Next weekend marks the beginning of the end for Vancouver's Raincoast Books.
Not the end, mind you, of its existence as a publisher, distributor and wholesaler - or at least, so one hopes. But definitely the beginning of the end of its highly profitable status as the originating Canadian publisher and distributor of each new novel in the Harry Potter series.
This is because the seventh and final instalment in J.K. Rowling's magnum opus, Harry Potter and the Deathly Hallows, goes on sale across Canada next Saturday. Already, in online presales alone, Amazon.ca has proclaimed the upcoming novel "the bestselling book ever" in its five-year history. And by Monday morning, if precedent holds, Raincoast's two principals, veteran publisher Allan McDougall, who co-founded the company in 1979, and Vancouver entrepreneur David Mindell, will wake up knowing that as many as 750,000 hardcover copies of Harry's swan song have already made it into customers' hands via book shops, department stores and Canada Post delivery trucks.
Not bad for a country where 10,000 purchases of a fiction title are often enough to put a book onto bestseller lists.
Printing of Rowling's 608-page novel, in fact, started in late April, with Montreal-based Quebecor World contracting several plants in the United States to use the 100-per-cent postconsumer recycled / ancient-forest-friendly paper the publisher has mandated since its 2003 release of Harry Potter and the Order of the Phoenix. In recent weeks, padlocked trucks have travelled north, ferrying their valuable, plastic-wrapped cargo -- an estimated 1.3 million copies in total -- to secret distribution points.
Next weekend's sale, of course, represents a lot of cash flow which, it is safe to presume, Raincoast will never ever see again from a single book, let alone a book that is part of a series. As Jamie Broadhurst, Raincoast's vice-president of marketing and Potter spokesperson, recently observed, the company's annual revenue B.H. (Before Harry) was between $20-million and $25-million; this year it's expected to be at least triple that.
And afterward? Can a company revered in the industry for its fleet, efficient distribution (Raincoast does fulfilment for more than 45 U.S., British and Canadian imprints), and that is known to the public, if it's known at all, as the publisher of Rowling, celebrity foodie Anthony Bourdain and Griffin & Sabine creator Nick Bantock, find new sources of magic in a post-Hogwarts universe? It's a question with a lot at stake.
Raincoast has been associated with the Potter phenomenon before it was, well, a phenomenon. Initially, the company was simply the Canadian distributor of the British hardcover edition of Rowling's debut, Harry Potter and the Philosopher's Stone, published in June, 1997, by Bloomsbury. Raincoast's first Potter order, for 150 copies, came from Vancouver Kidsbooks in late 1998.
It was only with the second title, Harry Potter and the Chamber of Secrets, issued in 1999, that Raincoast came aboard as publisher, in a joint venture with Bloomsbury.
Nine years into its careful stewardship of what one writer has called "publishing's equivalent of the Alberta oil sands," Raincoast can claim to have sold more than seven million Potters in hardcover and paperback. In fact, according to pollsters Ipsos Reid, 45 per cent of all Canadian households, including 4.5 million adults, have read at least one Potter novel.
For some retailers, Harry's rewards have been elusive
If anyone's been less than enamoured of these impressive numbers, it's retailers - or more precisely, those retailers who make their living almost exclusively from the sale of books. Sure, they entertain the hope that today's Potter fan is tomorrow's voracious reader. They like the traffic, the excitement and the sense of occasion a new Potter generates.
What booksellers don't like is the competitive pricing regime that's distinguished the Potter market in the last four years. Although the suggested list price of The Deathly Hallows in Canada is $45, no one who's preordered the book from, say, Amazon.ca has paid that, nor will anyone wandering into a retail outlet next Saturday afternoon.
With companies as varied as Costco, Real Canadian Superstore, Wal-Mart and Indigo Books & Music long ago piling into Potterville, deep discounting is the norm. While retailers traditionally receive 40 to 44 per cent of the publisher's suggested list price, Steve Budnarchuk, co-owner of Audreys Books in Edmonton, says that "it's now pretty much impossible to make money on a new Potter. It's more a question of, 'Can you avoid losing money?' " Budnarchuk plans to discount the title by 25 per cent - nowhere near Amazon's 50-per-cent chop or the 46 per cent from Indigo, but as a counterweight, he's offering a 20-per-cent discount on all other stock in Audreys next weekend.
The Potter frenzy is such that after what one bookseller calls "the saturation effect of its publication," backlist sales tend to be rather modest. Yes, "there's a little bit of renewed interest for the previously published titles, as the media focuses on the new one," says Budnarchuk, adding that there's also "a bit of a spike at Christmas" and again when a movie adaptation appears - although the benefit of that cinematic boost is compromised by the fact that Potter's publishers, including Scholastic Inc. in the United States, aren't allowed by Warner Bros., producer of the Potter pictures, to revamp the imagery on their covers to tie in with the films.
Of course, if you don't feel like spending the bucks (discounted or otherwise) on the Hallows hardcover, or waiting between nine months and a year for the trade paperback, there's always the public library. But you'll have to be prepared to wait.
