How they messed up the book industry

Lament for a literature, Part Two

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Last week in SHuSH 311, we reviewed the precipitous decline in Canadian publishing over the last several decades, as documented in Richard Stursberg’s Lament for a Literature: The Collapse of Canadian Book Publishing, coming next week from Sutherland House.

The upshot of the piece was that despite throwing laws, regulations, legions of bureaucrats, and hundreds of millions of dollars into a regime to encourage Canadian ownership of publishing companies, the Canadian-owned part of the industry has collapsed. Canadian-owned publishers now control between 3.7 and 5.3 percent of our domestic market, by far the weakest outcome in the industrialized world. Canadians consume less of their own literature than any of their peers, making us, in Atwood’s famous phrase, a nation of “cultural morons.”

This week we’re going to review Richard’s account of where the government went wrong. The failures are so many and diverse that we can only hit the highlights in a single newsletter. And while Richard approaches these failures from many perspectives, my favourite is his comparison of book industry policy to how Ottawa handled broadcast policy—the radio and television industry. It demonstrates how book policy was both weakly designed and poorly enforced, much to the industry’s detriment.

Canada successfully defended broadcasting by insisting on Canadian ownership, Canadian distribution, predictable rules, and stable reinvestment.

Let’s take those in turn.

First, foreign owners of Canadian radio and television assets were required to divest those assets in favour of Canadian ownership. Real control of broadcasting undertakings—the CTVs and Globals of the world—had to rest with Canadians. These ownership rules were clear, public, and non-negotiable.

Second, the government recognized that control over the distribution of broadcast programming determines what audiences see and hear. Broadcasters were required to give mandated space to Canadian programming, and foreign content was required to flow through Canadian channels in ways that helped finance domestic production. You watch The Pitt and the Super Bowl on CTV, and the money CTV makes from those broadcasts helps finance its Canadian programming.

Third, broadcasting policy was administered transparently through public hearings before the Canadian Radio-television and Telecommunications Commission. Evidence was presented on the record, decisions were published, and conditions were enforceable. Openness and accountability became defining features of the system.

Fourth, when broadcasting assets were sold, purchasers were required to reinvest a portion of the transaction value into Canadian content. These “tangible benefits” ensured that consolidation strengthened the system rather than hollowed it out. So when Rogers bought Shaw in 2023, it had to provide $1.5 billion in mandatory funding for Canadian content, commitments to regional news, support for independent producers, etc.

This suite of policies has not been perfect, and it’s been severely challenged in the streaming age, but it has allowed Canadian broadcasting to survive American dominance and continue to produce Canadian news, drama, sports, and entertainment at scale.

None of these mechanisms was applied with equal force to book publishing. Rather, book policy adopted the language of protection without the machinery to make it effective.

Again, take the elements one at a time.

First, while the government declared that book publishing should be Canadian-owned and controlled, it never enforced that principle with anything like the rigour applied in broadcasting. Ownership policy was administered under federal industrial policy legislation, through secret reviews, unpublished decisions, and opaque criteria. Foreign publishers were grandfathered (Random House), exceptions multiplied (Simon & Schuster), and control steadily migrated offshore. The result is that Canadian-owned publishers today exist at the margins of the industry.

Second, the government failed to treat distribution as the strategic choke point it is. Unlike broadcasting, there were no lasting rules to ensure that foreign books flowed through Canadian publishers or distributors in ways that would build domestic businesses. This was an enormous oversight given that the first generations of Canadian publishers—McClelland & Stewart, Macmillan of Canada—built their Canadian lists from cash flows earned by distributing British and American titles in Canada. Control over retail and distribution was left entirely to the market, allowing foreign multinationals, and later dominant retailers and platforms, to determine what was stocked, promoted, and sold.

Third, publishing policy lacked transparency and accountability from the outset. There was a relative absence of public hearings, published decisions, and clear statements of policy. Unlike in the broadcast world, publishing third parties (i.e., Canadian independent publishers and booksellers and authors) had no opportunity to test evidence or challenge outcomes in their space. Over time, this secrecy hollowed out both enforcement of rules and public confidence.

Fourth, consolidation in publishing carried no reinvestment obligations. When Canadian publishing assets changed hands, there were no mandatory commitments to reinvest in Canadian authors, marketing, or infrastructure. Consolidation therefore weakened the domestic sector rather than strengthening it, stripping Canadian publishers of capital, scale, and bargaining power. This is how a treasure like McClelland & Stewart, holder of the greatest Canadian backlist ever assembled, was traded to Penguin Random House for a handful of beans.

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Having abandoned Canadian ownership and distribution requirements—what are known in the regulatory community as structural remedies—successive governments came to rely on subsidies as the primary instrument of publishing policy.

You might think that a government that failed to make use of the biggest tools at its disposal would at least ace its subsidies, but no. They have never been up to the task of growing Canadian-owned publishers and sustaining Canadian writing. Poorly designed, they treat publishing as a cultural service to be maintained rather than as an industry requiring scale, capital, and market power to survive.

The core flaw of the federal subsidy regime is that it is capped and zero-sum. Each of the Canada Book Fund and the Canada Council programs has only so much money. The funds are spread among many publishers. If one publisher expands materially, others must eventually contract within the fixed spending envelopes. The more successful publishers get somewhat more funding, but only up to a hard cap, and they hit that cap when they become mid-sized. In Canadian terms, mid-sized is well under $10 million in annual revenue; by international standards, that’s not mid-sized, it’s tiny.

