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A Short Primer on Children's Books in the Global Economy

Daniel D. Hade

"When I see a great book, I think movie rights, interactive games,
and so on. It goes both ways, of course,
but neither company will ever be the same."

Jean-Marie Messier, CEO Vivendi Universal.
Boston Globe. Business Section, p. C1, June 8, 2001

(Mr. Messier made this remark while pointing at a children's book.
Mr. Messier was visiting the offices of Houghton Mifflin shortly after
the announcement that Vivendi Universal would be purchasing Houghton Mifflin.)

June 1, 2001: Vivendi Universal announced that it would be purchasing the educational and trade publishing company, Houghton Mifflin. You probably missed that bit of news unless you live in the Boston area. Most newspapers buried the story in their business sections. Generally, children's literature aficionados don't turn to the business section to catch up on the latest news in children's literature. Yet it is in the business of children's books that a remarkable transformation in children's literature has occurred, a transformation that has profoundly influenced the kinds of children's books we now are getting and will continue to get from publishing houses.

Vivendi Universal is a French-owned company. Five years ago it was a water utility. Today, it owns Universal Studios, Home Shopping Network, Ticketmaster, dozens of record labels including Mercury and Motown, and several French publishing houses including Larousse. Vivendi is a world leader in developing video games, information services, cable television, and telecommunications. And now Vivendi intends to own Houghton Mifflin and its sister publishing house, Clarion.

But Vivendi isn't the only mega-corporation to own a piece of the children's literature publishing business. It is merely the most recent corporation to join the feeding frenzy of mergers and acquisitions that have left the bulk of children's books publishing in the hands of some of the most powerful business leaders in the world.

Viacom owns Simon and Schuster, Atheneum, and McElderry Books, all well-known children's books imprints. Viacom also owns CBS, Paramount Pictures, Nickelodeon and MTV.

The News Corporation owns HarperCollins, Greenwillow, and Avon Books. The News Corporation also owns Fox TV, Twentieth Century Fox, major newspapers all over the world including The Times (London) and The New York Post, and the Los Angeles Dodgers.

Pearson, Ltd. owns the Penguin Putnam group, which includes Viking, Putnam, Philomel, Dutton, Dorling Kindersley, and Dial. Pearson also owns major interests in European TV production, broadcasting, and cable services as well as information and business services.

Bertelsmann owns Bantam, Doubleday, Dell, Delacorte, Random House, Crown and Knopf. Bertelsmann also owns a wide variety of newspapers and magazines, European TV production and broadcasting, Internet search engines, and major record labels such as Arista and Windham Hill.

Von Holtzbrinck owns Henry Holt and Farrar, Straus, Giroux, and Macmillan UK. Von Holtzbrinck also has considerable holdings in European-based newspapers, magazines, books, and financial periodicals including Scientific American and Die Zeit.

Reed Elsevier recently purchased Harcourt. Reed Elsevier is a major publisher of educational, business, and scientific books and journals. Among its holdings are Publishers Weekly and School Library Journal. It is conventional wisdom that a starred review in SLJ will have the most influence on sales of any reviewing accolade a book could receive. The conflict of interest is obvious.

Scholastic absorbed Grolier last year, making it the largest publisher and distributor of children's books in the world. Through its book clubs and book fairs Scholastic has a presence in virtually every classroom in every school in the United States. Scholastic has published some of the most popular books in the history of children's literature: Goosebumps, The Baby-sitters Club, Animorphs, The Magic School Bus, Clifford the Big Red Dog, Dear America, and, of course, the Harry Potter books. Scholastic's media and licensing division has helped produce television programs, movies, plush dolls, games, puzzles, clothing and hundreds of other pieces of merchandise based on its books.

These eight corporations produced over 84% of the books reviewed in The Horn Book Magazine in 2000 and over 75% of the books that received a starred review in School Library Journal in 2000.

These corporations' interests in children's books have little to do with bringing compelling stories to children. Rather, their interests run to "branding," "licensing," "vertical integration," "meaning brokering," and "synergy," because these are the paths to greater sales and profits. When we unpack what these words and phrases mean, what we find is chilling.

