the DoJ judgment, are a bit like the wholesale defeat of anti-corporate candidates arriving right after the Supreme Court’s pro-corporate Citizens United decision.
Some think the Penguin/Random merger is necessary to allow old-line print publishers to stand up to Amazon: If the enormous online retailer, with revenues of about $48 billion last year, has the atom bomb, the other players need to band together and build their own arsenal. Since their previous efforts were judged to be collusion, maybe a merger is the only option left. “Maybe it’s more an alliance than a consolidation,” Galassi says. “They could gain heft in negotiations.”