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Illustration by Photo illustration by The Globe and Mail. Sources:iStock

Not long ago, Dan Wells set up a table inside his bookshop in Windsor, Ont., piled it with tomes from Canadian-owned publishers, and put up a few signs: “Read Independently.” When not manning the store or running his own publishing house, both under the name Biblioasis, Wells had been parsing sales data to learn more about the health of his industry. “I knew it was bad,” he says. “I had no idea it was this impoverished.”

In 2021, independent publishers in Canada accounted for 5.3 per cent of English-language physical book sales, according to BookNet Canada, a non-profit. This is despite the fact that these publishers, buoyed by government funding, put out most new Canadian books every year, between 75 per cent and 80 per cent. It’s a bizarre situation, where titles are effectively lost in a void, outsold by books from foreign-owned multinationals such as Penguin Random House (PRH), HarperCollins and Simon & Schuster (S&S), which also distribute large numbers of imported works. (In the case of PRH Canada, locally published books make up between a quarter and a third of its business; another 20 per cent comes from distributing books from independent publishers, while the largest chunk is derived from selling PRH titles from the U.S. and U.K.)

So Wells cooked up his little experiment. Usually, books from domestic publishers make up 8 per cent of sales at Biblioasis. A month later, in May, the figure jumped to 18 per cent. “We more than doubled it just by making them more visible,” he says. Sure, it’s only one month of data from one bookstore in one mid-sized city. But that market share figure that so alarmed him is a sign that something is broken with how this country supports book publishing.

Many years of consolidation have left the multinationals with wide influence over the Canadian publishing sector. Each one is owned by a larger conglomerate: Bertelsmann owns PRH, News Corp. owns HarperCollins and Paramount Global owns S&S. Though the latter firm only launched its Canadian publishing division in 2013, it’s built an impressive list of big-name authors in that time.

The market could become even more concentrated. PRH struck a deal in November, 2020, to purchase S&S for US$2.18-billion. The move sparked outcry in the literary world with fears the purchase would create a global megapublisher dwarfing its rivals. The U.S. Department of Justice sued to stop the transaction, arguing it would reduce competition and cause “substantial harm” to authors. PRH has rejected the notion, saying the transaction will make the U.S. market more competitive, in part by allowing the combined firm to make better offers to more authors, spurring other publishers to fight even harder.

The lengthy trial began earlier this month. Should PRH win its case, the deal could combine the two firms in Canada, unless authorities here attempt to block it. (Neither the Department of Canadian Heritage, which oversees the publishing industry, nor the Competition Bureau will comment on the transaction.) If completed, the newly combined publisher would account for more than 40 per cent of the English-language market, according to an estimate from the Association of Canadian Publishers, and critics say it would exacerbate problems festering here for years.

“It would just be devastating for the Canadian market,” says Carly Watters, a senior vice-president and agent with P.S. Literary Agency. Authors will have one less publisher to compete for their work, which could put pressure on advances. Smaller publishers will have an even harder time breaking through. And a handful of employees at PRH could end up with more influence over which books Canadians are likely to discover.

While the pending deal has stoked unease, there’s also a sense of resignation in some quarters. Big companies getting bigger? That’s capitalism, baby. But the irony is there are federal policies to ensure a strong Canadian-owned publishing sector and regulate foreign investment. Consolidation, permitted by successive federal governments, has undermined those goals. “Heritage has been, for decades, proclaiming concerns about the Canadian-ness of the Canadian publishing industry without really doing much to prevent the big guys from taking it over,” says Kenneth Whyte, founder and president of Sutherland House in Toronto. The question is whether it’s too late to do anything about it.

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Canada’s level of support to the book industry is somewhat unusual. Policy makers recognized a few decades ago that because Canada is a small place widely open to imported books from the U.S. and U.K., the domestic publishing sector required investment to survive. The federal government established the Canada Council for the Arts, which provides grants for Canadian-authored books from domestic publishers, and also created the Canada Book Fund, a crucial source of operating capital. An evolving set of federal policies has also attempted to regulate foreign investment. The latest iteration requires such deals to be “compatible with national cultural policies” and provide a “net benefit” to Canada and the wider sector.

But publishing is a tough business. Over the following few decades, some companies went broke while others were bought out. Control amassed with deep-pocketed multinationals. “We lost a lot of our large and mid-sized publishers,” says Wells at Biblioasis. “There’s almost no large independent Canadian publishing houses left.” (There are exceptions, such as House of Anansi Press.)

