In a move that can be traced to last year’s launch of Book Country, Penguin’s writer community and self-publishing venture, Pearson has acquired Author Solutions Inc.,one of the largest self-publishing ventures in the world, for $116 million from Bertram Capital. In a conference call from ASI’s headquarters in Bloomington, Ind., Penguin CEO John Makinson and ASI CEO Kevin Weiss, said the deal marks the “mainstreaming” of self-publishing, will provide Penguin with “scalable” data and expertise on self-publishing and offers opportunities for global growth and wider distribution to selected ASI authors through Penguin’s channels.
Last year Penguin was the first conventional publisher to launch its own self-publishing service, Book Country, and they’ve followed that landmark venture with the acquisition of Author Solutions, a self-publishing firm with around 1,600 employees, revenue of just under $100 million in 2011 and that that has published nearly 200,000 books by more than 150,000 authors in print and e-book formats. The company has net income of $4.2 million laat year. Author Solutions also partners with about six other houses—Thomas Nelson and Hay House among them—to provide “white label” self-publishing services and both Makinson and Weiss said those ASI partnerships will continue. Bertram Capital began looking for a buyer for ASI this winter.
Answering questions from the Author Solutions offices, Makinson said “there’s no other acquisition like this with systems of scale behind it.” Makinson also said there will be no layoffs. “We’re looking to upsize not downsize. There are no plans for layoffs, this is an opportunity for growth,” he said. Weiss said they will not change Author Solutions name, “the brand will not change but we have time and we will decide what makes sense.”
Citing its own launch of Book Country, Makinson said Penguin has been looking at the self-publishing market “with growing respect and admiration,” noting that “we try to keep up with the game.” Makinson said, “It’s become more professional and added more value for writers and readers.” Makinson pointed to the growing number of self-published writers like E.L. James and Amanda Hocking, “self-publishing is growing and converging with traditional publishing. It's an important market and it's not unusual for self-published titles to hit the bestseller lists.”
Weiss will report to Makinson, who said the two “want to develop a global strategy and quickly identify new opportunities” in the self-publishing category. “We’d like people from Hudson Street [Penguin headquarters] to visit Bloomington and learn but we’re in the early stages of this,” Makinson said. Weiss also broke down Author Solutions revenues, noting that of the roughly $100 million the firm generated last year, 1/3 were from publisher services, 1/3 from marketing services and a 1/3 from distribution or consumer book sales. Author Solutions represents an almost conventional form of self-publishing that asks for fees, unlike the rise of free self-publishing e-book venues like Lulu.com, Amazon.com and others. Asked if Author Solutions can compete, Weiss pointed out the ASI has its own free services, noting Wordplay, a “lulu-like system,” noting that “we compete with free options more than ever and I’m not seeing any cannibalization of our market. We’ve seen no price pressure so far. Every writer has different needs.”
Makinson cited ASI’s expertise in “managing data analysis, online marketing and user-generated content,” while Weiss said, “Penguin does distribution and curation.” Makinson said that , “at first we didn’t understand rich consumer data, but we’re in the data analysis business now and ASI will give us a big lift with data analysis and online marketing. We’re gaining access to real scale, hundreds of thousands of customers and authors and ability to analyse across a large database.”
And while Weiss said ASI hoped to be able to move selected self-published authors to the Penguin lists, he emphasized that “there are no commitments,” on this point from Penguin. Asked if there were any concerns about the acquisition of a self-publishing company damaging Penguin’s reputation for editorial selectivity, Makinson said, “there’s no concerns. Penguin is associated with editorial selection and standards and while Author Solutions is using different filters, they’re allowing more writers to find more readers. We will work to make sure our audiences know what they’re getting.”
Weiss and Makinson also emphasized that Author Solutions will continue its partnerships with other publishers, providing a “white label” self-publishing capability for hire. “We didn’t want to sever our partnerships,” Wiess said, explaining that, “we separate all of our businesses with big fences from the other imprints and do not mix leads. We have security for our data and give assurance to our partners that they are segmented out from our other imprints. We do not share info with our parent.”
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.”