2023 Book Business Landscape: 8 Major Developments and Industry Responses

Two main debates stand out in 2023 in publishing: combating the rise in book bans and defending the freedom to read and defining the role of AI, focusing on adopting this technology beneficially while mitigating potential disruptions. 

Notable events included the tragic deaths of industry leaders Adrienne Vaughan and Casey McIntyre and Hachette Livre's unexpected merger of its U.S. and U.K. operations. 

The FTC's antitrust lawsuit against Amazon, HarperCollins' downsizing, and controversies at Scholastic's book fairs also made headlines. 

The Federal Court's ruling against the Internet Archive, structural changes at Penguin Random House, and KKR's acquisition of Simon & Schuster were other key moments of 2023. 

Let’s unbox. 

1. Book Banning vs. Freedom to Read

The publishing industry actively countered the increasing trend of book banning and restrictions on reading freedom. 

Penguin Random House, alongside PEN America, authors, and parents, sued a Florida school district in May, challenging the exclusion of books, primarily by non-white and LGBTQ+ authors, from school libraries as unconstitutional. 

"In every decision to remove a book, the School District has sided with a challenger expressing openly discriminatory bases for challenge, overruling the recommendations of review committees at the school and district levels," the complaints allege. 

A larger alliance, including Texas bookstores BookPeople and Blue Willow Bookshop, and several publishing associations, filed a lawsuit in July against Texas's HB 900 law, which demanded a rating system for books in schools based on sexual content. Although initially blocked by Judge Alan D. Albright, an appeals court later allowed HB 900 to proceed, pending a January ruling.

In a separate action, Penguin Random House, the Iowa State Education Association, prominent authors, and Iowa plaintiffs sued the state to overturn SF 496, a new law that allegedly targets LGBTQ students and restricts books with sexual or LGBTQ themes in schools. This lawsuit specifically targets the portions of SF 496 that mandate removing certain books from school libraries and classrooms, arguing this violates the First and Fourteenth Amendments.

On December 29, U.S. District Court Judge Stephen Locher granted a preliminary injunction, temporarily suspending the enforcement of what he described as "staggeringly broad" aspects of Senate File 496. This action comes as two federal lawsuits challenging the law continue to progress.

2. AI Between Copyright & Efficiency


Throughout 2023, the publishing industry vigorously debated the implications of generative AI.

The discussion among industry experts emphasized finding a balance between the benefits, like enhanced efficiency, and concerns about job losses and copyright violations.

This worry about copyright infringement sparked numerous lawsuits against the creators of large language model AI technologies. Authors filed lawsuits in July alleging that their copyrighted materials were used in AI training without permission. However, initial court rulings dismissed key claims in these cases. 

In December, the Association of American Publishers (AAP) underscored the importance of copyright protection in their submission to the U.S. Copyright Office. They argued against the tech industry's claims that fair use allows the use of copyrighted materials in AI training without authorization or compensation.

"Copyright is the engine of free expression, responsible for incentivizing invaluable, creative expression and information that is inherently transformational to both people and society and indisputably essential to democracy," the AAP argues in its comments. 

Amazon also engaged in the AI conversation through its Kindle Direct Publishing platform. They required KDP users to disclose any use of AI-generated content when publishing or updating books. Additionally, on November 1, Amazon's self-publishing arm started beta-testing a technology that enables KDP authors to create audiobook versions of their ebooks using synthetic voice narration, leading to increased audiobook production.

3. PRH’s Transformative Year 

Following the US government's successful blocking of its acquisition of Simon & Schuster in late 2022 and the resignation of global CEO Markus Dohle, 2023 saw major changes at PRH: the resignation of CEO Madeline McIntosh, Gina Centrello's retirement from Random House Publishing Group, and the exit of numerous well-known executives and senior employee. In September, Nihar Malaviya, who served as interim global CEO, was confirmed as PRH's permanent leader.

PRH underwent significant restructuring, most notably splitting the Random House Publishing Group into two entities: a smaller RHPG and a newly reformed Crown Publishing Group (CPG). Sanyu Dillon was appointed as RHPG's president, and David Drake became president of CPG. Malaviya opted for a committee-led approach rather than appointing a single successor to McIntosh.

In September, more restructuring occurred with the Knopf Doubleday Publishing Group announcing the gradual phase-out of the Anchor hardcover publishing program, moving its titles to Vintage Books. 

Despite these reductions, PRH expanded its portfolio by increasing its stake in Sourcebooks to 53%, acquiring the assets of Callisto Media, and purchasing Hay House towards the year's end.

4. Simon & Schuster Acquisition

KKR, a private equity firm, finalized the acquisition of Simon & Schuster for $1.62 billion on October 30, stepping in as the buyer after Penguin Random House's attempted purchase was blocked by the government in 2022. 

The newly formed board of Simon & Schuster, post-acquisition by KKR, comprises seven members, bringing together a diverse range of expertise. 

Richard Sarnoff, a veteran in the publishing sector with senior roles at Random House and the Association of American Publishers, will serve as the chairman. His extensive background includes time at Bertelsmann, the parent company of Penguin Random House. Joining him is Madeline McIntosh, former CEO of Penguin Random House U.S., who also has experience working at Amazon, the leading book retailer in the U.S.