Despite the policies to preserve Canadian ownership, numerous federal governments didn’t bother to effectively enforce them. A few years ago, Roy MacSkimming, who authored a book on the history of the sector, prepared a report for the Association of Canadian Publishers (ACP) that reviewed foreign investment. MacSkimming concluded that out of 13 transactions between 1992 and 2017, government rulings in 10 cases “strengthened primarily or exclusively the interests of the foreign investors” and “accomplished little or nothing for Canada or the Canadian-controlled sector, sometimes doing the sector demonstrable harm.”

Penguin Random House itself is the product of a merger that closed in 2013, and just how much influence it wields is a matter of contention. As for pure market share, estimates provided by the ACP are “inflated and inaccurate,” according to Jared Bland, the Canadian division’s vice-president of communications. The best source of data comes from BookNet, but even those figures provide an incomplete picture since e-books, audiobooks and some physical books sold online are not captured.

In 2021, BookNet pegged the company’s market share at 27 per cent. PRH’s internal estimate is lower than that, at 21 per cent, because it does not include sales of books from independent publishers that it distributes. Moreover, PRH’s market share is shrinking, Bland pointed out. In 2014, for example, it stood at 32 per cent. “The Canadian market, as even this incomplete BookNet trajectory shows, is incredibly competitive, and as a result we have lost significant market share,” he wrote in an e-mail. (It’s not clear who’s taking share from PRH, however, as BookNet does not disclose company-level data without permission.)

Bland attributed PRH’s loss to the ease of selling books online, the rise of self-publishing and other platforms, and the strength of traditional rivals. Together, he wrote, these trends have “altered the dynamics of the broader marketplace in a way that increases competition, and shows that narratives around market dominance offered by the Association of Canadian Publishers and others in various opinion pieces are unfounded.”

One can debate what constitutes market dominance, but it’s true acquiring S&S would increase the company’s size in Canada. Those opposed to the deal argue it would weaken competition because authors and agents would have one fewer publisher to solicit. Today, PRH maintains 20 imprints in Canada, including some that were once independent companies, such as McClelland & Stewart. The divisions, Bland wrote, “are permitted and encouraged to compete with each other in acquiring authors and agents.” Offers from imprints will share certain elements, such as the base advance amount, but differ in other ways, like marketing spend and bonus advance payments.

PRH, he wrote, disagrees with the notion that acquiring S&S will harm competition. “Our own success since the merger of Penguin and Random House has shown that stable ownership and meaningful investment fosters more choice for Canadian authors,” Bland said.

But according to some agents, imprints don’t compete in the same way as independent firms. At times, there might be rules dictating that imprints can bid against one another so long as there is another party at the table. Agents can submit manuscripts to multiple editors at different imprints, but will typically receive an offer on behalf of the whole firm. With few other players, especially compared with the U.S., agents have less leverage in negotiations. “The opportunity to drive up the perceived market value of a book isn’t really there,” says Watters, the agent.

During the pandemic, the multinationals seemed more hesitant than usual to take on new authors, says Denise Bukowski, who has run her own literary agency since 1986. One of the debut novels she sold is Probably Ruby, by Saskatoon-based writer Lisa Bird-Wilson, in part because Bukowski nabbed a quote from another author raving about it. “You have to have something special like that to make them lift out a totally unknown writer,” she says.

She could have submitted to one of the country’s many independent publishers, but there are some she would be “ashamed” to solicit. Their sales, marketing and promotional abilities do not compare to a multinational, in her view. “I tell authors that if they want to go there, fine. But don’t be disappointed if the book tanks,” Bukowski says. The only exception is if an author gets nominated for a literary award. Without that, “Your book is going to disappear, and only your mother will know about it.”

Of the 245 domestic publishers that received funding from the Canada Book Fund in recent years, more than half employed five or fewer employees and earned less than $1-million in revenue, according to a 2019 analysis from the Heritage Department. Without support from the book fund – some $220.6-million between 2012-13 and 2017-18 – many would be underwater. ”We would certainly be in a negative profit position,” Wells says of Biblioasis.

That puts independents at a disadvantage from the start. First, they often can’t pay a comparable advance to a multinational. “It would be irresponsible for us to even try,” says Brian Lam, publisher of Arsenal Pulp Press in Vancouver. If a publisher shells out a large advance and a book bombs, it’s going to take a loss.

If a book does become a hit, a multinational can lure the author away with a large advance for the next title. Lam likens independents to a “farm team” for the Canadian publishing industry – they scout talent and take the risk, only to lose authors to the big leagues. “It’s understandable, but disappointing,” he says.

