As America's biggest trading partner, Canadians live in fear of the old adage: “when America sneezes, the rest of the world gets a cold.” In the last year, when the U.S. recession was much worse than a sneeze, publishers in Canada feared it could be a disastrous year. But they have, for the most part, remained surprisingly robust.
Booknet Canada—a nonprofit Canadian version of Nielsen BookScan, which says that its sales data represents about 75% of Canadian book industry sales—released 2009 first-quarter figures that showed volume was up 6.7% and value was up 5% over the same period in 2008. Second-quarter results are not available yet, but Booknet Canada CEO Noah Genner has offered some reassurance. “Generally, what we are seeing is that the market is doing well as a whole. It's not as up as it was [in the last quarter], but it is still in the positive.” Genner says figures are between 2% and 6%, depending on the category. “I think we were still seeing some Twilight effects, and there were some other YA titles that were definitely bumping up the market a little,” he says.
In better economic times, expectations might have been higher. Publishers in Canada did not get through the economic turbulence entirely unscathed; there have been some cuts and layoffs, but a sense of health is sometimes relative. A cold doesn't seem so bad when your neighbor has the flu. Anecdotal reports from publishing houses in Canada range from cautiously relieved—flat is the new up—to downright pleased.
Key Porter Books publisher Jordan Fenn says he did lay off some staff and expects to be flat this year. That somber view, however, is qualified by his description of growth in the previous year. “We finished last year 27% up over the prior year, so in a company of our size, that's huge growth,” he says. D&M Publishers were also down from last year, says Rob Sanders publisher of the Greystone Books imprint, but he, too, notes that the previous year was a very good one. D&M expected to be down this year, but is actually ahead of expectations at this point, he says.
Random House of Canada and McClelland & Stewart (of which Random House owns 25%) also made cuts, notably and controversially laying off their rights staff and contracting that work out to the Cooke Agency International. Random House of Canada CEO Brad Martin cautions that the company's latest numbers would not be as high as those in Booknet's first-quarter report. “I'd have to strip out the Dan Brown to give you an accurate picture, but I would say our growth is sort of in the 2%—4%,” he says. Still, that's up, even without Brown's The Lost Symbol. M&S president and publisher Doug Pepper acknowledges that “book sales have been good, there's certainly no question about it. Better, perhaps, than we thought.” He says it's still a bit early to “write that chapter” before the holiday season, but M&S is going into that season with new books from both Margaret Atwood and Alice Munro.
Other multinational houses sound more upbeat. Kevin Hanson, president of Simon & Schuster Canada, is in the pleased category. “Our business is very strong in Canada,” he says. “In contrast to the global marketplace, which has been softer, the Canadian market has been robust, and our books have thrived. Essentially in all categories the business is up.” David Davidar, president and publisher of Penguin Group (Canada) says, “2008 was our best year ever,” and expects to be right on target for budget when this year ends in December. HarperCollins Canada president and CEO David Kent says his company had “a fabulous year.”
Nor do the multinationals have a monopoly on good news. Firefly Books, House of Anansi Press, ECW Press, and children's publishers such as Tundra Books, Kids Can Press, Orca Book Publishers, and Groundwood Books all say they did well.
PW examines why and how Canada has stayed healthy and asks for their secrets and remedies.
The Canadian Economy
The most significant reason Canadian publishing and bookselling has fared better is simply that the economy was more stable and the recession did not hit Canada as hard as it did other countries. “All the things that were complained about in the business community here for years turned out to be what saved us: very conservative fiscal policies, bank regulations, you can't write off the interest on your mortgage, so we didn't have the whole mortgage crisis, and I think that sustained us,” HarperCollins Canada's Kent says. “And we had a lot of good books,” he's quick to add.
