Penguin Becomes First Big-6 Publisher to Disrupt the Book Business Model

Pearson, the parent company of Penguin Group, acquired Author Solutions, a self-publishing platform, for $116 million. This makes Penguin the first of the big-6 publishing companies to provide full services, including editorial, marketing, and design, to self-published authors. Penguin will also be the first big publisher to start learning about customer acquisition and data analytics. 

According to Digital Book World, “’This acquisition will allow Penguin to participate fully in perhaps the fastest-growing area of the publishing economy and gain skills in customer acquisition and data analytics that will be vital to our future,’” said Penguin CEO John Makinson in a company statement.”

Penguin has always been one of the more innovative large publishers. In 1935, they were the first ones to print paperback books. Last year, they launched Book Country, an online community focused on helping genre writers develop their work, which later offered distribution services. Since then, several authors have sold their books from Book Country to agents and publishing houses, including Penguin.

Book Country was not mentioned in the press release announcing the acquisition, but many people expect Penguin will expand Book Country’s platform with Author Solutions, which may help it compete with Amazon’s Kindle Direct Publishing, Barnes & Noble’s PubIt, Kobo’s Writing Life, Smashwords, and other platforms. However, Penguin sent out a company statement saying that Author Solutions will be integrated but will continue to run as a separate company (interesting since companies such as HarperCollins are tied to ASI).

For a publishing company, $116 million seems like a steep acquisition (though once they make a bunch of money, it may seem like a good deal). For Author Solutions, the price seems low. Author Solutions, according to the press release, has worked with 150,000 authors to publish 190,000 books. Last year the company generated revenues of $100 million, with a 12% growth rate each year. Most revenues came from selling services to authors, and the company has 1,600 employees, most residing in Bloomington, Indiana, and Cebu City, the Philippines.

According to Philip Jones on FutureBook, “Other publishers are headed along the same route [with self-publishing] though. HarperCollins launched Authonomy years ago, and has tapped into a rich seam of budding authors as a result. Bloomsbury’s A&C Black offers editorial services and workshops through its Writers & Artists Yearbook brand.”

The press release also mentioned that “Self-publishing is a rapidly growing segment of the consumer books market. According to Bowker, 211,000 titles were self-published in 2011 in either print or digital form, an increase of almost 60% on 2010.”

Penguin will ensure that readers who buy Author Solutions books will know they are not Penguin books, so as not to damage Penguin’s reputation, Makinson said to DBW. Penguin will consider publishing authors in the Author Solutions database, as well as look in to hybrid models of traditional and self-publishing.

More from DBW:

With this acquisition, self-publishing may have turned a corner, according to Weiss. “When IBM gave its stamp of approval to the PC industry, what happened next was nothing short of remarkable. This feels like what happened with the PC industry back in the early eighties,” he said.

“The industry is changing rapidly and we don’t know where it’s going, but I think we have a much better opportunity working together creating change in the industry rather than having change thrust upon us,” said Weiss.

It will be interesting to see if Penguin begins using its brand to promote its new self-publishing services, or if it will continue the idea that authors are the brand. Penguin has a strong brand–much stronger than most publishing houses, especially with Penguin Classics. This acquisition may fully bring self-publishing into the mainstream, and erase the stigma against self-publishing that many in the book publishing industry have.

Miral Sattar, founder of BiblioCrunch, said she thinks self-publishing is getting big. “Self publishing is what blogging was in 2006,” she said. “Now magazines and news sites court popular bloggers all the time.”