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Consultation Lays Bare Divide Over Future of Canadian Book Industry

Late this summer, as thousands of Canadians were playing with their coveted new Apple iPads, the government quietly disclosed that it was conducting a regulatory review of Apple and its entry into the electronic book market.  The review caught many by surprise, with some left wondering why any government intervention was needed for another offering in the popular iTunes store.

My weekly technology law column (Toronto Star version, homepage version) notes the answer lies in Canada’s longstanding cultural policy and the significant protections it establishes over the publication, distribution and sale of books.  These include restrictions on foreign entry into the Canadian marketplace that reserve majority ownership for Canadians on the premise that an open market would hamper the ability of Canadian authors, publishers and booksellers to compete.

Those cultural policies are part of a major government consultation that comes amid signals that Canadian Heritage Minister James Moore may be open to relaxing those policies as online sellers and electronic books shake up the marketplace. Last spring, the government approved the establishment of a physical distribution facility for Amazon.ca, a move opposed by the Canadian Booksellers Association.  The approval came with strings attached – Amazon promised new investments in Canada, increased availability of French language content, and higher visibility of Canadian books – but the precedent was clearly established.

Over the summer, the government opened the door to extending the policy by launching a comprehensive consultation that asked for comment on the prospect of revising its book publishing and distribution foreign investment policy. The consultation generated 44 submissions with most of the major book associations, publishers, and book sellers weighing in.

The submissions reveal a stark divide, pitting the Association of Canadian Publishers against booksellers and many foreign publishing interests.  

The Association of Canadian Publishers argues that the rules should remain unchanged as it is hard pressed to find any redeeming quality about foreign competition or any relaxation of the rules.  It maintains that the current restrictions are “effective, practical, flexible, and fair.”  

The ACP is dismissive of foreign publishers, arguing that head offices in New York or London invariably make the decisions based on “assessments of return on investment and shareholder value.” By contrast, it suggests that Canadian independent publishers do not answer to foreign executives or shareholders and are more likely to publish Canadian authors.  Moreover, it believes that Canadian booksellers and distributors are also more likely to understand Canadian customers than are foreign-owned companies.

Many associations disagree.  The Canadian Publishers Council argues that neither Canadian nor foreign-owned businesses are more or less inclined to support the creation, distribution, and/or sale of books by Canadian authors by virtue of their ownership.  Leading international publishers such as McGraw-Hill Ryerson, Nelson Education Ltd., Simon & Schuster Canada, and Oxford University Press all support opening up all aspects of the Canadian market.

To further complicate matters, specific associations are seeking narrow reforms designed to assist their sector.  The Association of Canadian Book Wholesalers calls on the government to require publicly funded institutions to buy their books solely from Canadian wholesalers, while bookstore giant Indigo and Campus Stores Canada want the elimination of restrictions of parallel imports of books, which may artificially increases book prices for students by at least 15 percent.

In fact, even the Commissioner of Competition enters the fray, advising the government to relax or remove restrictions in order to increase access to capital, improve conditions for the entry of new competitors, and apply pressure on incumbents to invest and innovate.

The partisan voices make it difficult to gauge the effectiveness of the current restrictions and leave it to the government to determine whether Canadian authors and consumers – the two groups that the policies are ultimately designed to benefit – gain from market restrictions or would be better off with an open, competitive market as the world goes digital.

17 Comments

  1. Law of the Free Market
    If you can’t compete on your own, you deserve to go down.

    End of story.

  2. I’m not exactly sure, as a consumer, what I gain from it. And I have doubts about the claims that Canadian booksellers and distributors are more likely to understand Canadians than foreign owned.

  3. Question
    Is the protectionism noted above responsible for seeing Canadian and local books as a section of all Costco’s across Canada. Would removing this protection make them get rid of that small section of Canadian or Local books? If so I saw keep the rules as is.

  4. I’m pretty sure that they can still regulate the needing to stock Canadian novels and local books without limiting the number of businesses that can operate in Canada.

  5. I think you’ll find the “divide over the future of the Canadian book industry” is nothing new. That the ACP and CPC would disagree on the relative merits and dangers of foreign ownership is a surprise to no-one who understands the various industry players.

    The review is generating lots of interesting discussion and, in my opinion, lays bare nothing more shocking than an industry figuring its way through a changing environment.


  6. Once agin, old business models looking for govenment protection to stay afloat. And, “Canadian Book Wholesalers calls on the government to require publicly funded institutions to buy their books solely from Canadian wholesalers”, how is this in the interest of saving taxpayer dollars?

    Unfortunately, this may come to fruition since it is already policy in other sectors in Canada, bike parts, music instruments, CDs, movies, all mandated that sellers MUST get their stock through Canadian wholesalers. To my knowledge none of these are not allow to buy directly from the manufacturer. Is all private sector like this?

