The Jack David master class
What it takes to survive fifty years as an independent book publisher
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Jack David, co-founder and long-time publisher of ECW, was one of the first people I met when I started thinking about launching Sutherland House. I was lucky. I couldn’t have found someone more knowledgeable, experienced, and generous to guide me into the business. He’s been a mentor over the last five years, as he has been for longer periods of time to many others in the industry, not least his capable successor at ECW, David Caron, and Dan Wells at Biblioasis. Jack is usually our first call when we have a problem, because he’ll always have lived through it himself at some point in his amazing career, and he’ll patiently explain how a proposed solution is only going to make things worse. He’s a shrewd operator with a great eye for books, and a true mensch.
One of the largest and most successful independent publishers in Canada, ECW is celebrating its fiftieth anniversary this month. We spoke to Jack about the highs and lows and the true nature of book publishing.
SHuSH: Fifty years is an incredibly long time for a company to survive and an incredibly long time for one person to work in one place, so you've been blessed. Looking back from 1974 to today, what was the best moment in your life as publisher at ECW?
Jack: The one I remember actually quivering about, I was in our office which was then at 2120 Queen. I got a phone call from an agent, Neil Peart’s agent in New York. Neil was the drummer for Rush and we printed his second book, Ghost Rider. So I got the phone call, and my first thought was that we had lost our chance of doing any other deals with Neil. And the agent, who was very long-winded, was going on and on, and he finally said, ‘Neil’s got a new book.’ He said, ‘are you interested in offering on it.’ And it was then that I actually started to quiver. I stood up, because I was shaking. That first book, Ghost Rider, had saved our company, and I knew that if we continued to publish Neil we were going to be in pretty good shape. So that was a high point for me. We got the deal and we continued to publish Neil’s books. [ECW co-publisher] David [Caron] and I did a calculation a year or so ago. We figured out that Neil made over a million dollars in royalties from all his books with us.
SHuSH: Holy shit
Jack: Holy shit.
SHuSH: How did his first book save your company?
Jack: We were being distributed by General Distribution, owned by Jack Stoddart, and they were in financial trouble. They were distributing most of Canadian independent publishers at that point—all of the Literary Press Group, Douglas & McIntyre, Key Porter, among others, and General got out of control and the government didn't step in. Everybody thought the government couldn't let them fold because they were too big to collapse, but it didn’t. The bankruptcy people were called in, Deloitte & Touche, and we had to deal with them.
At that point, we hadn't received any payments for books that we had sold through General for probably four or five months. And it looked like it would extend longer because of all the courtroom stuff going on. Our American distributor was also on the ropes. And then I got a call, or maybe just a manuscript, from Nicole Winstanley, who is now running Simon & Schuster Canada. I think she was an agent at the time. She had received the manuscript from an agent in New York. It was the manuscript of Ghost Rider, and she had looked around at the ecology of publishing in Canada and said, ‘Well, these guys at ECW, they published music books.’ We had done a Muddy Waters book, for example. So she sent Ghost Rider to us. This is around February 2002.
I was going to Bermuda—my wife had always wanted to go to Bermuda, and we were going in off-season when it was relatively cheap—and I took the manuscript with me. We get there and we're sitting in the hotel room. It's very breezy and cool, so I start to read. I read the first page and—I've had this sensation maybe two or three times, reading manuscripts—I actually felt the hair on the back of my neck stand up. I actually felt it. And I said to Sharon, ‘this guy can write.’ Those are always the crucial words.
And then came the process of negotiating with the agent who was wacky and we ended up negotiating in March, maybe into April. I was at the London Book Fair. There were no cell phones like today. I was doing all this faxing back and forth with this guy in New York.
The terms were a $25,000 advance, a bunch of other stuff, and we had to get the book out quick because Rush was going on the road at the end of June and we needed to have the book on their merch table. I didn't have $25,000. The only hope I had was that the Canada Council money usually showed up in June, sometimes earlier. So I was counting on the Canada Council money, which would've been, say, $60,000, to cover the advance. So we agreed to the terms and he sent me the deal memo and the advance was for $25,000 US.
