John Sargent ready to testify in publishing lawsuit

“If you see me struggling with language, and being tentative, it’s because I’m going to be called to testify next week in court,” Macmillan ceo John Sargent said near the beginning of his ABA keynote conversation with outgoing president Becky Anderson. He’d already cautioned the audience that he was nervous to “step out of the background” as, someone generally reticent to comment publicly. Despite those caveats, Sargent ended up having quite a bit to say about the Department of Justice (though not as much about Macmillan’s settlement), self-publishing, Amazon, and other publishing matters.

Sargent felt the need to speak out because, “having been in the hole of DOJ and lawyers all day every day, it hard not to take that lead to be silent.” But he stressed that “it is dangerous for us as an industry if everybody lives under a pall of the DOJ/legal action.” Sargent did not mince words about Justice’s actions, calling the decision by the “senior guys” to bring the case against Apple, Macmillan and four other publishers “incompetent” and “incredibly myopic.” Further, “the DOJ is aggressive and good at intimidating, but we need not to be intimidated as an industry.”

Sargent couldn’t comment on what Macmillan will do after the settlement expires in December 2014, and deflected additional details by saying they were “widely reported in the press at the time” but that still left room for him to be pointed about the genesis of the agency model: “Publishers were working hard in the long run to protect their core interest. And the DOJ comes in and makes decision that they will carry Amazon’s water in this case…[Amazon] has 90 percent market share. The idea the DOJ had that we’re going to discourage new entrants from coming into the market by trying to protect current market share…On its face, that’s ludicrous.”

Sargent expressed “a lot of hope” for the publishing industry’s current digital progress, that independent bookstores appeared to be holding their own: “I was much more pessimistic about brick and mortar a year and a half ago than I was now.” Macmillan’s digital business is “holding steady” at 33 percent of the company’s trade business. “The consumer was always going to vote about how they want to read, but there’s a danger of allowing artificial acceleration based on desires to further own corporate goals.”

“People who work at Amazon are extraordinarily bright, and developed lots of innovations that are quite useful and work really well. But the concentration of power in our business is dangerous to financial pressures, and for a lot of reasons. If the American consumer ends up wanting to buy books from one online retailer in print and digital, that’s the way it will work. But everything I’ve seen in last couple of years says it’s not really true.”

On self-publishing, Sargent expressed his “huge respect” for that side of the business, and the good that has come out of it and success folks have had with it. It’s democratic empowerment.” And while it’s possible to crowdsource publishing by some sort of algorithm, “people forget this is a human business,” he said.

Anderson asked what the industry can do to emulate bookish cultures in other countries, such as Germany (where Macmillan parent company von Holtzbrinck is based), to which Sargent answered: “the single greatest way to do that is to put back in retail price maintenance laws.” Sargent also praised his employers (“thankfully I only have two shareholders to make happy”) for prioritizing what’s important culturally over the bottom line: “One of the remarkable things to see is that they don’t question cost of what it takes to get through the other side. We spent tens of millions of dollars in legal fees, settlement, yet they remained absolutely steadfast that we need to do what is right culturally, not just dollars & cents.”

–from today’s Publisher’s Lunch

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