At Arsenal, he impresses upon writers the advantages of signing to an independent, mainly that it will stick with a book for years in the market, rather than dropping it and moving on to the next. (Bland said that since 2020, PRH has acquired 439 projects from Canadian writers, and 177 of those were from debut authors and illustrators. “We seek always to discover and nurture new talent,” he wrote.)

Illustration by The Globe and Mail, Sources: iStock

In the experience of David Caron, co-publisher of ECW Press in Toronto, advances are not the main reason that authors sign with multinationals. It’s everything a multinational can do after that. Not only do they have more resources for marketing and promotion, they also have internal sales forces to develop deep relationships with booksellers. Sales reps are constantly in touch, keeping retailers appraised of coming titles, explaining why they should be stocked, who they appeal to and offering advice on how many copies to buy. “We will have an author who’ll say, ‘I just signed my next book with PRH because, frankly, their sales rep is in my local bookstore all the time,’” Caron says. ECW, meanwhile, doesn’t even employ its own sales team and has to outsource. “We’re lucky to have a monthly call with a sales rep.”

Ample sales and marketing resources don’t guarantee a hit, though. During the trial over the purchase of S&S earlier this month, the publisher’s CEO was downright humble about the firm’s ability to engineer blockbusters. “The idea that any publisher can make a book a bestseller is false,” said Jonathan Karp.

Still, any bestseller list shows that scale wins. Recently, BookNet published a list of the bestselling books in Canada since it started tracking data in 2005. On the fiction list, not one was published by a domestic company. Only one was even Canadian – The Book of Negroes by Lawrence Hill, published by HarperCollins. There were zero Canadian titles on the non-fiction list. The picture is much the same in the past five years. Of the top 15 fiction and non-fiction titles, five were written by Canadian authors; excluding the Robert Munsch book and a self-published cookbook, the remaining three were all from foreign-owned firms.

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Such lists underscore a related problem: Canadians aren’t reading Canadian books. In 2018, a few independent publishers put out a report called More Canada, which spelled out the decline. In 2005, Canadian-authored titles made up 27 per cent of purchases. By 2017, Canadian titles accounted for only 13 per cent. Data from the Heritage Department show a similar drop. Between 2012-13 and 2019-20, domestic sales of English-language books fell by just over 14 per cent. The More Canada report identifies a litany of causes: the flood of imports, digital disruption, the dominance of Amazon and the related challenges facing brick-and-mortar bookstores.

It’s hardly a calamity for multinationals, since profit margins on imported titles are fatter than original works. “Their bottom lines are better off the more foreign books they sell,” says James Lorimer, who contributed to the More Canada report and runs two publishers.

PRH, though, says it’s defying the trend. Bland, the company’s vice-president of communications, wrote sales of Canadian-authored books have been “remarkably stable” in the past five years, and had double-digit growth in 2021.

Lorimer believes the More Canada report caught the attention of bureaucrats. The most recent review of the Canada Book Fund sounds like an echo of the report in some ways, noting the program has efficiently doled out cash, but that domestic publishers struggle to get their titles noticed. The top recommendation is to focus more on assisting with marketing and promotion, where many small publishers lack resources and expertise. “That’s very significant because it has the effect of putting the federal bureaucracy concerned about cultural policy on the same page we’re on,” Lorimer says, “which is to say, we’ve got a problem.”

The department is less willing to say so outside the confines of a little-read program evaluation. Heritage Minister Pablo Rodriguez was not available for an interview, and in written responses, Heritage highlighted its successes. Since the book fund was created, the department said, there are more than four times as many books published by Canadian firms, with publishers now located in more than 80 cities in all 10 provinces. The problem, though, is not how many publishers there are or where they’re located, but the lack of domestic firms with significant scale. Similarly, the department responded to a question about the decline in domestic sales of Canadian-authored books by pointing out exports have risen by 19 per cent in the past few years.

Behind the scenes, the department hasn’t been idle. During the pandemic, it introduced a few measures to help domestic publishers and booksellers, with a particular focus on promoting Canadian titles. All told, the government put up around $53-million between 2020 and 2024 for the industry. The largest portion, $32.1-million over two years, will go to retailers to increase online sales of Canadian-authored books. Those that receive more than $250,000 have to spend at least a quarter of the funding to promote Canadian titles for online sale.

Indigo Books & Music, the country’s largest bookstore chain, says it has increased efforts to promote Canadian authors, too, such as a program giving more prominence to books from local authors online and in-store. “We have seen Canadian-authored book sales grow throughout the past two years and in the last three months alone we’ve seen double-digit growth,” said Rania Husseini, Indigo’s senior vice-president for print, in an e-mail.

