What’s Next in Mergers and Acquisitions for the Publishing Industry?
Businesses are created and sold. New businesses can quickly establish a strong foothold in an existing industry that threatens the bigger companies. As a result, these big companies will often buy out a smaller business to either prevent them from becoming a threat or to gain control of their IP, assets and audience to the benefit of their business. A perfect example of this was when Amazon acquired Goodreads.
Goodreads is an ‘influencer’ in the book world. They have a huge member base of readers and authors. Goodreads previously had a ‘hot and cold’ relationship with Amazon and potentially had the ability to become a major player in selling eBooks. Amazon saw this threat and stopped it in its tracks by acquiring Goodreads for a hefty price. Now Amazon can leverage this platform for its own benefit to gain access to readers and authors.
What’s in the Pipeline for Future Mergers or Acquisition?
• I would imagine that more publishers will merge to become stronger to take on the like of Amazon. A recent example of this was the merger between Penguin and Random House. We will also continue to see smaller and more recently established businesses being bought out quite quickly by the large publishers and online retailers.
• Once the big publishers come to terms and accept that it is the ‘niche’ markets and sites that are capturing their target audience then you can expect a range of future acquisitions to be announced. The first publisher to realise that they should own an ‘influential’ niche website or community for each of their genres or categories they sell eBooks in will challenge Amazon. Creating imprints for specific genres is not the same as what I am suggesting here.
Why Will we See more Mergers and Acquisitions over the next 12 to 24 months?
• The growth of eBooks may have slowed from its triple figure heights but they are still growing in popularity. As a result this billion dollar industry is one worth putting money into. Even a small slice of the pie can be very lucrative.
• New start-ups are finding that they require a capital injection to grow their business and are open to selling off a part or all of their business.
• Many entrepreneurs who start a business have the goal of selling out when the right buying comes along. Therefore they see an opportunity and then’ build to sell.’
• It can be a lot cheaper and more viable for a large company to buy a small established business rather than trying to create their own new business.
• The old traditional publishers are quickly trying to re-gain ground after ignoring the eBook shift early on. Publishers previously failed to recognize just how big eBooks would become and as a result did not evolve. Now they have to catch-up by buying out these businesses that saw these opportunities.
• The big publishers have lost a lot of market share to the online players, most notably Amazon. They need to grow to regain market share. This growth can come through mergers and acquisitions.
• Publishers were once ‘pure plays’ in publishing. Now several publishers have evolved and are now pursuing opportunities in online education, apps, eBooks, eBook services, technology and related fields to offset their losses or decline in book publishing. Companies are becoming more than just ‘book publishers.’
From personal experience I am aware of what some companies are looking for and what they are willing to offer. Our company eBooks International holds a dominant position in the eBook and digital publishing marketplace due to our large portfolio of eBook specific domain names (now 200 plus) and network of eBook and author centric websites.
Where we really hold an influential position is with our portfolio of sites dedicated to specific niche genres and categories such as Adultfictionebooks.com, crimefictionebooks.com, truecrimeebooks.com, romancefictionebooks.com, sportsebooks.com and many more.
We have received some exceptional offers but none that have enticed us to step away from our fast growth path that we are currently experiencing. Besides, when you love what you are doing it is difficult to give that up!