Adding a fresh perspective, V Pappas, ex-COO of TikTok, joins the board, bringing valuable insights from the social media domain. Additionally, Kareem Daniel, with an 18-year tenure at the Walt Disney Company, joins as a director. His expertise is expected to be instrumental in helping Simon & Schuster leverage its intellectual property effectively.

Following the acquisition, Judy Clain, previously with Little, Brown, was appointed as senior vice-president and publisher of Summit Books, aiming to rejuvenate the imprint. 

5. Copyright Case Against Internet Archive Advances

A lawsuit filed against the Internet Archive (IA) by Hachette Book Group, HarperCollins, John Wiley & Sons, and Penguin Random House progressed toward resolution. 

The pivotal moment came in March, when Judge John G. Koeltl ruled that the Internet Archive had violated the copyrights of these publishers by scanning and lending out their books, a practice termed 'controlled digital lending.'

Judge Koeltl dismissed IA's defense of fair use, stating that acquiring a copyrighted print book does not entitle someone to create and distribute unauthorized copies while retaining the original. In mid-December, IA's legal team appealed this decision, arguing that the district court erred in its interpretation and application of the law. They contended that the use should be allowed if it serves copyright’s broader goals more effectively than preventing it.

The publishers are expected to submit their response to the appeal in February, with a reply from IA to follow. This sets the stage for at least another six months before a potential hearing date is scheduled, marking a crucial phase in a case that could set a precedent in copyright law within the digital lending sphere.

6. Antitrust Lawsuit Against Amazon

On September 26, the Federal Trade Commission, backed by attorneys general from 17 states, launched a significant antitrust lawsuit against Amazon. 

The comprehensive 172-page complaint accuses Amazon of engaging in a series of interconnected anti-competitive and unfair practices to uphold its monopoly illegally. 

The government alleges that Amazon's monopolistic behavior hinders competitors and sellers from reducing prices, compromises quality for consumers, overcharges sellers, impedes innovation, and obstructs fair competition.

While the lawsuit doesn't specifically address Amazon's impact on the book industry, its filing was met with widespread approval from the publishing sector. 

Independent booksellers, notably affected by Amazon's aggressive discounting strategies to lure book buyers, welcomed the FTC's long-overdue move. 

According to Allison Hill, CEO of the American Booksellers Association, this legal action represents positive news for independent bookstores and all small businesses.

"Publishers were simply too fearful and too powerless to stand up to their biggest customer. And then Amazon started adding all manner of fees, effectively increasing their discount even further. To the extent that Amazon was able to discount books to lure customers away from other booksellers, publishers were effectively subsidizing Amazon's growth and dominance while watching their margins erode.” an independent publisher anonymously declared.

In response to the lawsuit, Amazon's legal team filed a motion in December requesting its dismissal, challenging the accuracy of the facts and legal basis of the case. 

7. Scholastic Revises Diverse Book Fair Strategy 

Despite criticism from authors, librarians, educators, and advocates for reading freedom, Scholastic announced it would cease the sale of its "Share Every Story, Celebrate Every Voice" collection. 

Scholastic had introduced this collection as a response to various state and local policies affecting content selection in schools, potentially putting librarians and educators at risk.

However, this move faced backlash for seemingly segregating diverse literature, which includes 64 titles representing BIPOC, LGBTQ, disabled, and other diverse groups. Critics argued that most of these books were not controversial and should not be treated as optional. Scholastic plans to discontinue this collection in January 2024, committing to finding alternative ways to distribute a broader range of books to children.

This controversy impacted Scholastic's financial performance. The company experienced lower-than-expected profit growth in its school reading segment, including book fairs and clubs, during the second quarter. CEO Peter Warwick attributed this slowdown to a complex educational environment marked by increased societal polarization, politicized school boards, higher absenteeism, and chronic teacher shortages. These factors have intensified demands on schools, restricting book choices for educators, parents, and students.

8. Hachette Livre Merges US and UK Operations 

Hachette Livre announced a new management structure, merging Hachette Book Group (HBG) and Hachette UK (HUK) into a unified English-language operation. 

David Shelley, CEO of HUK, will now also lead HBG, reporting to Hachette Livre's senior executives, Stéphanie Ferran and Arnaud Lagardère. 

Concurrently, HBG's CEO Michael Pietsch steps down to become chairman, with COO Joe Mangan also retiring. 

The company has yet to disclose detailed plans for this restructured organization, though it's confirmed Shelley will primarily operate from New York.

Final Thoughts

In 2023, publishing grappled with crucial debates—battling book bans and defining AI's role. Legal fights against discriminatory book removals and AI copyright issues took the spotlight. Big changes at Penguin Random House contrasted Simon & Schuster's acquisition by KKR. Legal clashes, like with the Internet Archive and the FTC vs. Amazon, revealed industry challenges. Scholastic faced criticism over book fair strategies, affecting its finances, while Hachette Livre merged US and UK operations.

These events defined an eventful and dynamic year in publishing, showcasing ongoing challenges and changes within the industry.