If you want to understand book publishing, you need to think less Bloomsbury and more Gambino: The five big companies are like the five families. Imprints are crews with plenty of ambitious upstarts looking to make their bones. And every once in a while even a good earner has to get whacked to send a message. Until it was reported that he was stepping down as CEO last week, Peter Olson was the godfather of Random House, which became dominant in the industry when he merged it with Bantam Doubleday Dell ten years ago. Olson’s Big Random, twice the size of its nearest rival and controlling 20 percent of the adult book market, was created to be a bully. With one hand it would beat down the door of the bookstore chains, forcing them to give all of its titles preferred placement in return for the house’s biggest books. With the other it would muffle the insistent agents and their ever-increasing demands.
At least that was the plan. But the reverse happened. For all of his tough talk, the proud and cerebral Olson was never a real enforcer.
Yes, he famously fired Random House president Ann Godoff for not making her numbers. But he didn’t rub her out. Random released all of her authors and contracts to her new imprint at Penguin, making her an instant success there. (So much for keeping your enemies closer …) As for the agents, Olson couldn’t keep them in their place. Other publishers created mechanisms for “house bids”—where the conglomerate keeps its imprints from bidding against each other—but Random House seemed to have few rules. While internal rivals battled, the agents prospered and advances ballooned.
A stronger personality might have disciplined Random, but there’s a good case to be made that the conglomerate was a victim of its own strategy. Size gave it strength against bookstores, but big-box outlets and Amazon provide sales velocity now. Random, and the rest of the industry, has little or no leverage with them. Were they really going to keep Grisham out of Costco? What would they get in return?
Meanwhile, Random’s size became a liability. Even with megahits like Bill Clinton’s memoir and The Da Vinci Code, the company’s annual revenue has been stagnant. To maintain its 20 percent share, the company has to publish around 2,000 titles, while more-efficient rivals like Hachette do under 500 titles for about 10 percent of the market. It’s a quarter of the work for half as much market share.
The publishing stars of the last ten years were small, crafty outfits able to exploit a niche: Miramax had a magic touch with publicity, Judith Regan’s company-within-a-company made the most of the cable-TV freak show, and Regnery mined conservative politics. Demand driven by product and publicity—Oprah, The Daily Show, and Today—replaced distribution. Margins followed. Olson’s company was too big to easily adapt. Olson may have fancied himself the last of the publishing moguls, but it looks more like he’s just the last don.