Rowland Lorimer
Canadian Centre for Studies in
Publishing
CANADA
The state of the industry and recent policy
---------------------------------
Book, Magazine and Scholarly Journal Publishing in English-Canada:
The state of the industry and recent policy
Rowland Lorimer
Canadian Centre for Studies in Publishing
Abstract: Participation of Canadian-owned publishers in each of book, magazine, and
scholarly journal publishing in Canada is limited. Such publishers play an important
cultural role in ensuring a flow of ideas among Canadians. Recent changes in policy,
industry functioning and technology have threatened the already limited functioning of
each of these industries. Initially, these changes appeared to or in fact did weaken each
sector. However, in each sector, new national projects are emerging that show some
promise in building strength in Canadian-owned companies. From a cultural standpoint,
such strength is important in maintaining a distinctive reality for Canada separate from
that of the US.
Books
The book market in Canada is worth approximately $4 billion per year at the retail level.
Given Canada’s current population of 30 million, this means that total consumption of all
books amounts to $133 per year per capita. This does not mean that each person spends
that amount of money. Rather, when all personal and institutional buying is combined,
the amount spent is $133 per capita. The market share of Canadian publishers publishing
original titles, the vast majority of which are written by Canadians, is estimated to be in
the neighbourhood of 28 percent (Statistic Canada, Table 9, 1998). While a high
percentage of such titles are written by Canadian authors, foreign-owned publishers are
also active in the publication of Canadian authors. As of 1998, Statistics Canada reported
that trade books by Canadian authors accounted for 80 percent of sales, 68 percent of
which are titles originated in Canada and 12 percent of which are imported titles written
by Canadian authors (Statistic Canada, Table 19a, 1998).1 These figures, while relatively
small, are partly a function of the way in which book publishing is carried out in Canada.
Quite often, Canadian publishers purchase books rather than rights. They develop an
exclusive agency relationship with foreign publishers and purchase books at a deep
discount—up to 70 percent—from foreign publishers to distribute in the Canadian
market. Were they to purchase rights instead and publish a title for the Canadian market,
1
A recent review of data provided to and reported by Statistics Canada actually brings this figure into
question. In interviews I carried out of the persons responsible for providing data to Statistics Canada, I
found that several large firms both foreign-owned and Canadian-owned made rough determinations of the
citizenship of their authors. In addition, again, in some significant cases, sales of Canadian authors was
estimated by multiplying the percentage of Canadian authors by the total sales. This, of course, is nonsense.
the title would show up as Canadian-published title. Exclusive distributions, otherwise
known as agency activity, accounted for 56 percent of book sales in 1998.
Notwithstanding this relatively small percentage share of the market, Canadian book
publishing has been something of a cultural success in the English-speaking world in
bringing forward Canadian writing to the world. Canadian authors have audiences world
wide. Over the past decade, Canadian authors have been nominated and won such prizes
as the Booker Prize, the Prix Goncourt, the Pulitzer prize for literature. With regularity,
Canadian authors are translated into other languages, especially in northern Europe.
International stardom is not the only measure of success. Over the period of 1973-1995
annual title production expanded from 6,000 to 16,200 titles. The number of Canadian
literary titles in English published in Canada climbed steadily. In 1973, 564 Canadian
literature titles were published. By 1980 that number had climbed to over 1038.
Production dipped in the 5 years following and reached their lowest point in 1985 at just
under 855. From 1985 forward the annual count increased until 1995 when the total
reached 1398 Canadian literature titles, drama, poetry, short stories and novels included,
with novels accounting for a great percentage of the increase. In other subject areas such
as Canadian history, the climb from 1973 to 1995 was 192 titles to 408 titles—double the
output. (See Duxbury, 2000, pps 497 and 505.)
One can also look to Canadian media to gain a sense of the vibrancy of Canadian writing
culture. Regularly, book reviews are to be found in virtually every major daily newspaper
along with fiction and non-fiction bestsellers where, commonly, half the list is made up
of Canadian titles. Canadian radio programs use Canadian authors regularly as interview
subjects and several different television shows featuring authors and writing can also be
found on television schedules. (Lorimer, 1995)
The development of Canadian writing and publishing has not been happenstance. The
book publishing industry in Canada was re-founded after 1968 by the baby boom
generation. Anxious to see Canadian voices in print, these new, young publishers
demanded the attention of governments, federal and provincial. Inside government,
newly minted civil servants of the same generation, assisted by more seasoned,
nationalistically-oriented bureaucrats, recommended the creation of support programs to
their political masters and their political masters acted. Throughout the 1970s such
programs were put in place at both the federal level and the provincial level. In the 1980s,
there was some faltering when government realized that subsidies to the book publishing
industry were becoming a permanent feature of the cultural environment. However, in the
1990s support programs were reaffirmed as necessary to the cultural fabric of the
country.
The core support for book publishing comes in two forms—cultural and industrial.
Cultural support is provided by the Canada Council for the Arts. Grants are given to
compensate publishers for taking risks in publishing unproven authors and literary genres
which do not normally produce a profit. The grants were originally awarded title by title
to cover each book’s deficit but soon they evolved into what was termed block grants.
This latter category is designed to provide publishers with an overall sum based on total
title output from the previous year and a projection of titles for the forthcoming year.
