Book publishers just spent 3 weeks in court
arguing they have no idea what they’re doingOn August 22, oral arguments ended in the Justice Department’s antitrust trial to block the book publisher Penguin Random House from merging with rival Simon & Schuster. The result of the trial, which is expected to be decided later this fall, will have a massive impact on both the multibillion-dollar book publishing industry and on how the government handles corporate consolidation going forward. Perhaps fittingly for a case with such high stakes, the trial was characterized by obfuscation and downright disinformation nearly the whole way through.
above image via BookScouter
Most of us are familiar with the idea of a monopoly and how such a selling market can drive up consumer prices, but with this case, the DOJ was arguing that PRHS&S would form a monopsony — an unfair buying market that would drive down the money paid to authors. Such cases are historically rare. If the DOJ succeeds here, it will be setting a major precedent for the way the US prosecutes corporate giants.
It will also be putting a stop to one of the biggest publishing houses American publishing would ever be likely to see. Yet despite the very real possibility that Penguin Random House and Simon & Schuster could combine to form a monster of a corporation, both publishers have continually presented themselves as scrappy underdogs doing their best to ride out a tough market.
at Vox reports on the details (and shenanigans) of the trial.
A monopsony is the mirror image of a monopoly, and is sometimes called a buyer’s monopoly. Instead of a market with only one seller who can charge whatever they like, a monopsony is a market with only one buyer, who can set their price however they like. It’s still a case where the laws of supply and demand have been skewed to favor one party unfairly over the other.
The Justice Department is suing to block Penguin Random House and Simon & Schuster’s proposed merger. The publishers’ defense hinged on their own incompetence.