Toronto's library system, the largest and busiest in the country, has ordered 571 copies of The Deathly Hallows - 20 more than its Half-Blood Prince inventory and "the most we have ever started with of any book," according to a spokeswoman. The Toronto system started to accept holds in early February . As of July 5, more than 3,000 such holds had been placed on the 571 books - or actually, on a mere 531, since Toronto is putting 40 copies into its "best bets" shelves in 40 branches. These Potters are available strictly on a first-come / first-served basis, and have to be returned after a week. A borrower from the regular stock gets three weeks to read the book. However, depending on how late the reader placed their hold order, it could take as long as four months before he or she finally gets a copy.
Signing up hoped-for hit-makers in Harry's wake
With great success comes great responsibility - and a whole lot of trepidation.
Take the case of Bloomsbury. Before it agreed to take on the first Potter in 1996 -- legend has it that 12 other publishers had passed on the manuscript - and to pay its 31-year-old author a $6,000 advance, it was a medium-sized company, just 10 years old and noted primarily for its roster of adult fictioneers, including Margaret Atwood, Michael Ondaatje and Nadine Gordimer. Pre-Potter - it went public in 1994 - Bloomsbury's annual revenues floated in the range of $18-million to $20-million. In 2005 (the year of Harry Potter and the Half-Blood Prince) it reported a profit of more than $40-million.
The next year, however, with no new Potter in hand, Bloomsbury found its pretax profit dropping by more than 60 per cent, to about $12-million on total revenues of around $165-million (itself a drop of almost 30 per cent), with a concomitant loss in share value of 20 per cent in the final quarter of 2006.
Now, with the end of the Potter gold rush drawing nigh, the company has been busily signing up hoped-for hit-makers (most notably novelist Khaled Hosseini, whose follow-up to The Kite Runner, A Thousand Splendid Suns, it released this spring). As well, it has been deepening its involvement in various digital media, which it first undertook in 1999 via its partnership with Microsoft in the Encarta World English Dictionary.
Raincoast Books' profit picture isn't known; it's not publicly traded. Nevertheless, Roy MacSkimming, industry analyst and author of The Perilous Trade: Publishing Canada's Writers, figures that Raincoast president, publisher and CEO McDougall "must be looking closely at the Bloomsbury experience, all of which may help to explain the pragmatic caution Raincoast has shown in so far not expanding enormously on the publishing side using the Potter profits."
Indeed, having been in the business for more than 35 years, "McDougall knows how very quickly things can turn bad for you in publishing," MacSkimming observes. "He told somebody at CBC a few months ago, 'I want to be one of the survivors,' so it's almost as if he realizes there could be much leaner days ahead."
As the Potter boom unfolded, Raincoast did expand editorially, buying the Polestar and Press Gang imprints in 2000, while moving more into children's literature (earlier this year it hired Tonya Martin, a New Yorker from Rowling's U.S. publisher, Scholastic, as children's books editor).
It had earlier brought in Joy Gugeler, managing editor for Vancouver's Beach Holme Publishing, to supervise a new Canadian adult-fiction program. But that program was folded last year, and while Raincoast's staff of 130 is almost double what it was a decade ago, the growth has been on the distribution, sales and marketing side. "I'd have to say their editorial planning has been a little haphazard," says MacSkimming. "It's been a little bit this, a little bit that. They've struggled."
At the same time, MacSkimming notes that Raincoast "has had to pour enormous mental and financial resources into the Potter phenomenon." Another company might have buckled under the strain of keeping Rowling, her agent and Bloomsbury happy, not to mention Canadian booksellers, readers, and the other publishers for whom it warehouses and distributes. Now though, with the expected waning of Pottermania, Raincoast has the opportunity to exhale, calmly survey the scene, and determine what role it should play. "What I'd like to see, I guess," MacSkimming says, "is that they engage an editor / publisher with vision, and invest some trust in him or her for the Raincoast list."
While Raincoast's Broadhurst acknowledges his company has gone through "a period of retrenchment [editorially]in the last two years," including editorial layoffs, he contends that it is determined to be more than simply a superb distribution machine and, in fact, has embarked on "a rather ambitious acquisitions program." Upcoming releases by Canadian writers include Joshua Knelman's Hot Art: True Crimes of Love, Obsession and Theft and Karen Van Kampen's The Big Sleep: What Dreams Reveal About Who We Are, as well as the English translation of the French bestseller How to Talk About Books That You Haven't Read by Pierre Bayard.
In the meantime, though, there's Harry Potter and the Deathly Hallows to bring safely and secretly into port. Amazingly, no one at Raincoast will know the contents of the novel until the rest of us do -- that is, early Saturday morning next week. There'll be no grand unveiling over celebratory bottles of champagne at Raincoast's headquarters, either, where, in 2000, four conference rooms were named Gryffindor, Hufflepuff, Ravenclaw and Slytherin, after the houses of Hogwarts.
According to Broadhurst, at least half of Raincoast's local staff has volunteered to help at the Potter parties that have become a prepublication tradition in many bookstores and libraries. "That's where Harry Potter really lives," he says, "with the bookstores and libraries."
Broadhurst himself is thinking he may put in an appearance, fittingly enough, at Vancouver Kidsbooks. It all depends on whether his son, Theo, is "in the mood." Broadhurst hopes he is. But since Theo is only six weeks old, he's still got a few years to go before getting hooked on the many and varied pleasures of Pottermania.