This design contrasts sharply with film and television supports, which are largely in the form of tax credits. These are demand-driven and uncapped, allowing the industry to grow when it performs well. An individual producer who increases revenues year after year will see its support compound. It can make better products and market them more effectively. In this manner, tax credits, which have been in place for decades, amplify market performance. Risk-taking is encouraged, scale is rewarded, companies are strengthened. As a result, we have large, successful Canadian production companies and a highly skilled, world-class labour pool of grips, cameramen, editors, etc.

In publishing, there is no support for a publisher aspiring to grow beyond mid-sized. That might make sense for the Canada Council, which has an explicitly non-commercial orientation—“we fund art.” But the Canada Book Fund is an industrial subsidy. It’s supposed to be building the book sector, yet it quits on publishers when they become minimally viable with a few million in sales a year. Not surprisingly, the most successful publishers in English Canada tend to have revenues in the range of $2 to $5 million a year.

The subsidy regime has entrenched smallness and fragility as permanent conditions of the Canadian book industry. Publishers have little incentive—and limited ability—to consolidate, invest aggressively in marketing, or take risks on books with broader commercial potential. Perversely, a publisher lucky enough to achieve the level of profits that fuel real growth becomes ineligible for future funding. Putting together several modest publishers, each with $500,000 in sales, to make one stronger publisher makes no sense because it will substantially reduce the combined firm’s grant income. Over time, this produces an ecosystem of small, chronically undercapitalized firms dependent on annual government funding decisions.

Perhaps more importantly, subsidies at current levels have proved incapable of countering the market power of multinational publishers and dominant retailers. The Canadian branch plants of multinationals such as Penguin Random House and HarperCollins earn good money by selling into the Canadian market books that have been acquired, developed, and largely paid for in the US or UK. That money permits them to outbid Canadian independents for the most valuable publishing properties available here—established writers and high-potential books—and to offer our booksellers more favourable commercial terms. The result is greater access to shelf space and promotional support, often at the expense of Canadian-owned publishers. Grants to independents, meanwhile, do little to offset the rising cost of access to large retail channels, whether Canadian-owned quasi-monopolies or massive foreign-owned digital platforms.

Finally, as subsidies have grown in importance, funding programs have come to exert a strong directional influence on Canadian publishing. Federal support increasingly emphasized adherence to prescribed processes, reporting requirements, and outright political priorities. Over time, the programs signalled not only what kinds of projects would be supported, but what kinds of publishing activity were expected. Researched nonfiction, for instance, was deprioritized by the Canada Council.

These interventions encouraged predictability and conformity among publishers. Projects that fit comfortably within established criteria moved more easily through the system; projects that fell outside those parameters faced higher uncertainty and fewer offsets. The regime did not forbid risk-taking, but it certainly failed to reinforce it. The result is a sector oriented toward caution at precisely the moment when confidence, experimentation, and institutional strength are most needed.

In the end, writes Richard, subsidies have failed to prevent the collapse of Canadian-owned publishing—they’ve merely slowed it.

What is striking, looking back, is not just the failure of individual programs, but the absence of any serious effort to change course. Governments were slow to respond to the streaming shock in broadcasting, but they eventually recognized the structural threat and acted. In publishing, no comparable reckoning ever occurred. Ownership rules were weakened, distribution was abandoned to the market, and subsidies were left to do work they were never designed to do.

The result is not mysterious. Public money has kept books appearing, but few find an audience, and the funding programs have not come close to meeting their objective of nurturing a viable national publishing industry. In hollowing out the institutions that select, promote, and sustain books, Canada surrendered control not just over scale and distribution, but over how (and if) its own history, conflicts, and ambitions are narrated and remembered.

That loss was not inevitable. The tools were available. We just chose not to use them.

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Start the year informed

As a SHuSH subscriber, you are eligible for this special offer: buy a subscription to Sutherland Quarterly (or treat a friend) and we’ll send you the Sutherland House book of your choice at no charge.

Launched in 2022, Sutherland Quarterly is an exciting new series of captivating essays on current affairs by some of Canada’s finest writers, published individually as books and also available by annual subscription—four great books a year, mailed to your door, for just $67.99. Subscribe now at sutherlandquarterly.com and we’ll immediately be in touch to send you the free book of your choice.

Sutherland Quarterly is also pleased to announce its next edition, coming January 27, will be Richard Stursberg’s Lament for a Literature, a sweeping account of how English Canada once forged a confident literary culture—and how that culture has steadily collapsed.

For decades, books provided the country’s most searching reflections on its history, politics, and identity; they shaped the national conversation and anchored a shared sense of who Canadians were. Author and media executive Richard Stursberg traces how this ecosystem emerged, flourished, and then eroded. He follows the rise of a vigorous publishing industry in the 1960s and ’70s, the period when Canadian writers reached international prominence, and the subsequent decades in which foreign ownership, shifting cultural priorities, fragile institutions, and policy failures hollowed out the sector.

Clear, forceful, and grounded in deep research, Lament for a Literature shows what happens when a nation loses the infrastructure that sustains its stories—and outlines practical reforms, including a Canadian Book Law, to rebuild the foundations of a literary culture capable of renewing itself.

ORDER HERE NOW

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