When the Canadian dollar started rising last fall, most Canadians were excited at the prospect of being able to purchase consumer goods at cheaper prices. After all, if the Canadian dollar was worth more than the American dollar, we should be able to pick up deals on items coming up from the States. While there is truth to the logic that if a Canadian were to buy something priced in American dollars they would save money, it doesn’t always bear out. It has actually meant hard times for some industries.
Even before the loonie (the Canadian one dollar coin has a picture of a loon on its tail’s side and is referred to as a loonie) went above par against U.S. currency, there were rumblings of worry from Canadian book publishers. Canadian book buyers have long been accustomed to seeing two prices on the backs of their books: one for the Canadian market, and a less expensive one for the American market (by about ten to twelve dollars for a hardcover). Since most people have always put that down to the differences in the purchasing value of the two dollars, it was expected that publishers in Canada would be able start cutting their prices.
In reality, the worth of the Canadian dollar had little to do with pricing of titles in this country. The biggest single factor dictating price is a simple matter of market size. Quoted in The Globe & Mail, Canada’s national newspaper, Carolyn Quinn, executive director of the Association of Canadian Publishers, said that with a potential market of only 33 million people, you have to charge more in the hopes of recouping your outlay than you would for a market of over 200 million.
In the face of an anticipated consumer revolt, Canadian publishers have been forced to drop their prices between 25 and 30 percent. Although that has already translated into a four percent increase in sales, and an increase of three percent in total dollar sales for the fall of 2007, the long term forecast isn’t as rosy. It’s simple math. You reduce prices by 25 percent; your revenue drops by 25 percent. If your total sales is only increasing three percent, that means you’re taking an actual loss of 22 percent in total revenue.
While the larger international houses like Random House, Penguin, and others can probably weather this storm, the smaller distributors and publishers won’t be as fortunate. In fact the first casualty was just announced this last week. Raincoast Publishing of British Columbia announced they would no longer be publishing original works, and would be focusing on distributing imported titles only.
While director of marketing and publicity for Raincoast, Jamie Broadhurst, claims it’s because 80 percent of their business comes from distributing American titles, and having to reduce prices by 20 percent across the board due to public demand is forcing them to cut their publishing division, something about that claim rings a little hollow. According to Roy MacSkimming, author of The Perilous Trade (a history of publishing in Canada), Raincoast has been reducing the publishing arm of its business steadily for the past little while. Since a management change a few years ago, they stopped developing any new talent.
Adding fuel to the fire that this bottom line move has been in the works for a while is the fact that Raincoast has co-published the entire Harry Potter series in Canada with Bloomsbury books. In some years this has resulted in Raincoast books having in excess of $70 million in revenues. Harry Potter And The Deathly Hollows has sold 750,000 hardcover copies alone since its publication last July, which is phenomenal considering the size of the Canadian market.
Broadhurst was quick to reassure everyone they wouldn’t stop publishing the Potter books. Nobody’s going to gut the goose that lays the golden egg, after all. In the same breath, though, he said the money from the Potter books were kept separate from the other arms of Raincoast and was used to allow them to become the pre-eminent book distributor in Canada. In other words, they had no interest in publishing and were more intent on ensuring the continuation of the far more potentially lucrative business of distributing American and British popular titles.
In Canada, book publishers are eligible for support from the Canadian government to help them offset the costs of publishing books in such a small market. Even with programs like the Book Publishing Industry Development Program, profit margins are small. This doesn’t seem to stop small presses across the country from developing new talent and publishing books, none of which make anywhere near the return that Harry and his buddies do on a yearly basis for Raincoast.
The Potter books aren’t going to be some passing fad either. They have all the makings of a perennial classic, like the works of Tolkien and C.S. Lewis. People will be buying them for generations to come. It would have been quite easy for Raincoast to designate a percentage of the revenue from those sales to underwrite their publishing wing instead of sinking it all back into the distribution of foreign books. It’s ironic that foreign-owned subsidiaries like Random House Canada, Penguin Canada, and Harper Collins Canada do that with the American best sellers they distribute in Canada, but a so-called Canadian publisher won’t.
While it’s true the increased value of the Canadian dollar will make life difficult for Canadian publishers over the next few years, the decision by Raincoast Books to drop its publishing wing entirely appears to have been in the works long before the dollar’s climb. They have merely seized upon it as a convenient excuse to bring about the end sooner. It’s a sad day for books in Canada when a profitable Canadian publisher turns its back on its own authors in favour of distributing foreign works. They really aren’t a publisher anymore. They’re just another business importing foreign goods, doing nothing to develop Canada’s industry or economy.