The breaking news this afternoon – and probably this year on the self-publishing landscape – is the announced acquisition of the largest global self-publishing provider, Author Solutions Inc, by Pearson, who own the Penguin Publishing Group. This could well represent the sea-change in the publishing world we have been expecting for quite a while. I have to say, I expected it to happen a little differently – with perhaps Author Solutions taking full control of a medium-sized traditional publishing house. Nevertheless, the implication and result is the same, and maybe more so now that one of the world’s largest publisher indirectly owns the largest self-publishing solutions provider.
I’ll have more on this later as I digest the full implications of this news and what it really means.
“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.“
Here is the full ASI press release:
July 19, 2012 – 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.”