One of the great literary hoaxes of our time is the book spine. A staggering number of logos stare out from dust jackets, celebrating names including Crown, Vintage, Ballantine, Knopf, and Dial. But the pluralism implied by this diversity of monikers is a sham. In the U.S., nearly 100 of them belong to a single company: Penguin Random House. The rest are owned by a small handful of competitors, one of which is Simon & Schuster.
At the end of 2020, PRH, the result of a 2013 merger between Penguin and Random House, announced its intention to buy S&S. Books are hardly the engine of the American economy. Still, the deal felt like the culmination of an era. Publishing was already about as consolidated as any sizable industry in America—and the companies felt free to make it even less competitive, because the government and the courts had always yawned at the trend.
That’s what makes this week’s district-court ruling by Judge Florence Pan so significant. At the behest of the Justice Department, Pan blocked the merger and, in the process, saved book publishing from the domination of a behemoth firm. To focus on just that, however, understates the ramifications of her ruling.
For a generation, the antitrust field has been dominated by an idea ushered into the world by the right-wing legal theorist and jurist Robert Bork: the so-called consumer-welfare standard, which holds, more or less, that the size of a company doesn’t matter so long as the company doesn’t abuse its power to hike prices. By this standard, gigantism in the pursuit of cheapness is no vice.
But in the age of extreme inequality, that orthodoxy has begun to wobble, challenged by a movement that claims the mantle of antitrust’s long-dismissed founding father, the Supreme Court Justice Louis Brandeis. (As it happens, the two most significant intellectuals of this movement—Lina Khan and Tim Wu—hold powerful positions within the Biden administration. The head of the Justice Department’s Antitrust Division, Jonathan Kanter, is a fellow traveler.) The group holds that prices and efficiency shouldn’t be the government’s exclusive or even most important concern. A healthy economy—and a healthy democracy—can’t simply protect consumers; it must also protect producers.
Applying the producer theory to book publishing, the government has an obligation to protect the ability not only of consumers to procure books but of authors to earn a decent living. The two goals are intertwined. After all, isn’t a thriving class of writers essential to the welfare of the book buyer?
And according to the Justice Department, the consolidation of the industry makes the writing life more difficult. It argued in court that the proposed publishing merger would create a monopsony: a clunky term referring to a dominant company that wields its size to squeeze producers. The combined companies would no longer compete against one another to woo authors with large advances. Even if the merger kept book prices low, the paychecks that writers received would inevitably be smaller.
That the government made this argument—and that a federal judge accepted it—is radical in the context of American jurisprudence. For the first time in several generations, the reigning paradigm has meaningfully shifted from Bork back in the direction of Brandeis.
But in the realm of books, this victory matters only if the government moves aggressively to address the industry’s main underlying problem, the very thing that compelled the publishers to merge in the first place: the power of Amazon, which sells substantially more than half of all books, according to The New York Times.
Consolidation in book publishing is a trivial issue compared with the dominance of Amazon. Since Jeff Bezos founded the company, the number of bookstores has plummeted. In 1998, America had 12,151 bookstores; by 2019, that number had sunk to 6,045. Many of those were independent stores—charming enclaves of literary culture, not chains capable of competing against the Everything Store.
Amazon is arguably the ultimate embodiment of monopsony power. It has, in the past, used its dominance to demand a large cut of publishers’ sales, according to industry insiders. And companies such as PRH have had little choice but to accept—or become bigger, so that they can bargain harder. Amazon’s pressure on publishers has sometimes come out of authors’ pockets in the form of reduced advances.
(I am an author working in the consolidated industry I just described, and it should come as no surprise that my trade makes me a conflicted party in this dispute. PRH is my publisher. PRH is nearly everybody’s publisher.)
Having exploited bookselling to achieve its dominance in retail, Amazon now treats publishers and the books they publish with something close to indifference. According to a 2019 investigation by the Times’ David Streitfeld, the company hardly bothers tending to the quality of its wares. Sales of counterfeit books, he demonstrated, are rampant on the platform. It does little to crack down on the trade of photocopied editions of books or illegitimate paperback editions of popular novels. In Streitfeld’s depiction, Amazon has become a textbook example of a lazy monopolist—one that squeezes both publishers and authors. That should make it the next target for the Department of Justice.
Reading the government’s briefs in the publishing-merger case, one can glimpse the makings of its argument against Amazon. Indeed, most of its arguments more firmly affix to Amazon than to PRH and S&S. If the government truly wants to protect literary life—and free expression—then it’s not enough for it to treat the symptoms of consolidation. It must attack the disease itself. When it comes to preserving book publishing, the government’s spine is the only one that matters.