Still, many Canadian publishers were affected directly by problems in the U.S. economy. “The depth of our recession hasn't been as bad, so we didn't reach some of the serious problems that some American publishers felt,” says Firefly Books president Lionel Koffler, “but for us, a big part of our market is in the U.S. We sell more books in the U.S. than we do in Canada, so the weakness of the American market last fall was a serious problem for us.” Small orders or decisions not to reorder in the spring hurt a few of his titles, he says, but adds that sales of this fall's books are going well so far.
Retail Environment
Canada also has a more stable retail scene. Indigo Books & Music's second-quarter results revealed that revenue was up 1% from the same quarter last year. She noted that the drop in bottom-line results also reflected an increased operating investment in Shortcovers, Indigo's e-book store. Shortcovers, launched in February, sells digital copies of books for download on various mobile devices. “Overall, it's been a decent year for us,” president Joel Silver says. “Different economic pockets are responding differently, but we haven't had the same doldrums that the U.S. market has.” Indigo, in fact, opened six new large-format stores across the country this year.
And the growth is not just in Canada's largest chain. As Simon & Schuster Canada's Hanson observes: “We have new bookstores opening up on the independent side, and the mass front and in the chain stores, so we've got Costco still growing, Indigo still growing, Wal-Mart growing, and you have independents like McNally opening up in large cities like Toronto.”
Speaking for the independents, Canadian Booksellers Association executive director Susan Dayus says, “Generally speaking, it's not a stellar year, but it's not as tough as it has been in the States. Some booksellers are reporting increased sales over last year.”
Bookseller health and confidence had a positive and direct effect on Canadian publishers. ECW Press copublisher David Caron says that Borders's cash-flow problems combined with Barnes & Noble's public statements that the 2008 fall and holiday season would be down due to the recession meant that publishers had to expect smaller orders. “It was pessimistic in the States, whereas in Canada, you didn't see that because Indigo was holding steady on its orders and expectations, [and] wholesalers were doing fairly well,” he says.
There was less happiness about a higher than usual rate of returns from Indigo. Indigo “did a fair bit of housecleaning late this year, and so certainly a lot of the industry felt that,” says Greystone Books publisher Rob Sanders of D&M Publishers. “But on the other hand, we're seeing good signs that some stuff is starting to move.”
According to Penguin's Davidar, “Canadian return rates must be among the highest in the world,” but he adds, the overall rate hasn't changed significantly. “In our last conversation with Indigo, we were actually talking about doing something about bringing return rates down. They want to manage it in a way that is more environmentally responsible and get our costs down by figuring out a way of not having a monumental return rate.”
Lean and Mean
Many publishers in Canada attribute their hardiness to a longstanding simple and even frugal diet. “I think one of the things that got us through the hard times in the last year and half was the fact that we always had to be lean,” says HarperCollins Canada's Kent. “We never had economies of scale in this country that worked for us. We could never be overstaffed. We've kept all our expenses very tight because we've had to. You can't operate in this country unless you do it that way.” Second Story Press owner and publisher Margie Wolfe echoes a similar theory. “Everybody is being more careful, but I suspect in Canada, we've always had to be very careful.”
This year the Ontario government has given school boards C$25 million—C$15 million in February and $10 million in May—to purchase library books. The money was part of a project in which the government negotiated discounts for the school boards with 72 Ontario-based vendors. “Right now in Ontario, the school libraries are getting quite an influx of money from the government, so that, I think, has given everybody a bit of a boost,” says Owl Kids publisher Jennifer Canham.
While all of the children's publishers PW talked to agree that the government money has been helpful, there is some frustration that the government has not done more to encourage school boards to buy Canadian. “Canadian publishers certainly have benefited and we've loved that, but I would say Americans who are publishing for the children's library market have done better than we have,” says Wolfe of Second Story Press.
“I think it is shocking that such a small percent of the buying went to Canadian books,” says Groundwood publisher Patsy Aldana, who adds that a lot of the books that were purchased were British books purchased through Canadian wholesalers.