Each genre is assessed and an amount granted depending on the average deficit by the
industry for titles in that genre. The explicit rules of this granting program, the absence of
interference with choice of titles and authors, and the regularity of these grants, year in
and year out, allows literary publishers to establish themselves and have some assurance
that they will not go broke in bringing forward new titles and new authors.
Industrial support is provided directly by the government ministry with responsibility for
the cultural industries, that is to say, broadcasting, magazine and book publishing, sound
recording, and film and video. In the early years, it is was the Secretary of State. Then
came the Department of Communications. Currently it is the Department of Canadian
Heritage. The intent of industrial support is to provide funds directed at the business
operations of publishers. Rather than bail out publishers for publishing books that would
normally not turn a profit, the industrial support is provided to augment profits, to cope
with high interest rates, to provide working capital, to set up distribution organizations
and improve retail availability, to assist publishers who wish to improve their marketing
and management, and so forth. Funds are also provided for training and professional
development. In overview, while the structure of funding seems forever in flux, as if both
government and publishers are looking for the magic bullet that is going to make
Canadian book publishing profitable, the industrial programs are richer than are the
cultural programs of the Canada Council.
The net result of these programs has been the survival of the Canadian book publishing
industry, its obvious cultural success, and its continued existence as a subsidized, luckyto-break-even industry. In part, the industry remains this way because there are no
effective barriers to the entry of new firms. Anyone can become a publisher if he or she
has a manuscript, can edit that manuscript and lay it out by means of a computer on
pages, put together a cover design, and pay a printer $2,000 to $3,000. Also, the vast
majority of Canada’s small and medium-sized publishers, like other publishers around the
world, are more interested in ideas and writing. Their attitude to profit is: A profit if
possible, but possibly not a profit.
The current status of the book industry is this. In tradebooks, that is, those books sold in
bookstores, by far the largest firm is Random House Canada. Other large, foreign-owned
conglomerates such as Pearson/Penguin and HarperCollins are also active and account
for substantial business. The owner of the main Canadian-owned house, McClelland and
Stewart (M&S), recently donated 75 percent of the value of the firm the firm to the
University of Toronto. The other 25 percent was sold to Random House which has
control over the marketing and distribution of M&S’s titles. What will happen when the
University divests itself of ownership is difficult to predict. A second firm of significant
size, General Publishing, the annual income of which was approximately $40 million,
went into bankruptcy in 2002. Several firms which have annual revenues of $5 to $20
million exist, but they are all owner-operated firms with aging proprietors looking to
retirement.
In legal, reference and technical and educational publishing, the market is dominated by
foreign conglomerates with some participation by smaller Canadian-owned firms. Thanks
to a cabinet directive of 1985, dubbed the Baie-Comeau Agreement, foreign firms have
been forbidden to purchase or set up Canadian book publishing firms, including
publishers, wholesalers, distributors and book stores. This regulation was later
incorporated into the Investment Canada Act and weakened. It is now possible for foreign
firms to be acquired by other foreign firms as long as they can demonstrate a net benefit
to Canada. The 2002 incursion of the online bookseller, Amazon.com, into the Canadian
market through Amazon.ca seemed to violate the principle of new participation by nonCanadian owners. However, because the law says that a book business must exist in
Canada, employ personnel in Canada, and have Canadian assets, it appears that
Amazon.ca does not qualify. Distribution is conducted by Canada Post with back-up by a
Canadian wholesaler. Orders are processed in the US and assets remain in the US.
Moreover, books are sourced in Canada. Educational publishers, although mostly
foreign-owned—the exceptions are Gage and Nelson the latter of which is owned by
International Thomson, which is ultimately owned by the Canadian Thomson family—
are required by certain provincial governments (who have constitutional responsibility for
education) to ensure that there is a suitable level of Canadian content and Canadian
authorship in the textbooks.
There are approximately 285 other publishing firms who carry on business activities that
generate more than $50,000 in annual revenue and a further 362 that generate between
$25,000 and $50,000. A good selling university textbook in a well enrolled course such
as economics or psychology could easily generate $25,000 in annual sales. This provides
a sense of the size of a $25,000 firm. It is a part-time, one person operation.
The interesting anomaly in the book publishing industry is a book publisher called
Harlequin, a company now owned Torstar, the owning entity of the daily newspaper, the
Toronto Star. Harlequin publishes in the neighbourhood of 500 romance novels per year
and is the major world-wide publisher of romance in the English-speaking world. This
company would be a wonderful partner for a tele-novela producer.
The net result of this book publishing activity is over $2 billion in sales at the wholesale
level or approximately $4 billion at the retail level. Private, that is to say, nongovernmental publishers, accounted for 5,725 French-language titles and 10,230 English
language titles in 1995, the most recent, reliable figures that are available (Duxbury,
2000). This would include all persons and institutions that engaged in book publishing
from the self publisher of war memoirs to the university publishing business case reports
for use in management classes. As noted, many titles find their way to Canadian bestseller lists and some onto the best-seller lists of the world. In recent years, certain
Canadian titles have made their mark in Hollywood and one movie, The English Patient,
an adaptation of a novel of the same name by Michael Ondaatje, was a serious contender
for a set of Oscars. Perhaps another sign of cultural and economic vibrancy is the
relatively healthy market for manuscripts by established authors, and sometimes for
relatively new authors. Advances of $50,000 for known authors (and other public figures)
are common and, in 20002, one relatively new author attracted a three-book contract for
$100,000.