SHuSH: Oh God.
Jack: Yeah. I can't remember what the Canadian dollar was then, but was a difference of $5,000 or $7,000. I said, ‘no, I can't do it.’ But the deal went ahead.
When I was back in Toronto at the office and I announced the book, everybody said ‘25,000? You've never paid 25,000!’ We'd never paid more than probably $5,000 in the past. But I was pretty convinced the book was going to do okay.
SHuSH: Based on what?
Jack: Based on who he was and the fact that the band was traveling and they played in venues that had 15,000 people. And he had a great story. It was a great story.
Anyway, we really rushed it. I got some early numbers and I printed 20,000 in paper and 10,000 in hardcover. I convinced somebody to do the printing job. We had no money.
SHuSH: So you printed on credit?
Jack: On credit. We had to. And we probably had to say to the printer, ‘we owe you money already, but...’
So it was a huge press run. And by August we were reprinting. And the important point here was that the merch people were the only ones who were paying us. General Distribution was not paying us. Our new distributor wasn't yet paying us. Nobody was paying us. But the merch people paid right away and they were selling 200, 300, 400 copies a night at the concerts, and that was the cash that kept us going. That's how it saved the company.
SHuSH: That's amazing. So that was your midlife crisis at ECW?
Jack: That was like one of them.
SHuSH: Was that the worst?
Jack: The worst was around 1989 when our banker from TD called. We had a line of credit guaranteed by the Ontario government. It was a program that included not just book publishers, but anybody else. The TD guy who handled our account came in and said, ‘I'm sorry, we're going to call your loan.’ It was $160,000. And I said, ‘but what about the government loan guarantee?’ Turned out the guarantee didn’t matter to them. So I had a scramble…
SHuSH: Wait, why would he call a loan with a government guarantee?
Jack: I have no idea. But they did. I tried negotiating, but all I got from them was they gave me time to find another bank, because I didn't have $160,000 to pay them back. So I went around from bank to bank. There was a CIBC on Danforth. I went in there, met a guy, and he was sympathetic. He’d give me a line of credit so long as he had a certain number of guarantees. We had to pledge our condo—actually, it was our house, at that point. I had to get my father-in-law to co-sign the loan. The bank had first call on all our inventory and all our receivables. They were covered three times, maybe four times…
SHuSH: Not to mention by the government…
Jack: And the government, too. All of that.
SHuSH: Banks are the worst.
Jack: It was bad. A very bad moment. But the CIBC guy came through. His name was Tom Spall, and he and I became friendly and I followed his career as he went from step to step, and he became a vice president of CIBC. But that was a pretty bad moment.
SHuSH: So I imagine Ghost Rider has to be one of your favorite books. Is there another one that stands out as something you’re especially proud of publishing?
Jack: I would think Too Close to the Falls (1999). And the reason for that is it was unsolicited. I just picked it up and started reading it, and it was another one where I could feel the hair on the back of my neck stand up.
SHuSH: This is Catherine Gildiner’s memoir?
Jack: Yeah. I saw her two nights ago. It's a memoir of a girl growing up in Lewiston, New York, from the age of three or four, up until she is thirteen. You think, who would want to publish a memoir of a girl growing up in Lewiston, New York? But the writing was sensational, the story was great, and we ended up selling a lot of copies, and selling rights all over the place.
One of the things that kicked it off was a review in Toronto Life, which at that point actually had some clout. And the reviewer, R. M. Vaughan, who committed suicide about two years ago, said great things about the book. I was reading the review and it was glowing. Just glowing. And then I get to the end of it and he writes, ‘but there's one thing that I don't like about this book.’
And I thought, ‘oh, fuck.’
And he wrote: ‘It ended too soon.’
