Hachette tried to toss indies out with the trash in Perseus distro deal

Perseus GroupNick Mamatas was kind enough to tip me off to a fascinating writeup by Dennis Johnson, co-founder of Brooklyn indie publishing stalwart Melville House, on a story that knocks another hole in Hachette’s credibility as the self-styled defender of cultural and literary values against the encroachment of Amazon. As Johnson tells it, Hachette Book Group’s just-collapsed deal to buy Perseus Books Group, long owned by private equity fund (not hedge fund as Johnson describes it) Perseus LLC, would have involved jettisoning the cluster of often highly-regarded indie publishers that it aimed to sell with the acquisition’s distribution business, to U.S. distributor Ingram Content Group.

Coverage of the putative deal in the Wall Street Journal and elsewhere couldn’t seem to get off the subject of how this transaction would help Hachette bulk up in its faceoff against Amazon – with sideswipes at Amazon’s continued penalizing of Hachette publications. Presumably all those journos are now having to backtrack, but Johnson has a different take on the real story.

Recounting his personal experience of the 2007-08 deal that created Perseus Books Group, Johnson notes that: “a hedge fund had thereby taken over about 80 percent of the distribution of indie publishers in America … And it was a disastrous takeover for some of us … Flash forward a mere seven years and a similar story about control of the distribution of many of our leading indie publishers is once again being buried. That is, it should have been part of the story of yesterday’s sale of Perseus to Hachette, but it really wasn’t.”

The assets that would have gone to Ingram, he observes, included distribution of Melville House itself, City Lights, Bellevue Literary Press, and Grove Atlantic – just a few standouts among some 400 small houses. Given these entities’ scale and resources, the rights include “the business of warehousing their books, selling them to the trade, and collecting the fees for all that” – in other words, a sizeable chunk of their entire marketing and distribution effort. The whole business would have brought  Ingram about $300 million per year.

Johnson is of two minds about how the indies would have fared with Ingram, but he does feel that “all those great indies may indeed be better off to be out of the clutches of the Perseus hedge fund.” As it is, they’re still there for now until Perseus finds another buyer. Hachette itself, though, apparently couldn’t have cared less about them. Its supposed allies in the Authors United claque might want to reflect on that – if they honestly cared for literary values and even fine publishing in the first place.

4 Comments on Hachette tried to toss indies out with the trash in Perseus distro deal

  1. Calm down there. All this chatter about “the clutches of the Perseus hedge fund” aren’t helpful. Hachette’s reason for not completing the purchase, that it was “too complicated,” makes sense.

    http://pevc.dowjones.com/article?an=DJFLBO0020140807ea87qm95s

    I happened to be a tech editor caught in the middle of one of these publisher-by-publisher buyouts some years ago. They can be really, really messy. My paycheck was months late in arriving.

    The Amazon/Hachette issue isn’t about whether authors should bestow sainthood on Hachette. There’s good and bad about it like there is about any of the major publishers.

    The issue is market-dominating Amazon’s bullying and other misbehavior and what that might mean for authors, however their books are published. If Amazon can force Hachette to march to its tune, then smaller publishers and independent authors don’t stand a chance. Eventually, they’ll find themselves caught in the vice. Hachette can’t hurt any authors but its own, and doing that is likely to hurt it. Amazon can hurt everyone.

    That’s what Hachette is defending and why it deserves support.

  2. Firs things first: Paul, you should know better than to read the Melville House blog and take it seriously. No one does.

    ” would have involved jettisoning the cluster of often highly-regarded indie publishers that it aimed to sell with the acquisition’s distribution business, to U.S. distributor Ingram Content Group.”

    What a load of nonsense.

    This deal made a lot of sense to me. Hachette is a publisher, not a distributor. Why would they want to take on a distribution business when they found someone else who wanted it?

  3. Paul Mackintosh // August 8, 2014 at 3:14 pm //

    True, Nate, but Hachette’s parent Lagardère has LS Distribution: “50,000 points-of-sale supplied…Exclusive distributor in 9 countries. Guarantees the delivery of millions of copies of national and international titles in Europe and North America each day.”

  4. Okay, so a different division of Legardere decided to pass on the deal (who knows if they were even consulted), and you describe it as “Hachette tried to toss indies out with the trash “?

    That’s still nonsense.

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