    I know that’s the case for bike parts as I did a lot of research in this area. When I was building my bike, 8 years ago now, it was VASTLY cheaper for me to buy the parts mailorder from the US and pay the related import fees than it was to buy locally. We’re talking 50% to 100%, even more, cheaper. One outrageous example I commonly use is when Race Face first released the Atlas crankset. I bought it from the US (Pricepoint, I think, maybe Jensen USA) for $225 shipped to me. I couldn’t buy it locally for less than $500 and it averged closer to $600. Now the real kick-in-the-a$$…Race Face is a Canadian company. Another good example is my frame a, now old, 2003 Intense Spider. At the time, suggested retail price in Canada was $3699 which I bought at the end of the season for $2399. To buy it in the US (It is a US made product), I believe the original SRP was $1799 and at the end of the season you could get it as low as $1199 or even less than $1000 if you really looked around. There is enormous amount of markup by the Canadian wholesalers. It’s a racket!!!

    Forcing the booksellers, or any seller for that matter, to go through central wholesalers is equivelent to price fixing as far as I’m concerned

  7. …correction…
    “To my knowledge none of these are allowed to buy directly from the manufacturer.”

  8. “The Canadian Publishers Council argues that neither Canadian nor foreign-owned businesses are more or less inclined to support the creation, distribution, and/or sale of books by Canadian authors by virtue of their ownership.”

    To assess this position, all you have to do is look at the situation in Canada before measures were introduced to develop a Canadian publishing sector. The support which Moore and Co. are now scrutinizing were proposed, and gained wide support, precisely because that statement from the CPBC is false. In the absence of competition from Canadian publishers, there is scant reason for them to develop a Canadian publishing operation.

  9. Here’s something interesting. There’s a longstanding cultural policy in place that protects Canadian academic jobs for Canadians. Who knew?

    From the HRDC website:

    Before a degree-granting educational institution can hire a foreign academic for a position in Canada, it must:

    •Advertise vacant positions in Canada;

    •Make sure any vacant position advertised abroad is also advertised simultaneously in Canada;

    •Advertise for a reasonable length of time (about a month) to allow broad exposure of the vacancy to Canadians and permanent residents;

    •Demonstrate that the advertising medium used – web, print or electronic – is effective in attracting appropriate candidates for the position;

    •Include in the advertisement this statement: “All qualified candidates are encouraged to apply; however Canadians and permanent residents will be given priority”;

    •Meet all conditions of applicable collective agreements;

    •Complete the Foreign Academic Recruitment Summary (PDF 127 KB) – HTML Version outlining the educational institution’s hiring decision and providing summaries of Canadian applicants verified by the vice-president (academic) or other senior academic official of the educational institution.

    •Be prepared to complete a yearly summary report on recruitment practices for Canadian academics and results.

    I wonder what the “law of the free market” would have to say about these rules?


  10. @Degen: There’s no such thing as “free market”. That’s just propaganda BS. Real “free market” means no regulation. Which means returning to the basic primitive ruling of him with the biggest guns. Oh wait, it sounds like our neighbor…. but now you know what “free market” really means. It means “you do like we say otherwise we come there with our best men to organize “free elections””.

    Nap.

  11. @Degen
    Interesting, I didn’t know to quite length employers had to go through to hire foreign, but this is an immigration issue and goes beyond markets. You can’t equate “people” to “goods” like books and movies. Preferential hiring is a common practice in hiring in most countries I believe, especially in the academic and professional areas such as doctors, lawyers, nurses, software developers, engineers, etc.. I have Canadian friends who work in the US. They have similar rules and employers there must prove similar things to those you listed. They also have to show US immigration that no one who was qualifed, who was a US citizen actually applied. Every year the visa (A TN visa I believe) must be re-justifed and extended. Eventually most of my friends end up marrying US women and then visas are no longer an issue.

    When I was looking for work, I considered various positions down there, but ultimately decided to take a lower paying job to avoid immigration headaches and remain in Canada. Luckily for me, my wife, who is an engineer, did the same thing. She turned down a fairly prestigious position with a good engineering firm in Louisiana to remain in Canada and work for the government…and if you think the government pays as well as a private sector engineering consulting firm, I have a bridge to sell you. :)

  12. P.S.
    @Degen: …just forgot to add – how about organizing some “free market” in the copying industry – repeal all regulations and let him who can provide the cheapest copies win.

    LOL.

  13. “It all makes perfect sense…
    …Expressed in dollars and cents.” (Roger Waters, “Amused to Death / Perfect Sense part II”).

    @IanME: Actually not. You cannot express “quality of life” in dollars per hour only. So don’t be so sorry about your decision to stay north.

    Nap.


  14. …and BTW. If Roger Water’s album had DRM, under Moore’s C-32, would I be allowed to quote the lyrics? I guess not?

    Nap.

  15. Question for Michael Geist
    A question for the expert in law: as in the previous example, and under the proposed C-32, if I listen to a song recorded on a CD with “copy protection” DRM, and then I reproduce the lyrics on this blog, would my brain be considered a “circumvention device”, declared illegal, and subjected to lobotomy?

    Nap. :-)

  16. Laurel L. Russwurm says:

    quietly
    It would be awfully nice if the government would actually invite the public to the public consultations they keep having. http://whoacanada.wordpress.com/2010/10/28/book-policy-review/

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