The greatest vulnerability of book publishing is the structure of the Canadian bookselling
market. As of 2002, it was dominated by a single national bookstore chain that combined
mall-based stores and super- or big box stores. The actions of this chain, Indigo/Chapters,
under its former owner, played a very large and direct part in putting the $40 million
General Publishing and its distribution arm out of business. The greatest weakness of the
industry is that it fails to generate any significant level of profit and is thus not only
vulnerable to vicissitudes in the market but also incapable of generating sufficient
revenues to reinvest in technological change, even when such change would introduce
significant economies. It thus falls to the government to attend to the business
development interests of the industry.
A closing word on government policy and support. In addition to support provided by the
Canada Council and Canadian Heritage, two further support programs bear mention. The
first is support provided by an agency call the Association for the Export of Canadian
Books which also receives funding from Canadian Heritage. This agency essentially
matches spending by Canadian publishers on export development. The program works in
tandem with another administered by the Department of Foreign Affairs and International
Trade. Foreign Affairs has helped create Canadian Studies programs and courses
throughout the world. It has funded conferences, brought foreign scholars to Canada, paid
for Canadian authors to tour various foreign universities, and, in general, created a
demand for Canadian books and Canadian authors in many countries around the world.
The Foreign Affairs program exists more for cultural development and to assist Canada
in making friends and allies around the world. Not incidentally, the program helps many
to distinguish between Canada and the United States. In that sense, the program is
cultural, while the AECB program is industrial.
It should also be noted that the majority of Canadian provinces also provide financial
support to book publishers in their province. Most often assistance is based on cultural
criteria, but in Canada’s largest two provinces, Ontario and Quebec, business support
prevails.
Magazines
Like Canadian books, Canadian-published magazines have only a percentage share of the
market. While no agency provides an estimate of the total size of the market, one look at
most magazine stands indicates that US titles predominate. A wide variety of titles are
published in Canada. Statistics Canada reports that in 1998/99 there were 2027 magazine
titles not counting those that were annual publications. It further reports that total
revenues for the industry in that year—ads, subscriptions, single issues sales, list rental,
donations, membership dues and grants—were $1.268 million. (Statistics Canada, 2002)
The Canadian magazine industry is largely a subscription-based industry. Readers
purchase a subscription for one or more years, pay up front, and receive the issues though
the Canadian postal service, which is amazingly efficient at delivering magazines in a
timely fashion, even though, oppositely, it is very slow in delivering normal letters. Most
Canadian magazines rarely find their way onto newsstands essentially because this
method of distribution is too expensive. Its expense comes from the fact that the title
must be distributed in significant numbers to many locations. All unsold copies are
destroyed after a certain time. Unless the magazine is a true mainstream title, likely to
appeal to the impulse buyer, the cost of product plus delivery and associated commissions
is a losing proposition.
The support for the Canadian magazine industry that has been provided by governments
over the years is cultural, industrial and structural. On the industrial side, postal subsidies
have been in effect since the 1840s to assist Canadians in maintaining contact with other
Canadians.
On the structural side, since 1965, the Canadian magazine industry has grown on the
foundation of two structural policies (in addition to postal subsidies). One is found in
Section 19 of the Income Tax Act. This section of the act allows businesses to deduct
advertising aimed at the Canadian market as a business expense only when the
advertising vehicle is owned and controlled by Canadians. The level of required
Canadian ownership used to be 75 percent. Now it is 51 percent. This rule has made it
necessary for foreign-owned media such as radio stations, television stations, newspapers
and magazines to charge about half the normal advertising rate to compete with their
Canadian competitors. A second mechanism, Customs Tariff 9958, prevented the
importation of magazines in which US-oriented ads had been stripped out and replaced
with Canadian ads, thereby creating what is known as split runs. Split runs publish the
same content but replace the ads. There is also provision in the law that requires all
magazines to have original Canadian content that is not derived from elsewhere: there
can be some but no more than 20 percent of material from other magazines. Tariff 9958
further allowed for magazines to carry a maximum of five percent of ads directed at
Canadians.
These two policies worked well until 1993, when a US-based multinational
conglomerate, Time Warner (now AOL Time Warner), obtained a ruling from Canada
Customs that it could beam its editorial content by satellite to a printing plant in Canada,
sell ads for a “Canadian edition” of its magazine, and technically not be a split run. Time
Warner was still subject to the provisions of Section 19 of the Income Tax Act, but at
least it could re-use its editorial content. The clearly unhappy Canadian magazine
industry demanded an inquiry and got one in the form of the Task Force on the Magazine
Industry, set up in 1993 and chaired by Patrick O’Callahan (Canada, 1994). After
reviewing the industry, the task force recommended that an 80-per-cent excise be placed
on advertising space sold by foreign magazines to advertisers who were directing their
advertising to Canadian audiences. The government looked favourably on this and, illadvisedly, brought forward Bill C–103, to apply the 80-per-cent excise tax on all foreign
publications.
In 1996, the US challenged this legislation, magazine postal subsidies, and Tariff Code
9958’s provision against the importation of split-runs within the World Trade
Organization. The WTO, both initially and after Canada’s appeal, ruled in favour of the
US. Determined to protect Canadian magazines, the Canadian government responded
with alternative measures. In place of postal subsidies, the Department of Canadian
Heritage now provides postal grants to qualifying Canadian-owned and -controlled
magazines. Secondly, in 1998 the government brought forward Bill C–55, which became
the Foreign Publishers Advertising Services Act (passed into law in 1999) and would
allow only Canadian magazines to provide advertising space to those seeking to reach
Canadian consumers.