And that kicked it off. Cathy did a huge number of book events. She's a great, great self-promoter, and she will tell you she sold the book, it had nothing to do with us. She went to all the book clubs, and word-of-mouth worked. We ended up selling a lot of copies. Initially, I was reprinting 1,500 or 2,000 at a time, and we couldn't keep it in stock. So, finally, we bit the bullet and printed 10,000 or 15,000. We ended up selling something like 60,000 or 65,000. So yeah, we did well with the sales, but it started with my call. It had to do with the instinct to find a great book that had saleability. That was the key for me.
SHuSH: Is that the most important thing a publisher does?
Jack: Not everybody would agree with me, but if you don't have good books that can sell, you're fucked.
SHuSH: Does it also follow, as you said of her book, that the really good books more or less sell themselves?
Jack: No, not really. We were just lucky on that one. We've had a lot of great books that haven't sold anything.
SHuSH: Of the ones that do sell really well, do they sell themselves?
Jack: No. They need that push. They need that effort. I was in Indigo last night at Bay & Bloor. I was on the third floor and there’s five or six book tables there. And right away I saw two of our books on the front table. And then I saw another one on another table. And I walked a bit towards the biography table and there was what looked like a shrine to our Leonard Cohen book. It looked like you should be genuflecting in front of it. So I wrote Heather a note this morning and said, ‘thanks for the shrine.’ Who knows how it's going to sell, but we've never had that kind of prominence before.
SHuSH: In fifty years.
Jack: I can't remember another case like it.
SHuSH: So you started out in 1974 publishing the journal Essays on Canadian Writing, hence ECW. When did it first look like a business and what made it look like a business to you?
Jack: It didn't look like a business in the early days. It was volunteer stuff, and we were hard up for cash all the time. And as my partner at the time, Robert Lecker, and I got more excited about what we were doing, we made bigger, bigger issues. We were publishing 250, 300, 350-page issues. It put a severe crimp in our cash. We had hardly any subscriptions. And the government grants were pretty low. But what happened was that we were publishing bibliographies in the journal, of people like bpNichol and other Canadian writers. And at a certain point we thought we should do a whole series of bibliographies on Canadian authors. That was our idea. There was no P & L. No thought about editing costs or printing costs or distribution cost, anything like that. It was just a good idea. So I found a publisher, Peter Martin Associates, PMA books. They had an office on Bloor between Spadina and Bathurst. We met with Carol Martin there. She liked the project. We went over to the Park Plaza, went up to the rooftop bar, and signed a contract for an advance of—wait for it—one dollar.
At a certain point, when the bibliographies started to pile up and her business was going down, she called me in and said, ‘sorry, we can't do this project.’ And then they went bankrupt. So Robert and I said, well, University of Toronto Press should do this. It’s perfect for them. Well, dealing with a university press was not the way we liked to operate. It would've taken them two years to figure out whether they wanted to publish it. Literally would've taken them that long. So Robert and I said, ‘we'll do it ourselves because we already know how to publish. We publish this journal. There you go. Both feet.
SHuSH: So that's how you started the business. When did you know it could succeed as a business? When did you decide, I'm going to be a publisher…
Jack: That's a different question. I would say sometime around 2007, 2008, I thought we might succeed…
SHuSH: After thirty years.
Jack: Yep.
SHuSH: That late?
Jack: Well, we almost went bankrupt at least twice, and we had distributors crapping out on us. We probably dealt with nine or ten US distributors over time, and now we're on our eleventh. And we dealt with five or six Canadian distributors.
SHuSH: What changed in 2007, 2008?
Jack: We were over the hump of the General Distribution bankruptcy. We had a huge debt when they went under. We had lost somewhere around a million dollars, and so we had to make the money back. And we paid everybody a hundred percent, stupidly. But we did it.
SHuSH: How big a business would it have been around that time?
Jack: At the time General went down, probably a million, or a million five, somewhere in that range.
SHuSH: Over the fifty years, what's changed most in the world of Canadian independent publishing, or book publishing more generally?
Jack: I got that question from a Centennial College student last year. I thought about it and I said, ‘here's what hasn't changed: writers writing good books that should be published.’ That's the key. But the technology around us has all changed. When we began, there were no computers. We began before there was a fax machine. We were around for the beginning of the internet. We were around when PDFs began to bounce around, when people began to deliver manuscripts on files, on disks—all that's changed, but the essence is the same.