Marketing Innovations
Now that everyone is on Facebook and madly Twittering, new ways to grab online attention must be sought and found. MacLachlan of House of Anansi Press says her company sparked interest in Emily Schultz's novel Heaven Is Small by initially offering it free on Indigo's Shortcovers. D&M Publishers seeded Andrew Nikiforuk's Tar Sands with environmental organizations by offering free electronic copies for a short time, and publisher Rob Sanders says the company saw a big spike in sales as a result. Orca Books' giveaway of Lian O'Donnell's graphic novel Media Meltdown was so popular it initially crashed the company's Web site. Publisher Andrew Wooldridge was pleased to see 25,000 downloads in the first two weeks and thinks it will drive sales for the series.
ECW Press and Simon & Schuster Canada both mentioned the importance of making advance reading copies available to identified readers who are influential in their communities, prompting word of mouth, blog, and Twitter publicity.
But there is still the world beyond the computer screen, and authors and publishers in Canada have found new ways to reach readers there, too. Partnerships with other businesses and organizations are a popular approach. HarperCollins Canada now has a partnership with the Girl Guides of Canada, in which the Girl Guides select HarperCollins Canada books for its seal of approval. “All of our retailers, especially Indigo, are really behind it, displaying our kids' books on tables that we're not even paying for in some cases,” says marketing director Shelley Tangney.
Key Porter Books is exploring the potential for introducing advertising and product placement in some books. Publisher Jordan Fenn says it obviously wouldn't be used in fiction, but it makes sense for cookbooks or possibly some of the hockey books that the company specializes in. He says he is currently offering breweries the opportunity to have their beer identified, described, and used in a recipe in a cookbook. “We're trying to get 100 at C$1,000 a piece. So far, we've got about 40 breweries committed,” he says.
Poster ads for books are often seen on the Toronto subway, but another promotion from HarperCollins Canada in October means that they could also be heard. Four striking images appeared in subway ads. The titles of the books were only printed in fine print around a headphone jack on the ad with the idea that curiosity about the image would compel commuters to plug their headphones into the jack to listen to a 20—30-second excerpt of a book and a 20-second bumper telling them the title of the book, author, and where to buy it. “We'll actually be able to measure how many people plugged in to these advertisements,” says Cory Beatty, HarperCollins Canada marketing manager, digital advertising and promotions.
And then there's Margaret Atwood. She has created a semidramatic performance based on her new novel, The Year of the Flood, complete with three actors and a choir performing music commissioned by Atwood by Los Angeles composer Orville Stoeber. And she's taken her show on the road this fall in cities in Canada, the U.S. and U.K., Sweden, and Germany. Atwood “has been a one-woman marketing machine on this book,” says M&S's Pepper, who attended the Toronto performance in a church packed with 700 people.
Wild Card
Amid the good news this year, the volatility of currency exchange between the American and Canadian dollars has been an ongoing problem.
“There's no predicting where the dollar is going to be,” says Random House of Canada's Martin, noting that the Canadian dollar “fell off the table last October. In February of this year it was 76 cents at one point, and then it was as high as 97 cents.” That kind of volatility is the worst case scenario for publishers in Canada who print both Canadian and U.S. prices on their books and face the wrath of outraged Canadian consumers when the dollar approaches parity but the book prices show a much greater disparity.
This fall, publishers in Canada have been anxiously watching the Canadian dollar rise again. “To be honest, it is a nightmare,” says Tundra Books managing director Alison Morgan, who says the house was one of the book publishers that got a lot of bad press in Canada two years ago when the Canadian dollar reached and surpassed parity with the U.S. dollar, because Tundra regularly had price differences of C$6 to C$8. “We danced around about doing all kinds of different stuff, and gradually over the years, we tried to bring that closer,” she says. Now, the press tries to keep price spreads to no more than C$1 or C$2, but it is hard to make the margins work, she says. Owl Books' Canham said her company tried to do par pricing for a season, thinking “we don't want any more trouble,” but found it too difficult to continue. Now Owl, too, has gone back to printing both the Canadian and U.S. prices on the books, but tries to keep the price differences to a minimum. Others, like Second Story Press and Firefly Books, have found a way to make par pricing work for them, but they are the exceptions.
