5-STAR Fantasy / Sci-Fi

Thursday, July 19, 2012

News: Penguin buys Self-Publishing Company for $116 million

Penguin buys Author Solutions, Inc. for $116 million in cash.

Penguin takes leading position in fast-growing self-publishing market.

News on Indie Author News
Pearson, the world’s leading learning company, is today announcing the acquisition of Author Solutions, Inc (ASI) from Bertram Capital for $116 million in cash.

Formed in 2007, ASI is now the world’s leading provider of professional self-publishing services. It has enabled 150,000 authors to publish, market and distribute more than 190,000 books in print and electronic formats and benefits from several powerful growth trends including user-generated content, eBooks and digital publishing and marketing technologies.

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. The self-publishing sector has also become an important source of talent and content for the publishing industry, producing several bestselling authors including Lisa Genova, John Locke, Darcie Chan, Amanda Hocking, Bronnie Ware and E.L. James.

The acquisition gives Penguin a leading position in this fast-growing segment of the publishing industry and brings significant opportunity for the two companies to collaborate. Penguin will gain access to ASI’s expertise in online marketing, consumer analytics, professional services and user-generated content. ASI will benefit from Penguin’s design, editorial and sales skills, and its strong international presence as it looks to expand outside the US.

Penguin’s chief executive John Makinson said: “Self-publishing has moved into the mainstream of our industry over the past three years. It has provided new outlets for professional writers, a huge increase in the range of books available to readers and an exciting source of content for publishers such as Penguin. No-one has captured this opportunity as successfully as Author Solutions, which has rapidly built a position of world leadership on a platform of outstanding customer support and tailor-made publishing services. 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.”

In 2011 Author Solutions generated revenues of approximately $100m, growing at an average annual rate of 12% over the past three years. Its business is split broadly evenly across three key areas: publishing, marketing and distribution services, with revenues generated primarily from services to authors.

The company has approximately 1,600 employees, located primarily in Bloomington, Indiana and Cebu City, the Philippines. Pearson will be expensing integration costs relating to Author Solutions in 2012 and expects the acquisition to enhance adjusted earnings per share and to generate a return on invested capital above Pearson’s weighted average cost of capital from 2013, its first full year. Author Solutions will be integrated into Penguin’s back office and technology infrastructure but will continue to be run as a separate business.

Kevin Weiss, Chief Executive of ASI, said: “Over the past 75 years, Penguin has demonstrated a commitment to bold and fresh thinking in the publishing industry. We are thrilled to be a part of its vibrant culture, and look forward to accelerating the pace of change the industry is experiencing. As part of Penguin, we will be on the front-end of that change and have the broadest set of offerings of any publisher today. That means more opportunity for authors and more choice for readers.”

Source: Author Solutions, Inc.

What others say:

"Penguin has signaled its interest in self-publishing before. Last year, it established Book Country, a Web site inviting writers of genre fiction to submit their own work." (New York Times)

Weiss compared the acqusition to the impact of IBM entering the personal computer market in the early 1980s, “this is like that, a stamp of approval for the self-publishing sector.” Makinson said, “We spent time getting to know the people at ASI and their sophisticated operation. They have skills that can help us at Penguin. They’re moving globally and we can support that. It’s a natural convergence and its broadening our publishing and offering more choices for readers. Like Kevin says, this is the best time ever to be an author.” (Publisher's Weekly)

"The splash caused by self-publishing superstars such as Amanda Hocking and EL James, the author of worldwide success Fifty Shades of Grey, has encouraged traditional publishers such as Pearson-owned Penguin to break into the market." (The Guardian)

"The acquisition shows how traditional publishers, whose business models have been threatened by the rise of e-books and tablet devices, are increasingly recognizing the potential and power of self publishing." (Wall Street Journal)

"[...] While Pearson is smart to develop a long tail strategy that includes self-published authors, the challenge with ASI is that its business model is entirely dependent upon blinding the eyes and stealing the dreams of unsuspecting authors. It earns 2/3+ of its revenue selling services and packages to authors, not selling books to consumers. That's a recipe for parasitism an exploitation, and in the long run as indies wise up, it's not a sustainable model. The money flows in the wrong direction. Money should flow to authors. Now, keep in mind, Smashwords is a competitor to ASI, so my comments should be read in that context.[...]" (Mark Coker [CEO-Smashwords] - Comment on Publisher's Weekly)

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