SHuSH: So given that it took you from 1974 to 2007 or 2008, to get the business firmly established and feel like you had a secure future…
Jack: I never said we had a secure future.
SHuSH: Okay, you got it to where you could breathe…
Jack: Yes.
SHuSH: So looking back at that, would you done something different, done something sooner?
Jack: I don't know how we could have, because neither Robert nor I knew anything about trade publishing and there was no one around to say, ‘try and do this or do that.’ We just made it up as we went along. And it took us really…
SHuSH: It took as long as it took.
Jack: It took as long as it took. It wasn’t really until the early nineties that we knew anything much about trade publishing. And then we got lucky with a couple books, and then that helped us push forward.
SHuSH: I think you kind of answered this already, but what's the thing that most people don't understand about book publishing?
Jack: I think it would be the Avie Bennett misconception. A lot of people have this idea that you get into book publishing…
SHuSH: You should first explain who Avie Bennett is…
Jack: So Jack McClelland built McClelland & Stewart into the most powerful trade publishing company in Canada. And he published everybody. Pierre Berton and Farley Mowat and Margaret Atwood and blah, blah, blah. The one thing Jack couldn't do was he couldn't run a business very well. He was a great selector or authors, and great at working with authors. He was a super promoter, but he didn't have a handle on who had the cash and where it was going. He ran into trouble and he got bought out, on the verge of bankruptcy, by Avie Bennett, who was a developer of shopping plazas. Avie had a lot of money and he said, ‘I think I'll be a publisher and I'll hang around with Pierre Trudeau and I'll hang around with Margaret Atwood who knows who else. And what he discovered was that it was a money losing game. He was spending far more than he was taking in. One rumour I heard was that he was losing about a million dollars a year. And that makes sense because he was there for about fifteen years and then he got a $15 million tax write off after finagling the government.
Anyway, the Avie Bennett misconception is this notion that you get into publishing so you can hang around with interesting people all the time. Well, it’s true that we hang around with some interesting people. But what people don't get is that it's also business and it's a detailed business, and there are nickel-and-dime issues, which-corner-to-cut issues, all the time. On a daily basis, you're looking at proofs, and you're looking at reports from your distributors, and you're figuring out how to do a promotion for a book, and you're dealing with the bad banks. That’s what people don’t understand—all the other stuff that goes on. And that’s the real business.
SHuSH: What do you think the future looks like for independent publishing? What's it going to be like a decade from now? Is it around?
Jack: I think so. I think there'll be more consolidation at the top end, the multinationals, although there can't be too much more. For the little guys, assuming in Canada that the granting systems, provincially and federally, stay in place, then you’ll be able to make money. You can break even doing your four or five literary titles a year. You won't pay yourself a salary, probably, but you'll get some books out. I could give you probably eighty examples of how that works. But take away the funding and all those guys go out of business, except for the people who either have private source of income, private source of wealth, or are just stupid enough to keep doing it.
SHuSH: So it sounds like you think it's going to be incredibly difficult to make money selling books going forward.
Jack: Yeah. It gets more and more difficult.
SHuSH: What's made it most more difficult in your time?
Jack: When we started selling books into bookstores, the discount that the bookstore took was 40% or 42%, and the wholesalers took maybe 45%. When you compare that with today, with Amazon taking who knows how much—55%, 57%, who knows exactly? And Indigo with their little fees and their extra 4% for this thing and that, they're probably taking at least 50%, maybe 52%. So you have to ask yourself, where did this 10% to 15% go? What happened to that bit of money you used to get?
SHuSH: Right. Royalties for authors haven’t changed.
Jack: Yeah. Royalties are the same.
SHuSH: And costs have gone up,
Jack: Printing costs have gone up crazy over the last few years. Up 30% or 40%.
SHuSH: Are you doing anything personally to celebrate fifty years?
Jack: No.
SHuSH: Maybe you should.