The reaction of the US to Bill C–55 was immediate. Knowing that they were unlikely to
win if they protested Bill C–55 within WTO, the US lobbied hard and, when that failed,
threatened massive retaliation, far beyond the financial restriction that US magazine firms
would have to live with, in short, a trade war. Though Bill C–55 cleared the House of
Commons in March 1999 and went on to the Senate for consideration, on 26 May, 1999,
Trade Minister Sergio Marchi and Heritage Minister Sheila Copps announced that a
bargain had been struck. The deal was this. US magazines now have the right to create
and sell split runs in Canada. These split runs are allowed to have 18 per cent of the their
ad space devoted to advertising directed solely at Canadians (phased in over three years).
Should US magazine owners want to increase their access to Canadian advertisers, then
they would be required to get permission from the Department of Canadian Heritage, set
up an office in Canada, and increase their Canadian editorial content (supposedly to at
least 50 per cent). In contrast with the past, Canadian advertisers will now be able to
deduct their advertising costs in split-runs of any magazine as business expenses.
Although passed, Bill C–55 was never proclaimed.
What did the Canadian magazine industry get in this deal? Ministers Marchi and Copps
claimed that it represented a victory for Canada: they had achieved recognition from the
US of Canada’s ‘right in trade to protect our culture’. The fact that this is exactly what
the cultural exemption in NAFTA was supposed to do was not mentioned. The ministers
also promised, and in December, 1999, set up the Canada Magazine Fund with an annual
budget of $50-million to assist the Canadian magazine industry with their anticipated
loss of $98 million per year in ad revenue (Canadian Magazine Publishing Industry,
various press releases, 1999).
In addition to these two policies, approximately 100 literary and arts magazines obtain
cultural support for their activities from the Canada Council (see www.canadacouncil.ca).
The rationale for this assistance is much the same as it is for books. Publishers are
provided funds for undertaking activities that support art and literature and normally do
not generate a profit in the market. These magazines provide an entrance for Canadian
writers and other artists to gain some initial publications on their way to writing larger
works. The magazines provide advice and editing. They are enlightening in themselves,
as well as useful as development vehicles for creative artists.
The current state of the industry is this. There are clearly many magazine titles in Canada.
New titles are continuously being founded while others are dropping away. Culturally
speaking, Canadians who seek out Canadian magazines can reasonably expect to find a
small magazine that caters to their interests. The magazine industry has also created a
market for professional freelance writers and other creative contributors such as
illustrators, photographers and cartoonists. These are difficult professions in the sense
that they do not pay handsomely, but a good professional can certainly make a living
wage. In the case of writing, freelancers commonly find themselves doing research,
sometimes paid for by a commissioning magazine, but then spinning the article into a
variety of different forms to sell to a number of different magazines. The major
shortcoming of the market for articles by freelancers is the lack of time to sit back and be
thoughtful, to take an unusual approach; to have the luxury of creating something that
stands out beyond the run of the mill, competent article, generally available in most
magazines. Such articles can be found, from time to time, in US magazines such as the
US-based Harper’s Magazine which has sales of some 20,000 in Canada.
A common strategy in the magazine industry to is to build a core title or title line. Once
that is in place and serving a defined niche market successfully, spin-off products or
brand extensions are created, for example, an annual guide to suppliers of certain
products, a catalogue of goods that might be expected to sell to subscribers, a directory of
people and institutions involved in the core activity around which the magazine is
organized, and so forth.
The vulnerability of the industry is the open market to foreign, mainly US publishers who
may attempt to sell space to Canadian advertisers and. If successful set up Canadian
editions of their magazines. While Canada is not currently being inundated with ad
salespeople attempting to establish markets for foreign magazines, there is no reason to
believe that foreign competition will not increase as the years go by.
There is also a structural weakness in the industry that is little discussed. This weakness
is that many Canadian magazines are now owned by media conglomerates such as
Rogers (that began as a cable television company) or printers such as Quebecor,
Transcontinental and St Joseph’s. While the printers are more aware of the structure and
nuances of magazines, the largest Canadian magazine owner, Rogers, is squandering its
magazine publishing capital. It is clear to this author that Rogers does not have the
intellectual and entrepreneurial energy to grow its magazine division. In the case of
Rogers, and in the case of the many small magazines, there exists an inability or a lack of
will to stay on top of new trends, adapt to evolving markets, and most importantly, take
advantage of new technologies, notably the web.
Scholarly Journals
While it might at first seem that scholarly journal publishing is a rather specialized and
esoteric area of publishing, partially because of developments in technology, it has
emerged as a significant leading edge publishing sector.
In the same way that Canadian publishers have a small percentage of the market for
books and magazines, Canadian journal producers are dwarfed by foreign journals,
especially in science, technology and medicine (STM). This foreign dominance is not
surprising given the international nature of science and scholarship, but it might be
otherwise. The Netherlands, for example, is home to many international journal
publishers, particularly the biggest, Elsevier. The size of the journal market is unknown
and it is mainly an institutional market—university and other research and professional
libraries that provide ready access to users.
