There were not many of his old colleagues left in business when publisher Harold Fenn took his case to Ottawa last year, urging the government to support the embattled sector by upholding its long-standing ban on foreign investment in Canadian publishing – something Heritage Minister James Moore is now openly considering, with a new policy due as early as next month.
Permitting unrestricted foreign investment in book publishing, wholesaling and retailing would have potentially devastating consequences for an “already fragile” industry, declared Mr. Fenn, a widely admired pioneer of the independent industry that flourished after foreign takeovers were banned in the 1970s.
“We believe that Canadian content would diminish within the industry, fewer Canadian authors would be published and Canadians would read fewer Canadian books,” the company said in its submission to the minister.
That plea came too late to save H.B. Fenn & Co., which mothballed its premier imprint, Key Porter Books, soon after. A few months after that, the company entered bankruptcy, its founding family walking away with nothing from what was once a multi-million-dollar business with more than 200 employees.
But the lessons to be drawn from the Fenn drama are not as clear as they might have been in the last century, when independent Canadian publishers were seen as essential stewards of an emerging literary identity and the federal government banned foreign takeovers – requiring at the same time that already established subsidiaries, including such firms as Random House of Canada and Penguin Canada, undertake to deliver formal “benefits” to Canada as a condition of their continued existence. Coupled with direct subsidies to Canadian publishers, those restrictions helped produce a spectacular literary flowering, with dozens of new publishers emerging to compete with the incumbents and more Canadian writers cashing royalty cheques than an earlier generation could have imagined.
Forty years on, however, the independents continue to struggle commercially and disappear regularly. Just as unexpectedly, an extraordinary share of the trade they pioneered – Canadian literature as it is known to us and the world – is now controlled by the handful of multinational companies they struggle to compete against. Although the branch plants represent only 3.75 per cent of firms active in Canada, they generate 44 per cent of industry revenues. Independent Canadianpublishers pride themselves on discovering new talent and marketing risky work, but they can rarely afford to retain the talent they develop – let alone to introduce such writers to international markets.
Even the career of Margaret Atwood – the ultimate nationalist writer, still published by McClelland & Stewart, the ultimate nationalist publisher – proves the trend, with iconic M&S now reduced to a de facto imprint of Random House of Canada, a subsidiary of Bertelsmann AG., which owns 25 per cent of the company but manages it alone – including the profitable business of marketing Ms. Atwood.
With Canadian publishers weakening even as Canadian literature flowers, many observers – along with Canadian publishers of every stripe – are calling for major reforms of the old protectionist policies. Rather than strengthening Canadian publishers, they argue, the foreign ownership ban stifles them, forestalling the capital investment and international partnerships modern publishers need to grow. In that analysis, the best medicine for an ailing sector is a bracing dose of free trade.
The argument against foreign domination of Canadian publishing has clearly weakened in light of contemporary reality, with so many of the recognizable names in Canadian literature firmly and contentedly ensconced in branch-plant stables.
No serious policy maker today argues against the need to support a national literature – or the effectiveness of the $20-million worth of annual direct subsidies to Canadian-owned publishers. Butprotection carries its own cost, one that has opened new divisions in the nationalist camp. In the same forum where publishers such as Fenn and fiercely independent House of Anansi Press argued passionately for cultural protection, Lionel Koffler of equally independent Firefly Books registered a thoughtful plea for foreign investment.
After 35 years as an independent Canadian publisher, Mr. Koffler said in an interview, he has learned the simple truth that bigger is better. Ready access to capital and “vast productive backlists” – books that keep selling long after their initial publication – keep the multinational conglomerates profitable in virtually every market they enter, he notes. But independent Canadian publishers confined to a small market will always struggle.
“Size matters,” Mr. Koffler said. “But it’s never been easy to capitalize a book publishing business in a country where the people with capital mistrust publishing.” And almost impossible as long as investment by potentially savvier foreigners is banned. Without it, according to many observers, Canadian publishers are fated to the role of marginally profitable farm teams.
Mr. Koffler’s contrary view led to his quiet resignation from the nationalist Association of Canadian Publishers this year. But it accords neatly with opinions long expressed by Firefly’s foreign-based competitors, who have backed them up with impressive histories of publishing top-quality Canadian books.
Once thought to be interested solely in distributing imported books, the branch plants first turned to domestic publishing only to satisfy undertakings made to the federal government under the Investment Canada Act. Since then, they have more than satisfied expectations: Despite the fact that none qualify for federal subsidy, the multinationals not only dominate the English-language market in Canada today, especially for fiction, they alone have made Canadian literature consistently profitable – at home and abroad.
Publishing CanLit is not only profitable in itself, according to Random House of Canada president Brad Martin, it also helps the company sell imported titles by rounding out its offerings to booksellers. He has no doubt Canadian publishers would become more competitive if they were able to partner with cash-rich U.S. or European giants. Key Porter, he says, might still be publishing had foreign investors been permitted to buy it. “We’d probably have taken a close look,” he said.
Still, others are perfectly content with a status quo that encourages impressive output from a wide variety of small publishers, especially in regional and more obscure literary markets, without much regard for commercial pressures.
This unique Canadian mix proved its value this fall, the same season that saw Key Porter disappear, when small-is-beautiful Gaspereau Press of Kentville, N.S., won a Giller Prize for The Sentimentalists by Johanna Skibsrud, then adroitly exploited its surprise success by contracting with Vancouver-based Douglas & McIntyre – one of the last remaining independents of any size – to rush out a mass-market edition that quickly became a national bestseller.
Pulling even one of the strands of the delicate cat’s cradle of regulations supporting that status quo risks ruining it, many Canadian publishers say. Despite the multinationals’ traditional good citizenship, Anansi head Sarah MacLachlan says she distrusts assurances that they will continue to support distinctive Canadian voices if takeovers are permitted “Historically, that has not been the way it works when a bigger fish swallows up a smaller fish,” she noted.
But smaller fish need food, too. Without it, they will always remain trapped at the bottom of the food chain – with ominous shadows circling overhead.
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BOOKS BY THE NUMBERS
- $2.8-billion: Estimated total value of the new and used book market
- $2.1-billion: Estimated total value of the new book market
- 234 million: Estimated total number of books sold
- 12.3: Average number of books bought a year (new and used)
from: Globe and Mail
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