It’s official. Bertelsmann’s Random House and Pearson’s Penguin announced today that they are being merged into a joint venture called Penguin Random House (sadly not Random Penguin or Penguin House).
Random House will be 53 percent of the new company and Penguin will be 47 percent. The CEO of Random House will be the CEO of the new company and the CEO of Penguin will be chairman. The merger will close in the second half of 2013 pending regulatory approval.
Assuming the deal closes, the big question for libraries is which ebook policy will the new company use for libraries?
Random House currently offers their entire selection of ebooks to public libraries. Amazingly, they allow libraries to purchase ebooks on the day that the titles are available for sale. They are one of only two of the Big Six (soon to be Big Five) book publishers that have such an open policy for their ebooks at libraries.
Unfortunately, this open availability comes at a price. Namely, two to three times the normal price. Random House has specific pricing for ebook “distributors” like OverDrive. They released these prices back in February of this year and the average price is two to three times the retail price of the ebook. Libraries can only buy from ebook distributors so they are forced to pay these higher prices.
This arrangement is far more preferable than the situation over at Penguin though. Penguin has had a rocky relationship with libraries that started off with allowing libraries to buy most of their ebooks through OverDrive. Last year, they stopped selling to libraries citing security concerns with Amazon. They restored access a few days later only to stop selling any ebooks to libraries in February of this year.
Penguin started a pilot program this month that makes their ebooks available at libraries through 3M’s Cloud Library. The Cloud Library is pretty cool but it does not work on Kindle devices which make up the vast majority of ereaders out there. Also, the pilot is currently only at the New York and Brooklyn Public Libraries.
Of course, libraries would love to see the ability to buy any ebook out there at the retail (or discounted) price and be able to loan it out as many times as they want to. But barring a major change in the stance of the publishers that seems extremely unlikely.
The next best scenario would be for Penguin Random House to adopt the ebook policies of Random House for libraries. This would be a huge win for libraries as they would be able to offer all of Penguin’s ebooks on the day the ebook is released and it would be available for all major ereader formats through OverDrive. Libraries would still have to pay two to three times the retail price for each copy, but this would be far better than the alternative of not being able to offer the ebooks at all.
It looks like libraries can get a little excited about this merger. Random House owns a majority of the new company and the CEO of the merged company is the CEO of Random House, so there is a strong possibility that Penguin’s ebooks might soon be available at libraries.