Scholarly journals have been in the news for some years, in fact, since the end of World
War II when Robert Maxwell obtained the license to distribute the scientific journals of
the German firm, Springer Verlag, to the English-speaking world. Maxwell taught STM
journal publishers that they could make handsome—some would say usurious—profits in
the journal business. Since the end of the war, STM journal prices have been rising
steadily, continuously outpacing inflation. And no matter how hard the industry argues
back about increased size and careful editing, one look at the income statements from the
annual reports of these companies reveals that an annual profit level of 20 percent is low.
The proclivity of the STM journal publishers to charge high prices for their wares has led
to what librarians call the serials pricing crisis. This crisis is that while science and
scientists are devoted to creation and dissemination of knowledge, based on their position
as monopoly holders of valuable information that can produce mega-profits, for instance
for drug companies, STM journal publishers are more interested in obtaining maximum
return of their investment of resources and energy. This approach works in contradiction
to maximizing information circulation in so far as it has become impossible for all but the
best universities to subscribe to a full list of journals of value to their resident researchers.
Even more dramatically, given the economic disadvantages of developing economies, the
chances of a scholar being able to access all the latest needed science, is very small.
A reason for further concern about this market structure is that, in spite of its
disadvantages, and partly on account of aggressive private sector publishers, it shows
signs of expanding into social science and humanities (SSH) journal publishing. The net
impact would be, increased journal prices and decreased circulation.
In Canada, these trends are counteracted by two publishing policies and their attendant
programs aimed at journal publishing. The first is directed at STM journals. The National
Research Council through its Canada Institute for Scientific and Technical Information
(CISTI) publishes 15 scientific journals which it sells around the world at a price that
most institutions can afford (see http://www.nrc.ca/cgibin/corporate/external.pl?http://www.nrc.ca/cisti/journals/rj.html). The journals are selfsustaining: they are not used as for-profit enterprises or to support other types of
activities.
On the SSH side of journal publishing, for the most part, journals are not-for-profit
operations owned by scholarly associations or entities such as not-for-profit corporations.
In addition, the vast majority of these journals are directly subsidized by Canada’s
government-funded, Social Sciences and Humanities Research Council (SSHRC). The
advantage of this funding is that it keeps prices low in three different ways and allows
both Canadian and foreign individuals and institutions to consider subscribing to the
journals. First is that the money itself contributes directly to the operation income of the
journal. Second, the structure of the assistance, at least until 1999, made it
counterproductive for a journal to increase its revenues beyond a break-even point. Third,
and largely as a consequence of the first two, the structure of the support minimized the
amount of public funds spent on journals by encouraging not-for-profit enterprises,
providing only the level of funding needed by the journal to continue operations, and
sharing the costs with Canadian institutions.
Two final points on Canadian journal publishing should be considered before we move
on. First is that postal subsidies and now postal assistance is available to Canadian
journals on the same basis as Canadian magazines. Second, in so far as the vast majority
of science, technical and medical research is carried on by scientists whose salaries are
paid with public funds; research is most often directly funded by other public funds; and
this research and these researchers undertake their work in public institutions also
supported by the taxpayer, it is a queer state of affairs indeed when public institutions
must purchase back that knowledge at highly inflated prices.
New policy
The summary provided above suggests uncertainty if not vulnerability to gradual
weakening and eventual severe downsizing in book, magazine and journal publishing in
Canada. In book publishing, monopsonies, single buyers in a market, like monopolies are
never good. One hiccup can produce a tsunami. In magazines, the competition from split
runs could severely weaken the Canadian industry. In journals, without action, the
restriction to circulation brought about by high journal prices could spread from STM
journals to SSH journals.
The Canadian government is aware of these vulnerabilities. In response to them the
federal government has put or is putting into place a new set of policies and programs
that are designed to compensate for these structural weaknesses to which the government
itself has contributed to some degree through its free trade policies. In books, the creation
of a massively dominant single national buyer that appears to account for up to 60 to 70
percent of sales of books in some major Canadian cities has created supply hoarding,
abandoning of industry standards for bill payments and return of merchandize,
intolerance of criticism of business practices, and overuse of product for displays without
compensation. In response, using the buyout of the dominant bookseller, Chapters by the
other big box chain, Indigo, and in face of the inability of Indigo/Chapters to sell a set of
stores Canada’s Competition Bureau demanded it try to sell, the Competition Bureau set
up a fairly simple regulatory regime for the company. Indigo/Chapters has agreed on a
certain level of merchandize return that would decrease over the years. Secondly, it
agreed to pay its bills within 110 days and to reduce the delay time to the industry
standard of 90 days.
For its part, the federal government began investigating an industry initiative in the UK
called the supply chain initiative. The basics of this initiative are that a national database
has been created which tells those who have access where all copies of all book titles are
at any given time. This information has given publishers a much better idea of sales and
has allowed for the redistribution of books within the UK system and has obviated the
necessity of reprints. Overall, the system has reduced the level of merchandise return
substantially thereby saving expense, paper, and directly contributing to publishers’
bottom lines. The Canadian government has decided to fund the development of a
parallel initiative in this country to serve the Canadian market but also to integrate
Canadian publishers with the US and UK counterparts.
The spin-off consequence of this initiative has been that the book industry is
modernizing, at least to the extent of creating an accurate electronic bibliographic
database as the foundation of this data-tracking system. With this database in hand, the
book industry is moving forward to implementing what is called the ONIX (Online
Information Exchange) standard for bibliographic records of titles (see www.editeur.org).
