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Summary:

Book publisher Penguin is embracing self-publishing with its acquisition of Author Solutions for $116 million. The acquisition lets Penguin “gain skills in customer acquisition and data analytics that will be vital to our future,” said Penguin CEO John Makinson in a statement.

Book publisher Penguin is embracing self-publishing with its acquisition of Author Solutions, Inc. (ASI). This morning, Penguin parent company Pearson announced that it has purchased the company from Bertram Capital for $116 million.

Author Solutions, based in Bloomington, Ind., had revenues of $100 million in 2011 and has published 190,000 books by 150,000 authors since its founding in 2007. It “will be integrated into Penguin’s back office and technology infrastructure but will continue to be run as a separate business.”

Penguin already offers some self-publishing services through Book Country, its community writing platform, but the acquisition of Author Solutions reflects a new focus on the area. “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,” said Penguin CEO John Makinson in a statement.

Author Solutions CEO Kevin Weiss said, “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.”

“Curated self-publishing”

Penguin’s Makinson said that Penguin’s partnership with ASI “will fall somewhere between self-publishing as presently defined, and Penguin publishing as presently defined.” He mentioned “curated self-publishing” and imprints drawing on self-published content. Weiss noted that ASI already provides white-label self-publishing solutions to publishers like Hay House and Thomas Nelson. He says that ASI will call certain titles to Penguin’s attention for traditional publication. “Within our imprints, there will be several authors that Penguin will want to take a look at,” he said. “There’s no commitment that they will [publish them], but when we see something that has promise, we’ll share that with them.”

Makinson said that an increasing number of bestselling books either are self-published or started out that way. The two most well-known examples are 50 Shades of Grey and Amanda Hocking’s “Trylle” trilogy. And Penguin recently  acquired the rights to two bestselling self-published titles, On the Island by Tracey Garvis-Graves and Bared to You by Sylvia Day Bella Andre.

Publishers Marketplace’s Michael Cader pointed out that those titles were actually self-published electronically, through free platforms like Amazon’s KDP, and not through higher-end platforms like Author Solutions. “We’ve been competing with free options for a long time,” Weiss said. “We have not felt any pressure thus far from the free publishing market.” And Makinson claimed there is “growing category of professional authors who are going to gravitate to the ASI model rather than to the free model.”

Weiss said the acquisition provides legitimacy to self-publishing. Recalling a previous job at IBM, he said, “When IBM gave its stamp of approval to the PC industry, what happened next was nothing short of remarkable. This feels very much like what happened with the PC industry back in the early eighties.”

  1. John F. Harnish Friday, July 20, 2012

    From the time of Ben Franklin in the 1700s, “self-publishing” has been a legitimate method for authors to publish and successfully sell their work. The high cost of letterpress and offset pressruns prevented many authors from taking this path.

    In the 1990s, Print-On-Demand publishing using high-speed digital printers became an affordable reality. For a few hundred dollars anyone could have a trade paperback published and available for sale to the public. Suddenly there was a surge of POD books written by many authors previously rejected by traditional publishers. By the turn of the 21st century POD books began to make their way into brick-and-mortar bookstores and onto the web pages of Amazon.com.

    The corporate style publishers attempted to squash POD publishers by painting them with the stigma of being vanity houses. Bookstores were advised not to stock their books if they wanted to continue to receive sweetheart deals and promotional dollars from the mainstream houses. Book reviewers with major newspapers and trade publications dependent on advertising dollars, were discouraged from writing reviews on books produced by these evolving digital publishers.

    The big publishers, the chains, and the reviewers created an effective Catch-22 to limit access to the marketplace. The bookstore chains refused to stock books that weren’t reviewed in the media, and reviewers refused to review books that weren’t available for sale in the chain stores. The mainstream publishers benefitted from having their titles automatically reviewed and stocked on the shelves of the bookstore chains.

    There was an ongoing effort to deter authors from using POD publishers by spreading the myth that no agent would represent an author of a “self-published” book. This is untrue; when a book has achieved a track record of significant sales, agents and publishers are chasing after the author to snag a deal. If the book is a good read, consumers don’t care how the book was published or what imprint is on the title page.

    The increasing popularity of ebooks has leveled the playing field in favor of new authors—they don’t need a publisher taking a big piece of the profits from downloads sold, nor do they need to jump through hoops to try to obtain distribution through the dwindling number of bookstores.

    Authors are starting to ask publishers what specifically are they going to do that will benefit the sale of their book. With all the turmoil in the publishing industry, a contract with a mainstream house isn’t as enticing or as profitable as it might have been a couple of decades ago.

    $100 million in revenues for Authors Solutions in 2011 might sound impressive within the industry, but what percentage was generated from the sale of services to authors and what percentage was produced from the actual sale of books published by ASI???

    Industry reports indicate that 80% to 90% of all digitally printed books never earn enough royalties to surpass the breakeven point and produce a financial profit for the authors. Ironically that’s about the same percentage of traditionally published books that earn out the advance paid to their authors.

  2. The times, they are a-changin’!

    As an increased number of authors are able to effectively wear all of their hats and achieve success as self-publishers, the paradigm shifts just a little. Even in an over-saturated market, these are exciting times.

    -A.M.
    http://amschultz.com

  3. Jacqueline DeGroot Friday, August 3, 2012

    Interesting . . . I started with them in 1999 when they were 1stBooks, then continued when they became AuthorHouse, then Author Solutions, Inc. I wonder what Penguin will rename it?
    Jacqueline DeGroot

    1. I published Mist on the Window, a kids’ novel with Authorhouse in 2010 and am about to send them the sequel, Beyond the Mist. Unlike most, it appears, I have actually been happy with the working relationship I have had with them – and the finished result…. not the cost of the individual books though, which have kept my marketing to an embarrassing minimum. Maybe Penguin’s decision to buy Author Solutions will work out well for those of us who where bold enough to go it alone… I hope so. Su Thomas

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