This article is adapted from the introduction to the paperback edition of André Schiffrin’s The Business of Books: How the International Conglomerates Took Over Publishing and Changed the Way We Read (Verso).

It’s too early to tell what the long-range effects will be on the American economy of September’s disastrous events–certainly the short-term effects have not been salutary. And the recession we had been fearing is now officially declared. We can be sure that the cost to book publishing will be great.

If it were simply part of the decline of sales within the overall entertainment industry, there would be less cause for concern. But at a time when the country badly needs more information, new ideas and countercyclical analyses of American foreign policy, the chances that these will be published have diminished considerably. The recession will bring increasing profit pressures on the conglomerates. The natural reaction to this, as we know from the past, will be to cut back on “smaller” books, the ones that have little chance of selling in any large number, precisely the books we will be needing at this critical juncture in our history.

In the year since The Business of Books: How the International Conglomerates Took Over Publishing and Changed the Way We Read appeared, the trends I tried to analyze have continued unabated. In country after country, the few remaining independent publishers have decreased still further in number and the large international conglomerates have taken over an ever-increasing share of publishing. In Britain, where there were only four important independents, one of the most promising, Fourth Estate, was bought by HarperCollins, part of the Murdoch empire. One of the first decisions taken after the merger was to cancel the contract for a biography of Murdoch, which the publishers realized would be critical of its subject. The impact of Fourth Estate’s sale negatively affected other independent publishers. A number of the smaller British firms, like Granta, Profile and Verso [whose managing director, Colin Robinson, recently joined The New Press–Ed.], relied on Fourth Estate’s excellent sales force to represent their books to the bookstores. Once the merger had taken place, this was no longer possible, and these smaller firms had to find new ways of selling their wares. This task became even more difficult with the announcement that Britain’s largest bookstore chain, Waterstone’s, would demand much higher discounts from smaller firms, a decision that threatened economic ruin for many of them. Appeals to the appropriate authorities in Britain went unheeded. Interestingly, a similar development has occurred in the US record business, where the giant Tower chain has decided to cut back drastically on its stock of the smaller, classical-music labels.

In France the long-established nineteenth-century firm of Flammarion, the doyenne of French independent publishers, was bought by Rizzoli, the Italian publishing firm partially controlled by the Fiat Corporation, just as last year’s Frankfurt Book Fair opened its doors. I have yet to find a French or Italian publisher who can explain the editorial rationale for such a merger. But clearly the urge to diversify internationally, to become a player on the European scene and in general simply to grow by acquisition is enough to justify mergers that may seem difficult to understand otherwise.

In the United States the merger between Time Warner and AOL had surprisingly swift consequences. The New York Times reported the departure of Little, Brown’spublisher shortly after the merger was announced–Little, Brown’s list was apparently not sufficiently commercial for the new owners. More ominous, the new merged entity announced that it would transform the nature of CNN, the country’s only remaining international news outlet. Four hundred people were fired immediately amid reports that CNN would place less emphasis on news and more on entertainment–and presumably more on profit. Having safely navigated the shoals of antitrust scrutiny, the new AOL Time Warner was clearly intent on being even more profitable than its components. CNN’s recent return to massive news coverage shows how unreliable corporate planning can be.

The list of independent US publishers was reduced when Vivendi, the French water and book company, which already controlled a third of French publishers, bought Houghton Mifflin, the largest of the remaining US independents. Few could understand why close to $2 billion was spent to acquire a company whose educational publishing barely fitted with Vivendi’s general program. A group headed by Reed likewise bought Harcourt General in July. This time Reed’s educational and reference focus caused concern for the safety of Harcourt’s small but prestigious general list.

It’s safe to assume that more such mergers will take place. The only question is whether the economic downturn that marked the first half of 2001 and has now entrenched itself will slow down the trend toward ever-larger conglomerates or whether, on the contrary, the increasing economic pressures will force even further amalgamations and greater cutbacks. Indeed, these foreign conglomerates may well wonder why they bought these excellent trade houses to begin with. They represent but a small part of both Houghton and Harcourt, and could well be dumped in hard times.

Everywhere, publishers and booksellers have debated the issues raised by the mergers and have sought differing and new solutions. In Italy, for instance, a series of debates in bookstores across the country led to the introduction of a bill in the Italian Senate seeking to protect the independents. These were defined as bookstores in which the majority of sales come from the publishers’ backlists. In other countries, the debate on possible discounting and the future of the fixed price of books continues to be hotly disputed.

In some places, such as Spain, critics have disagreed with my suggestions of increased government aid. When this has happened, these critics argue, the result has been nepotism and corruption, as in their film industries. But each nation has to find its own appropriate solution. Certainly just about everyone could do with better funding for schools and public libraries (as has happened in Norway), which alone would suffice to give back to publishing some of the economic underpinning from which it has benefited for many decades.

There has been widespread discussion as to whether the problems are as severe as I suggest. Critics and independent publishers have tended to agree with the analysis I put forward. In several countries, those working for the large conglomerates concurred in general but argued that it has not affected the firms for which they work. The nature of the changes that I discuss varies from country to country, of course. In France and Germany the large houses are still publishing a far wider selection of intellectual titles than in neighboring countries, but even there, available choices have been narrowed. In the United States and Britain, there is little doubt in my mind, after looking carefully at the publishers’ catalogues over the past decades, that the changes are very considerable and perhaps permanent.

The area in which critics have differed most markedly with my conclusions is in the field of new technology. There are many who feel that electronic publishing will solve many of the problems I describe; but it is evident that the underlying problem of how to get people to pay for materials that appear on the web has yet to be solved. Random House recently canceled its e-book publishing, AOL-Time Warner has laid off almost its entire e-publishing staff and everyone has given up on CD-ROMs as the wave of the future. Even Stephen King’s experiments at getting readers to pay for his books in the Dickensian manner of purchasing each chapter separately did not last. King abandoned this attempt when the number of purchases diminished markedly, even though the quantity of would-be purchasers was far greater than most authors would dream of. Perhaps more telling is the fact that the widely read American literary and political magazines that appear on the web, such as Slate and Salon, have struggled to find a way to get people to pay for their service. Only time will tell whether alternatives such as issuing print versions will work, but it is clearly not a way of dealing with the problems facing books on the web.

The more optimistic partisans of the web tend to forget that the most expensive book is not the ten thousandth or even the hundredth copy but the very first. I well remember my last year at Pantheon, when two books on The New York Times Book Review‘s list of the ten best of the year came from our catalogue. Ian Gibson’s biography of García Lorca and Donald Cameron Watt’s marvelous history of the origins of World War II, How War Came, had both been commissioned twenty years before we published the books! Clearly the authors needed substantial financial support over those decades, support we were only able to provide in anticipation of sales.

Even the university presses have not yet figured out how the editorial work required in the preparation of monographs to be published online will be paid for once the initial foundation grants allowing for them run out. It is hard enough to make books pay for themselves when they are sold, copy by copy, in bookstores and by mail. The idea that authors can sit down at their computers and simply feed in their major works without outside support is not at all realistic.

We are still in the early days of the new technologies, and it is certainly possible that novel ways of dealing with these problems will be discovered. The question remains whether sufficient time, effort and money will be spent on books that are not significantly profitable in printed form and even less profitable online. These are the books that are often the most important and are the most endangered.