This industry standard allows for the creation of a single record of all but the sales
information pertaining to a title. It means that all company members who have access can
examine the single authoritative source on the title and be assured that it is the correct
information. It can send out publicity material from the database, formatted into preexisting templates with title release information that has already been entered. In short,
the initiative has laid the foundation for the evolution of the industry into the digital age.
The most interesting element of this initiative from the point of understanding policy
development, is that it is doubtful that this national initiative would have been
contemplated, or at least acted on with dispatch, without the crisis caused through the
creation of the monopsony buyer that Chapters represented and Indigo/Chapters now is.
The presence of such a large entity that can put a digital database-driven supply chain
information in place and serve as a proving ground for such a concept while at the same
time demonstrating that it is willing to be a fair player in the marketplace has had a
positive consequence in the development of the supply chain initiative rather than a
negative one.
The magazine industry estimated that it could lose as much as $98 million per year if split
runs legislation were to be put into effect. While that was an obvious exaggeration, the
price the federal government was willing to pay to avoid a trade war with the US was $50
million per year in the form of a promised fund to assist publishers to make up for lost
revenue. The initial promise was $50 million. When the fund was created it came in at
$35 million. And while the industry was quick to say that $35 million was insufficient,
the industry and government did not allocated the full amount of the fund in the
beginning years of the Canada Magazine Fund.
It can be argued, and many publishers have done so, that the impact of allowing split runs
will be felt over the long haul as the Canadian and US economies ever more closely
integrate, year after year. While this ticking time bomb theory may prove correct,
meanwhile, a number of positive developments have emerged from this fund. First is the
creation of a national advertising campaign to bring Canadian-owned and published
magazines to the attention of Canadians. These ads have run in magazines and on
television. They depict a prototypical Canadian scene with an absurd element in it. In one
Canadian ad we see a dog sled team in snow in a mountain valley. One slight problem,
the dogs are clipped-to-the-skin poodles who would last all of 5 minutes in Canada’s
north rather than the traditional Huskies. Another ad shows a man in a canoe (a Canadian
icon) in the Canadian wilderness. Above his head is a flock of large birds in the wellknown V formation of Canada geese. Only one problem. The birds are pink flamingos, a
tropical bird that would never be found anywhere in Canada outside a zoo or aviary.
Affixed to each of these ads is what looks like an address label with the message: It’s not
the same if its not Canadian. Get the Genuine Article. Read a Canadian Magazine. The
two words ‘genuine article’ are a play on words where genuine article means the real
thing as well as a Canadian written essay. (Electronic files containing these ads
accompany to this article.) xxx
These ads would be unlikely were it not for the presence of federal funds accessible by
national magazine organizations. Other national initiatives are also being put into place
for magazines. One is the creation of financial benchmarks for literary magazines. In
applying for funds from the Canada Council, literary and arts magazines must submit
their annual financial records to demonstrate their level of sales, show that they are viable
financial enterprises and that they have paid their contributors—the writers and artists
that provide content for their pages. Until two years ago, while the Council saw these
financial figures and the juries were able to see the figures on a magazine-by-magazine
basis, no one had taken the trouble to compile the figures and determine typical
expenditures in the various departments of publishing, editorial, administration,
production, marketing, distribution, etc. Nor were compiled figures available for sales—
single issues sales, subscriptions, advertising, and so on. True they were available on a
national basis from Statistics Canada, but so large were the groups used, so tardy was the
publication of the data, and so diverse the operations of those included that no
benchmarks of spending and revenue could be calculated that were at all meaningful. In
2000, the Canada Council commissioned such a study. Magazines were provided with
their spending in comparison to a small group of like magazines and then in comparison
to a larger group operating in the same genre or language (French or English) (Lorimer
and Osborne, 2000). The response to having such figures available was positive. For the
first time, publishers could compare their financial operations to a meaningful small
group of similar publishers. Thereby they could assess the wisdom of such expenditures.
Perhaps as significant as any initiative is the online journal publishing initiative. For
some time, Canadian social science and humanities journals have been playing with the
idea of going online. Some, such as the Canadian Journal of Communication have done
so and all back issues more than one year to 18 months old are available freely online to
anyone with access to the Internet (www.CJC-Online.ca). For those active in online
publishing, however, it is apparent that there are tremendous economies of scale to be
gained from developing online software for many, rather than just one or a few, journals.
It is also obvious that maintaining a dynamic website as well as keeping relatively up to
date in the use of technology is much more labour intensive than expected. In addition,
while volunteer labour is a wonderful way to make an initial online foray, relying upon
volunteers, year after year, introduces inefficiencies and uncertainty that are incompatible
with a professional publication devoted to publishing original contributions to
knowledge. From a different perspective, it is also apparent that US- and UK-based SSH
journal publishers are selecting strong Canadian journal titles and offering to make their
content available online for a share of the selling price of an aggregate of journals in a
field. It takes little foresight to understand that these activities will eventually integrate
Canadian SSH journals into the general journal environment, fragment Canadian research
and knowledge, and leave the journals with less circulation and appeal without a
significant online presence.
