In an age of technology, I would like to draw our attention back to the written word. Recently Random House and Penguin are going to join together to become the biggest thing in publishing. Using my vast knowledge of the publishing word, the first thought in my head when I saw the article was "monopoly anyone?" It seems now that there is a "Big 6" left in the publishing world and they are feeling the heat from this RH-P deal to make consolidation moves of their own.
My question to you is this; At what point, assuming more mergers between the remaining firms, would the government be needed to step in and file anti-trust against the industry? Is there a line in the sand, or would it depend on how effective their lobbyists are in Washington?
The FTC and various federal economic bodies regularly examine big mergers/accusations such as this, with a defined set of qualifications around questioning monopoly power. The main plausable reason that this marriage is acceptable, is that there are still--"no barriers to entry" for other publishing firms within the market. Anyone can start a publishing company, and while there may only be a "Big 6", theoretically there are hundreds of thousands left out there.
ReplyDeleteThe power of internet retailers is also extraneous to the power of this merger. While many books are still published in print, it seems the general shift is moving toward online publishing. The internet has swallowed up "industry leaders" such as Netflix, Blockbuster, various print-magazines, and newspapers. The increased 'strength in numbers' of merging publishing firms can only do so much against the superpowers of the modern internet. The music industry as well, while today only made up of three main firms--Still has incredible competition through various online alternative choices.
I agree with Andrew's point that there are so many options provided via the internet, that even if the big 6 publishers start to join together there will still be competition. My SIP was about print vs. digital media and through my research I found that people learn better as well as retain more of what they have learned when they are reading print editions. This is reason enough for me to keep reading at least somethings in print. I think that the big 6 need to merge somewhat because they will have to downsize because of the technological revolution, however they will have an advantage in the print market because this is their area of expertise. So to sum it up it really isn't print vs. digital, it is more about how print and digital will continue to coexist and evolve together, like with QR codes. I don't think the government will need to intervene.
ReplyDeleteI really doubt that there are any true uncrossable lines in American politics today. With the right lobbyests, the regualtors are basically always able to be convinced, or at least reassured of the validity of the merger. I believe this is especially true of a market with as low of barriers to entry as publishing today. This blog post has the potential to reach many more people than could be reached by the average book even twenty years ago, and at virtually no cost, thus competition is still strong in the publishing industry. On the other hand, this blog falls into a very different catergory from the bound works of Charles Dickens, so regulators could be tempted to draw the boundaries of the industry somewhat differently, leaving only six big companies left (five if this deal goes through). This redefinition of the relevant market would make the publishing industry already extremely concentrated, and could distress regulators. In this case, as was mentioned in the article, PenguinHarperCollins has a great advantage over the next firms wishing to merge in this industry because the change from six to five firms does far less to concentrate the market than the change from 5 to four would.
ReplyDeleteWhen it comes to anti-trust, the government has laws put in place that require every large-scale merger to be approved. The decision made by government to approve or decline the merge depends in the change in the Herfindahl-Hirschman Index (HHI). This index measures industry concentration and can be used to make sure a certain industry is not ran by a monopoly or an oligopoly. The merger will be declined if it violates anti-trust law.
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