Still, the annual budget for the Canada Book Fund has remained at $38.4-million since 2001, despite the lobbying efforts of the Association of Canadian Publishers. The federal Liberal Party committed to boosting funding by 50 per cent in its 2021 election platform, but hasn’t yet done so.

There are plenty of other ideas to strengthen independent publishers, and by extension, boost readership of Canadian titles. Kate Edwards, executive director of the ACP, says there are parallels between publishing and the Liberals’ attempts to govern tech platforms, such as a bill that would give the Canadian Radio-television and Telecommunications Commission the power to require online streaming companies to make financial contributions to support Canadian programming. “It’s this recognition that foreign companies are present and active, and should be contributing not just to Canadian content production, but something more to support the domestic companies,” she says.

The More Canada report, meanwhile, listed 68 proposals. There’s a bureaucratic approach to some ideas that are bound to be controversial, such as advocating provincial governments develop a system to accredit bookstores that agree to stock and display a designated number of Canadian books for a specified amount of time. Schools, libraries and the like are required to spend at these accredited shops. (Quebec already has such a program.)

Just as fraught are criticisms of the Canada Council for the Arts, which, among other programs, awards grants to domestic publishers of “literary books.” Like the Canada Book Fund, it has been a crucial funding mechanism. But some who spoke to The Globe and Mail contend the funds discourage publishers from growing and having ambition beyond securing grants, the very administration of which eats up resources. “Subsidies are a two-edged sword, because they can engender mediocrity,” says Patrick Crean, a long-time editor who recently retired from HarperCollins Canada.

The point here is not to advocate for particular solutions. Even the notion of government efforts to promote Canadian culture is a bit cringey for some. “I can imagine some committee being put together and somebody being tasked with helping to market Canadian books because they’re Canadian,” says Martha Sharpe, who runs a bookstore and a small press under the banner of Flying Books in Toronto. “It has to be about stimulating the discussion of these books because they’re interesting books.”

But there is a need to study what’s working and what’s not. The last time the Heritage Department embarked on an industry review was in 2010, and no changes were made afterward. Edwards at the ACP says government policy for the publishing industry hasn’t been meaningfully updated since 1992 – before the internet became widespread, before Amazon upended retail and before yet another big acquisition.

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Does any of this matter to anyone who doesn’t own a printing press? Only the more astute reader would pay attention to the name of the publisher printed on the spine of their favourite books. And it’s a golden age for book lovers, with infinite choice and convenience.

Among the most common concerns raised about consolidation is that it dilutes the literary ecosystem, with risk-averse publishers flogging commercial blockbusters to the detriment of everything else. “It makes for a boring world,” says Norm Nehmetallah, who heads Invisible Publishing in Toronto.

It’s a subjective judgement that’s hard to measure. Nehmetallah, who used to work as a sales manager for PRH Canada, also says multinationals are veering into editorial territory occupied by independent publishers. “Quirkier stuff, or more literary and inventive stuff, has real sales potential,” he says. “Within those large corporations, there are lots of great readers and very literary people, and they will pick up those books because they have a sincere interest in them.” If multinationals publish a more diverse array of books for a wider audience, that could very well benefit readers.

The best reason to care might just be the same one that has long underlined cultural policy: that Canadian culture and stories are too important to be defined and controlled by those outside of the country. “You have foreign-owned companies that view us more as a book-buying market than a literary environment that needs nurturing,” Whyte at Sutherland House says.

No matter how dedicated a local office of a multinational is to Canadian culture, it still represents a tiny outpost of a global publisher, which is itself part of an even bigger conglomerate. Bertelsmann, which owns Penguin Random House, is a massive German firm that also owns a broadcaster, a record label, a magazine publisher, an e-learning provider and a venture capital fund. What happens, Whyte asks, when the head office hits trouble? “You’re not going to cut first in Germany, you’re not going to cut first in London, you’re not going to cut first in New York. You’re going to cut marginal editorial operations that deliver minimally to the bottom line,” he says.

For now, the fate of the PRH and S&S deal may be decided in a U.S. courtroom. Should the publishers prevail, Canadian authorities may opt to review the transaction. At the very least, that would provide an opportunity to examine some thorny questions that have only grown more pressing – who benefits from consolidation, what gets lost, and, even though we have policies spelling out the importance of ownership in Canadian cultural sectors, how much do we really mean it?

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