An analysis of this situation brought forward another factor that deserves consideration
(Lorimer, 2002). Many journals struggle financially from year to year and rely upon the
volunteer labour of scholars to perform a variety of duties including manuscript review,
editing, preparation for publication, production management, subscription management,
bookkeeping, management, and so forth. For online operations, many are using
inexpensive servers sitting on someone’s office floor, vulnerable to hacking, power
failure, accidents, and theft. When problems develop, regaining an online presence can
take weeks. In short, extending the volunteer foundation and small-is-beautiful approach
of many journals is inappropriate to online publishing. It was rather like hiring a small
copy shop with photocopy machines to print and bind a journal.
In contrast to these realities are those that pertain to university libraries who provide
online access to journals from around the world. Today, university libraries must
maintain whole server systems for basic library functioning, to provide the research
community with access to the internet, to provide access to electronic databases and
directories to which it subscribes, to undertake interlibrary loans, and so on. As well, for
some time, as providers of a range of information, libraries have been under some
pressure from scholars and would-be journal publishers to assist in making scholarship
available at least to the local, if not to the global academic community.
A proposal was put forward in late May of 2002. Why not, beginning in Canada, have the
scholarly journal and university library community make common cause and become
publishing partners rather than maintaining their traditional separate roles of producer
and consumer? Why not have the libraries provide the infrastructure, the servers and the
guidance to users on how best to use the service and have the journals provide the content
to create a decentralized database of Canadian social science and humanities scholarship
that could be made freely available to all those with a dot-ca address? The advantages
seemed legion.
Such a database would allow a researcher to search on topics over a variety of different
disciplines, for example, Canada’s native people. Researchers could easily access the use
of theoretical concepts both over time and across disciplines. The publications of a single
researcher in various Canadian journals would also be readily available. Economies of
scale would allow for the development of software for a variety of purposes including
easily integrating sound, colour and image into papers. Expanding the number of articles
published would be easier, and a wider range of scholarly communication might be
considered including the archiving of high-level symposia.
A further attraction of the proposal was that when it was circulated, it came to the
attention of a group of librarians who had been planning their own version of the same
initiative spurred by the desire to legitimize newly founded journals that were having
difficulty gaining a presence in the marketplace of ideas. And the pièce de resistance was
that Canada already has in place a well funded agency charged with providing increased
research infrastructure for Canadian scholars. While the initial efforts of the Canada
Research Foundation (CFI) have been toward rebuilding the infrastructure for scientific
research, in its most recent call for proposals, the CFI indicated that it wished to pay
specific attention to proposals focused on the humanities and social sciences. As the
proposal developed, it also became apparent that while there had been a number of highlevel computing projects funded, such projects were in need of critical content to
demonstrate their potential to the research community. What could be more crucial
content than the content of journals?
As this paper is being written this proposal is being developed. Its working title is
SYNERGIES: Canadian Scholarly Publication and Communication Network. Funding
from Canada’s major infrastructure fund would seem highly likely. But in the event that
it does not materialize, there appears to sufficient will in the journal and libraries
communities that the initiative will move forward in one way or another.
American Utopias in Canada
A continual theme running through Canadian history is how Canada can remain separate
and distinctive from the United States. Canada and the US share many attributes,
language, settlement history, British institutions, early European settlers, small
populations of native people. But while the US was founded through a revolutionary war,
Canada evolved to a full national status as a constitutional monarchy. Canada’s motto is
Peace, Order and Good Government, not Life, Liberty and the Pursuit of Happiness—nor
even Progress and Order. An examination of Canada’s governing institutions suggests a
greater hierarchy than exists in the US where the constitution begins, “We, the people…”
An examination of everyday life in Canada suggests a greater tolerance, and indeed a
celebration of difference, as opposed to a higher demand on conformity in the US.
Canada has no military draft. Canada does not declare war against its own citizens intent
on denying them access to recreational drugs. Canada does not attempt to lead a charge to
change conditions in foreign countries for Canada’s benefit. Nor does Canada lead a
charge to replace governments in foreign countries. Canadians understand that there are
different political systems that have developed throughout the world and while we defend
democracy we do not see one form of democracy and one set of institutional
arrangements as ideal. Canada is also not a powerful empire, but is rather a ‘second
power.”
Beginning in 1968, the desire for asserting distinctiveness and knowing ourselves began
to be expressed in the establishment and the strengthening of cultural industries; radio
and television broadcasting, book and magazine publishing, sound recording, film and
video. The Canadian utopia was cultural sovereignty, that is, control from within the
country of our airwaves, our bookstore shelves, our movie screens, our magazine racks.
Canadians did not wish to exclude the outside world. Rather we wanted to ensure that the
outside world did not drown us with a cacaphony of voices that were not our own.
Support programs were created and Canada’s cultural industries grew. Then came a push
for free trade. Together with the consolidation of businesses, for example in the
formation of Chapters and Indigo/Chapters, free trade doctrine counselled the removal of
the dikes that protected Canadian cultural products against the ever swelling waves of
entertainment products produced by the US. Because Canada is a trading nation, and is a
major beneficiary of exports, especially exports to the US, Canada’s policy makers had
difficulty pushing for free trade in general but rejecting free trade in the particular case of
cultural products and services. Somewhat surprisingly, Canada’s then Minister of
Heritage, Sheila Copps, found few nations ready to enthusiastically endorse a regime for
cultural products and services that took as its first principle, the structuring of domestic
markets to ensure ample room for voices from within.