Branding. The basic goal of today's business is to create a meaning that transcends any product. Nike has achieved this with its "just do it" motto. The name "Nike" suggests a certain way of looking at the world and a certain kind of lifestyle. If you read the annual reports of the eight companies mentioned above, you will find "brand" sprinkled throughout. Scholastic feels it has accomplished "brand recognition", that teachers and parents have come to trust Scholastic to produce products that will help children learn. Scholastic also refers to certain series of books as brands. "Clifford" is not just a book character; "Clifford" is a brand, as are "Animorphs", "The Baby-sitters Club", and "Harry Potter". When a story has achieved brand status, you will find that character on all kinds of merchandise besides a book.

Licensing. The corporations that control children's book publishing understand that what they truly own are ideas and they can make lots of money by selling licenses of their ideas to other companies. So, Scholastic sells a license of Clifford to Eden Toys to make Clifford dolls and backpacks. Pearson has also sold the license for Ludwig Bemelmans' Madeline to Eden, which in turn has produced an extraordinary range of toys, dolls, doll houses, games, clothing, etc. based upon the Madeline stories.

Vertical integration. As I mentioned earlier, the corporations that own the children's book business also own a staggering array of other entertainment-based companies. A corporation might take a story "brand" such as Viacom's Rugrats. Viacom then can and has produced a number of other products throughout other divisions of its corporation, such as a television show for its Nickelodeon channel, a movie from Paramount Studios, videos to rent from its Blockbuster stores, and a line of books from Simon and Schuster.

Synergy. A synergy is when two brands join together to produce something new. The Cheerios Counting Book is a good example of a successful synergy. General Mills benefits by extending its Cheerios brand into a whole new medium, a book. Now a child can "consume" Cheerios not only while eating them, but also while reading. Viacom benefits by having its Little Simon line of books associated with a highly recognizable brand.

Perhaps the most troubling effect of licensing, synergy and vertical integration on children's books is that the book and each spin-off piece of merchandise and retelling across another medium become advertisements for each other. Children reading, say, Clifford the Big Red Dog, are also reading a promotion for the Clifford television show, Clifford backpacks, and Clifford dolls, and vice versa. The eight corporations listed above are quite savvy. They know that in today's market what is truly scarce is time. There is only so much time in a child's day and much of it, such as time in school, has been off-limits for advertising. However, with a synergized product, a company can now advertise Clifford at any point in the day when a Clifford book, game, backpack, CD-ROM, or doll is visible. Or General Mills and Hershey can now advertise in school through the math lessons they provide in The Cheerios Counting Book and The Hershey Milk Chocolate Bar Fractions Book. And they don't have to pay a nickel for this advertising.

Meaning Broker. I believe that stories are the building blocks of our thinking. We use stories to interpret the events in our lives and to form our ideas about ourselves and others. These eight corporations plus a few others such as Disney and AOL Time Warner have become meaning brokers in our culture. These corporations hold a near monopoly of our culture's stories and the means to communicate those stories to us. Together they form a culture-producing industry. They broker the ideas that get into books, film, television, music, information services, video games, and newspapers.

In the minds of today's corporate owners of children's book publishing, a book is merely one of several kinds of containers for an idea, no different from a film, a video, a doll, a CD-ROM, a video game, a puzzle, a board game, a T-shirt or a backpack. Books that lend themselves to synergies, vertical integration, and licensing are the books today's major children's book publishers seek. If you think I'm overstating the case, I invite you to read the annual reports of the corporations who own children's publishing: Vivendi Universal; Viacom; The News Corporation; Pearson, Ltd.; Bertelsmann ; Von Holtzbrinck; Reed Elsevier; and Scholastic. You might notice how often these reports contain glowing news over synergies and licensing and how infrequently they mention literary awards and prizes their books win. I urge you to look at the books that occupy most of the slots on the children's best selling lists which can be found at the Publishers Weekly web site. In 1999 all twenty of the twenty top selling hardcover children's books were licensed books. This includes two Harry Potter books, Jan Brett's Gingerbread Boy, and Beverley Cleary's Ramona's World because each of these four books feature characters which have been licensed to toy companies and/or film studios.

Big Media now owns the children's book industry. Their interests in children's books are far different from the stand-alone publishers of years past. Today's children's book publishers are looking for stories that transcend the medium of the book and become a recognizable brand that can be licensed to and integrated across a wide range of products. In turn cultural meaning is now brokered and reading has become an act of consuming.

Daniel D. Hade is an associate professor of children's literature at the Pennsylvania State University. Currently he is working on a book about children's book publishing in the United States.

Volume 6, Issue 1, The Looking Glass, 2002

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