Editor's Note : The Perfect StormDecember 2008 By Noelle Skodzinski
Two events occurred recently that some have called the biggest news to hit the industry in decades. First was the announcement of the settlement between Google, the Association of American Publishers (AAP) and the Authors Guild, regarding Google’s controversial Book Search tool. The settlement allows Google to make millions of books available for consumers to read or buy through Google Book Search; but the big news is that Google will provide compensation to publishers and authors for their works. The settlement also established a Books Rights Registry (supported by the $125 million settlement paid by Google), which will monitor such compensation as well as work to resolve any additional disputes.
The second event, Houghton Mifflin Harcourt’s (HMH) reported temporary freeze on new-title acquisitions, has had the industry reeling. Some reports suggested the company still would consider acquiring select new titles, and that it was more like a “freeze-lite”—as Josef Blumenfeld, vice president of communications, referred to it in a New York Times article. “There was simply some belt-tightening going on,” relayed Otto Penzler, of HMH imprint Otto Penzler Books, in an Associated Press report.
Many speculated about the reasons behind the freeze … err, um, freeze-lite … including whether or not the private-equity owned HMH was for sale, speculation that was all but confirmed by a New York Times interview with Jeremy Dickens, president of HMH holding company Education Media and Publishing Group. The article reported that Dickens “denied that the company was for sale, but said, ‘If there’s a transaction that makes sense for all of our stakeholders, we’ll consider it.’”
Regardless, some believe it is simply a sign of the times.
David M. Hetherington, adjunct professor at Pace University’s Graduate School of Publishing, says, “It was an extraordinary decision to make public, but frankly, it is understandable in the current economic climate and in the face of HMH’s debt-service obligations.”
News of the Google settlement inspired celebration among many in the industry, but the HMH news caused a collective gasp. If it is a sign of the times, it joins many other signs pointing to a perfect storm. Book Business columnist Andrew Brenneman refers to this perfect storm—brought on by digitally induced changes in the fundamentals of how we publish and sell books, and the global financial crisis, among other things (page 34). Hetherington also refers to the perfect storm in “16 Tips for Steering Your Company Through an Evolving Industry” (page 23) and notes, among the causes, a skittish consumer mentality, rising oil prices and the fluctuating dollar. “The question will be one of degree,” he says. “Which [industry] sector will have the toughest time, and how will they respond?”