The signing of free trade agreements has led to increased international trade. Some
countries have benefitted. Canada is one. Yet, there has developed a world-wide
objection to international political and economic institutions elected by no one and driven
by economists whose view of human kind is one focused on consuming those goods and
services that cost the least. There has also arisen in Canada the awareness that while the
US may speak of free trade and sign agreements committing itself to free trade, what it
means is free trade if convenient, and no free trade if a strong enough domestic lobby in
Washington exists to lobby against it. What Canadians have realized also is that free
trade also means is multi-million dollars lawsuits against governments in Canada who
attempt, for sound reasons, to exclude from the country, for example, chemical additives
that may do grievous harm to the environment.
In that general context, when US companies managed to circumvent legislation designed
to allow Canadian magazines a share of the market, and the US government attacked
Canadian policies designed to close that loophole, and the US threatened a trade war if
counteractive policies were successfully reframed within the strictures of NAFTA and the
WTO, Canada did not capitulate, but rather negotiated the right to support its cultural
industries. When it became amply clear the potential damage a single national book chain
was doing to Canada’s book publishing industry, Canada did not adopt its usual solution
which would have been to allow US competition. Rather it instituted an elementary
regulatory regime to create order in the marketplace and supplemented it with a national
data processing initiative to increase the efficiency of the industry. At the same time, it
allowed some foreign competition in one sector, online bookselling, by allowing
Amazon.com to set up Canadian operations, Amazon.ca. And in face of the aggressive
privatization of online journal publishing by foreign companies that would increase
prices and decrease knowledge circulation, Canada is moving to establish a public sector,
open source based, social science and humanities database of research that will see
publicly funded knowledge remain in the control of public agencies. Such a database will
clearly work against the exploitation of knowledge for the benefit of the copyright holder
over the interests of society in general. Moreover, the project will set an example of how
developing regions might create and control their own knowledge infrastructure.
International agencies such as Canada’s International Development Research Council
could easily find themselves working with developing regions to assist them in
developing a parallel initiative.
These are uncharacteristically determined defenses of Canadian cultural and knowledge
production by the Canadian government. Canadians are more accustomed to their
government capitulating in the face of US determination to increase its dominance in the
Canadian economy. These actions can be seen as a means by which Canada is
compensating for the competitive advantage the US has in almost all things economic,
the largest, richest home market in the world. By creating national projects, Canada is
helping to integrate its cultural industries so that they are strong enough to compete both
in Canada and in foreign markets. At the same time, these initiatives are addressing the
closing of markets through the use of patents and tightening controls on the use of
intellectual property. Open source software—a good example is internet protocols—is
not owned by anyone. Such software is there for the world to use, freely, and for the
world to improve. Contrast this to the vast and unnecessary accumulation of wealth in the
hands of one lucky man, Bill Gates. Which is more beneficial to society? The embrace of
open source software as the foundation for the online journal initiative makes clear where
Canadians stand.
Conclusion
Canadians are extremely lucky to live in a culture where, in general, governments pursue
the interests of industries, groups, and Canadians in general, not individuals, their firms,
and their holdings. Politics in Canada has a low level of corruption—individual
politicians may attempt to gain benefit for their friends, but the level of corruption that is
tolerated in Canada is best illustrated by the trial of a provincial premier for taking
$13,000 Canadian or about $26,000 Reais in free services. He was forced to resign and
endure three years of investigation leading to a trial. In the end, in what many believe was
a politically untainted verdict, he was found innocent.
With a low level of corruption and an ability to put in place policies that favour an
industry, not individual firms within it, Canadians are able to trust their government in
such sensitive areas as book, magazine, and newspaper publishing, as well as in
broadcasting, film and video and sound recording. Canadians have assumed, and
governments have shown that they are capable of developing policies where political
interference in freedom of expression does not take place. Government commitment to
technological development, to industrial opportunity, and to heterogeneity in terms of a)
size of business, b) location across our large and sparsely populated land and c) content
(and hence ideological) orientation, is providing a foundation for both cultural and
economic development that provides benefit for the whole country and, Canadians
believe, the world as well.
References
Statistics Canada. 2001 Book Publishing Survey, 1998-1999. Cultural Statistics. Ottawa:
Statistics Canada.
Statistics Canada. 2002. Periodical Publishing Survey, 1998-1999. Cultural Statistics.
Ottawa: Statistics Canada.
Duxbury, Nancy. 2000. The Economic, Political, and Social Contexts of Englishlanguage Book Title Production in Canada, 1973-1996. Ph.D. Dissertation, Simon Fraser
University, Vancouver, BC.
Lorimer, Rowland. 1995. The Future of English-language book publishing, in K.
McRoberts (Ed.), Beyond Quebec: Taking Stock of Canada. Montreal: McGill Queens
University Press.
Canadian Magazine Publishers Association. See www.cmpa.ca/
Lorimer, Rowland and Osborne, Stephen. 2000. A Guide to the Year 2000 Canada
Council Benchmarks for Canadian Magazines. Ottawa: Canada Council.
Lorimer, Rowland 2002. Online Journal Publishing: From Here to Sustainability and
Accessibility. Presentation to Annual Meeting, Canadian Association of Learned Journals,
Toronto.
Canada. 1994 A Question of Balance: The Report of the Task Force on the Canadian
Magazine Industry. Ottawa: Ministry of Supply and Services.