Fast Facts: Canadian publishers in jeopardy

October 7, 2015

A 2015 EKOS Research study found most Canadians see books as having strong social benefits in terms of quality of life, social cohesion and economic strength. If we want to tell our own stories and preserve our own history, government investment in publishing is essential. But over the past 10 years, the federal government has put our culture in jeopardy.

Prior to the 1970s, Canada primarily imported U.S. and British books. Government investment helped create a Canadian publishing industry. In the 1970s, 98 percent of book publishers were located in Toronto and Montreal. By 2009, there were at least 235 publishers in 80 cities. Currently, there are over 300 independent Canadian publishers who produce 10,000+ new titles annually. In Manitoba, local publishers produce up to 120 titles each year, the majority of them authored by Canadian and Manitoba writers.
In addition to enhancing Canadian life, writing and publishing are important to our economy. Nationally, Canadian publishers provide more than 9,000 jobs and generate $2 billion in revenue annually. In Manitoba, locally owned independent publishing is a $4 million industry. Publisher dollars stay in Manitoba at a level higher than in most other industries (76 percent), with 84 percent of that going to wages and salaries.

Canadian writers and publishers face serious challenges. Writers’ incomes decreased by 27 percent between 1998 and 2015; 80 pecent of writers earn writing incomes below the poverty line. Wages in publishing (for editors, designers, publicists) are low compared to other workers in Canada, and life is precarious for many independent publishers.
There are three main challenges for publishers: erosion of copyright protection, frozen funding that has not kept pace with inflation, and ineffective foreign ownership policies. The federal government must see books through the lens of cultural policy, as they historically did, rather than purely capitalist economics.

The Copyright Modernization Act enacted in 2012 will have an impact on independent Canadian publishers, most notably by adding education to the list of “fair dealing” exceptions to copyright law. Educators in the K-12 and post-secondary sectors have broadly interpreted the act’s fair dealing provisions by stopping or drastically reducing payment for copyrighted work.

The financial impact of these interpretations has been significant for copyright holders. Publisher revenues related to copyright decreased by 12 percent between 2010 and 2014. Because this revenue represents 16 percent of earnings, its loss can be the difference between staying in business or not for small and mid-sized Canadian publishers. Their disappearance will lead to more consolidation, less content diversity, higher prices and fewer works by Canadian writers.
Litigation over fair dealing is unnecessarily costly—one of several good reasons to address these concerns before the 2017 mandatory review of the Copyright Modernization Act. An immediate review would help clarify the fair dealing provisions and facilitate negotiations on fair dealing between educational institutions and producers/creators are imperative.

Funding for culture and publishing
Governments in Canada do invest in independent publishing. The federal government does this mainly through the Canada Book Fund (CBF), administered by the Department of Culture and Heritage (DCH), and the Canada Council for the Arts. The CBF provides, eligible publishers are provided operating support and special project grants.

Government investment in publishing has a significant return. For example, the $30 million invested in the Support to Publishers Program helps to generate $413 million in sales. In Manitoba, government investment is returned dollar-for-dollar.

The total CBF budget of $39 million has not changed in over 15 years—an actual budgetary decrease when inflation and costs are taken into account. A very modest part of that money ($100,000 annually), which publishers match dollar-for-dollar, went toward a professional development travel subsidy. But this program will be terminated in 2016. Without this support, Canadian publishers, especially those outside of major cities, will find participating in professional training opportunities virtually impossible, decreasing their capacity.

To achieve cultural goals, funding for Canadian book publishing needs to be stable and to keep up with inflation and industry needs. CBF funding should increase to $48 million and the professional development subsidy must be reinstated.

About 4 percent of publishers in Canada are foreign-owned, but they account for 44 percent of total sales and 67 percent of sales in educational books from Kindergarten to Grade 12. Canadian-owned publishers account for 56 percent of publishing industry revenue, but produce 80 percent of new Canadian-authored books. In Quebec, the ownership landscape is completely different; there are no foreign-owned publishers, and distribution and retailing are dominated by Quebec- or Canadian-owned firms.
In 1992, the federal government revised the rules governing foreign investment in publishing and distribution through changes to the Investment Canada Act. The new rules have two key elements: new firms or acquisitions by foreign firms must be Canadian-controlled, otherwise there must be a “net benefit” to Canada from the sale or new firm. Between 1999 and 2010, 99 percent of all foreign investments in cultural industries were approved; only two of 46 foreign book-publishing applications were declined.
In a 2010 review of the policy, most Canadian publishers advocated at least maintaining ownership restrictions in both publishing and distribution (including retail). Some publishers advocated expanding the Canadian ownership restriction. No policy changes resulted from the review.

Since 2011, there have been numerous exceptions to the policy that have no benefit for Canadian publishing and which eroded capacity of the Canadian-owned sector. For example, McClelland & Stewart was sold to Random House (owned by German publishing behemoth Bertelsmann) with very few conditions. Long-term investment by the Canadian government was lost. M&S staff is now a shadow of its former self, and all sales, marketing and production have been consolidated into Random House. Fewer books are being published by M&S and the backlist of classic Canadian titles is now owned by a non-Canadian corporation.

When the playing field is level, Canadian publishers help us achieve our cultural goals, whereas multinationals use their power to enhance their profit and market share. At a minimum the federal government needs to abide by the ownership conditions that were instrumental in fostering an independent Canadian publishing infrastructure. But it could go further to ensure a vibrant Canadian culture by implementing recommendations from the 2010 foreign investment policy review and expanding the ownership restrictions in publishing.

At every critical juncture, the current government has failed Canadians. Without significant changes, we risk once again becoming a country with no one to preserve our stories and history and nothing but imported books for us to read.