Jack: Why?
SHuSH: It's a real fucking achievement, Jack.
Jack: Well, maybe, but when you're in the middle of it, you don’t think about that.
SHuSH: I know. But at some point, in fifty years, you have to lift your head up and say, this is pretty cool what we built.
Jack: I get that from other people. Quill & Quire did a really nice piece on our fiftieth and I heard from people. They said, ‘Wow, fifty years, good for you. Blah, blah, blah.’ So fine. That's good. But what lasts? What lasts? Nothing lasts. Whatever you do, it's “Ozymandias.” Everything turns to dust.
SHuSH: Who else can you point to who started either before you or at the same time as you, who's still out there?
Jack: Howie White at Harbour (pause).
SHuSH: Lorimer?
Jack: Yeah, Lorimer.
SHuSH: It's a short list.
Jack: Maybe a couple other people. I don't know.
SHuSH: It’s a very short list. That's pretty amazing. Anyway, congratulations.
Jack: Thanks.
We Don’t Hate Banks Enough
Since I mentioned a couple of weeks ago that we have published Andrew Spence’s Fleeced: Canadians Versus Their Banks, the latest edition of Sutherland Quarterly, I’ve been inundated with people’s horror stories of their dealings with Canada’s chartered banks. Jack David’s tale in the above interview is a classic of the genre.
In Fleeced, Andrew lays out in aggravating detail how Canadian banks, although chartered by the federal government to facilitate economic activity in the broader economy, do all they can to avoid lending to small and medium businesses, never mind that small and medium businesses employ two-thirds of our private-sector labour force and account for half of Canada’s gross domestic product.
By OECD standards, small businesses in Canada are starved of bank credit, and when they are able to secure a loan, they pay through the nose. The spread between interest rates on loans to small businesses and large businesses in Canada is a whopping 2.48 percent, compared to .42 percent in the US—more than five times higher.
Why? Because Canada’s banks are a tight little oligopoly, impervious to meaningful competition. Their cozy situation allows them to be exceedingly greedy. Their profits and returns to shareholders are wildly beyond those of banks in the US and UK (and, as Andrew demonstrates, their returns from their Canadian operations are far in excess of those from the US market, meaning they screw the home market hardest.)
Our banks never miss an opportunity to impose a new fee, or off-load risk. From their perspective, small business involves too much risk—some of them will inevitably fail. The banks prefer that publishers and dry-cleaners and restaurateurs either finance themselves by pledging their homes, or use their credit cards to cover fluctuations in cash flow or make investments that will help them hire, expand, and grow. And that’s what entrepreneurs do. According to a survey by the Canadian Federation of Independent Business, only one in five respondents accessed a bank loan or line of credit. Half of respondents financed themselves, tapped existing equity and personal lines of credit, and about 30 percent used their high-interest credit cards.
By severely rationing credit and making it exceedingly expensive, Canada’s banks siphon off an ungodly share of entrepreneurial profit to themselves while leaving the entrepreneur with all the risk. Their insistence on putting their own profits above service to the Canadian economy is one of the main reasons Canada has such a slow-growing, unproductive economy and a stagnant standard of living.
There is much else in this slim volume to make your blood boil: exorbitant fees on chequing and savings accounts; mutual fund expenses that torpedo investments; ridiculous mortgage restrictions, infuriating customer service…
Fleeced: Canadians Versus Their Banks is a stunning exposé of the inner workings of our six major banks—something only a reformed banker and financial services veteran such as Andrew could write. He also explodes the myth that a bloated, uncompetitive banking sector is the price we have to pay for stability in times of financial crisis.
We are in desperate need of banking reform in Canada. Read this book and you’ll be shouting at your member of Parliament for prompt action.
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.
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I count myself lucky to be an ECW author and to have Jack in my corner.
Loved the interview, and congratulations to ECW and Jack David. Also appreciated the piece "We Don't Hate Banks Enough." Very timely, as TD was just hit with a record 3 billion dollar fine for knowingly engaging in criminal activity as money launderers in the USA.