Since the controversy two years ago, which included the federal finance minister, Jim Flaherty, holding up a copy of a book as an example of a product for which Canadians were paying too much when the dollar approached parity with the U.S. dollar, many publishers have lowered their prices, particularly on hardcover books. They work to keep the difference between U.S. and Canadian prices to a minimum, but it is hard to know what to do with a rapidly fluctuating rate. “Our pricing in the spring was adjusted to reflect the dollar in the summer and fall of 2008, which meant that we took significant losses in the first half of 2009,” Random's Martin says. “We have adjusted our pricing again.... But it's not going to take effect until 2010.”
Penguin Group (Canada)'s Davidar says he hopes the dollar will not rise to parity with the American dollar, but says the company has a plan to deal with it if it does. “If [retailers] have in-store programs that will help pull people into the stores and get some books moving, we'd much rather do that than rush into lowering the price right away,” he says. Martin says Random House of Canada has worked with retailers before on similar remedies and is prepared to do it again.
HarperCollins Canada's Kent says the company lowered its prices in mid-October, but was “very flexible” because it is also a distribution company and has just invested in its own stickering machine.
Houses Divided
The Canadian Booksellers Association has taken on the task of creating something to fill the void after Reed Exhibitions decided to close BookExpo Canada (BEC) in 2008, but there is very little consensus about what kind of event that should be.
With only a few months to organize following BEC's demise, CBA hosted a summer conference this past June roughly modeled on the ABA's Winter Institute. This year's conference was held in conjunction with the CBA's annual general meeting and attracted a small number of publishers who set up table displays and participated in such sessions as publisher-bookseller speed dating. In 2010, the event will be called the National Conference, said CBA executive director Susan Dayus, but details including where and when it will be held have not yet been worked out.
Although many people say they miss the chance to gather everyone in the industry together or miss BEC for sentimental reasons, most say that the large trade show format was too expensive and had outlived its relevance. “I miss it for the schmoozing and the talking, and I miss it for what it used to be, a long time ago, when we actually sold books, but I don't know that I miss it as an effective sales and marketing tool in the last few years,” says Second Story's Wolfe.
Many say that regional fairs are more effective. “We would much rather put our resources into going where the booksellers live and work and going out to their markets and visiting them in their stores and visiting the book media in those communities,” says HarperCollins Canada's Kent. “The very people that we need to see at a BookExpo are the people who don't come.”
“We want selling fairs. The industry has moved on from a trade fair,” says Random House of Canada's Martin. Last May Random created its own event in partnership with the Toronto Globe and Mail, which included readings and panel discussions featuring Random House authors. Martin counts the festival a success, saying about 3,000 people attended. Plans are being finalized for a 2010 event, which will also include some Penguin authors.
McArthur & Company president Kim McArthur, who helped organize and supported the CBA's 2009 industry-only conference, says that public-focused events were tried in the last days of BEC and didn't work. “I know that the multinationals were deeply keen in not attending anything that looked like BookExpo, because they wanted their public thing and they were running their own presentations,” she says. But she adds, “I feel like we would just be hurling ourselves against the wall on that.”
House of Anansi's MacLachlan likes what the CBA did this year: “I thought it was a good little solution. I think there's room to grow it and get more people engaged with it.”
But Firefly president Koffler says bigger is better. “The whole business needs more showmanship than it's got at the moment,” he says, adding that BEC was a very important fair for independent publishers, booksellers, and librarians, and its closing was a shame. “Some little slice of something in an out of the way place doesn't do credit to the size of the business. It is still a billion-dollar industry.”
