Scott McIntyre, Vancouver’s legendary book publisher, says the tough times in his trade tend to fade quickly into memory – particularly after what he describes as a “fabulous” 2007. That’s the reason he can look back at the ups and downs of the past 37 years at the helm of Douglas & McIntyre Ltd. – one of Canada’s largest independent publishers – without too much pain. Still, he can’t help shaking his head as he recalls the devastating 2002 bankruptcy of D&M’s Toronto-based distributor, General Publishing.
‘‘It cost us almost $1 million,” says the 63-year-old UBC fine arts grad. “And, you know, we went through hell. We went through a lot of difficult times and cash was always an issue, but all of this has gone away. And not because of more equity, but because we earned our way out of it.” In 2007, after he’d recovered from that near disaster, McIntyre brought new blood into the company: president Mark Scott, a lit-loving former investment banker at Scotia Capital who, along with two partners, has taken a majority position in the company. McIntyre now not only has his personal future provided for, but also intends to stick around for up to another decade as publisher and chair.
Despite the turnabout for his own firm, McIntyre knows from long experience that survival is always in doubt for the 32 member firms of the Book Publishers Association of B.C. Just this January, it was announced that Vancouver-based Raincoast Books – most famous for being the Canadian publisher of the Harry Potter series – would be dropping its domestic publishing program after the spring season. At its peak, Raincoast was publishing almost 50 titles a year, but it never made any money from its publishing arm and blames the rapid rise of the Canadian dollar (which forced publishers to match U.S. prices) for its ultimate downfall.
Publishing in B.C. has always been a low-margin business (if profitable at all), with owners often going into debt just to keep themselves afloat. The rising dollar has helped erode those margins further. Adding to this is the growing question of what influence the digital revolution will have on traditional publishers.
After decades of broken promises and clunky technology, the digital reading tool known as the e-book seems to have finally turned the corner of consumer acceptance, presenting both risks and opportunities for print-focused publishers.
The e-book made its first real impact in 1971 in the form of the electronic publication of The Declaration of Independence by Project Gutenberg, which currently offers 20,000 texts online (along with another 100,000-plus from its partners). More than three million of the out-of-copyright, free e-book files are downloaded from the site each month. Until very recently, however, the e-book hadn’t lived up to its hype. The traditional book is, after all, relatively inexpensive and portable, and nobody saw a good reason to switch from that comfortable print-on-paper environment. That’s changed with the almost universal usage of BlackBerrys, PDAs, iPods and iPhones, as on-screen reading becomes a 24-7 activity.
Pushing e-book adoption to the next level has been the recent arrival of Amazon.com Inc.’s Kindle – a US$399 electronic reader that gives its users direct-download access to some 115,000 titles from major publishers such as Scribner, Ballantine, Putnam, Simon & Schuster Inc., and Penguin Group. For US$9.99, Kindle owners can download current hardback bestsellers, such as Liberal Fascism, that would otherwise set them back almost US$17 plus shipping from Amazon.com’s online store; a paperback, such as The Overlook by renowned mystery author Michael Conolly, is US$6.39 in electronic form, compared to US$7.99 in print if ordered online and even more if purchased in a bookstore. While Amazon.com doesn’t provide figures on its e-book sales, the first batch of Kindles (said to be about 4,000 units) sold out in 5½ hours; since that November 2007 launch, the wait for purchasing a Kindle has been as much as six weeks. (Another online site, eBooks.com, offers more than 102,000 books that can be consumed on the Iliad Reader – a device costing a much pricier US$699.)
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In 2007 e-books worth some US$32 million were sold by major publishers to American wholesalers – amounting to, perhaps, double that figure at retail levels (local figures are not available). It’s still not that impressive when compared to overall retail book sales of US $40 billion last year (again, in the U.S.), but 2008 could well be the year of the e-book breakthrough. Already, libraries are moving to electronic versions of books, and the Association of Book Publishers of B.C. is putting together a digital library of members’ books in partnership with several library consortia in the province. “It makes perfect sense to me,” says Margaret Reynolds, the association’s executive director, “as a way to get those non-fiction, reference-type books into the libraries.”
Another veteran B.C. book publisher, Howard White of Harbour Publishing, sees the e-book as the future of his industry. This past Christmas, he even gave his wife a Sony Reader so she could download bestsellers from the Internet. “She reads about two or three bestsellers a week, but she’s not a collector, and that means they just pile up,” says White. “So it suits her perfectly to just be able to go on to the computer and download the next book, and when she’s finished it, it vanishes into the ether.”
White, 62, gives the B.C. industry a decade to make the transition. “It does make you a little insecure, and it can make you wonder if you’ve spent your life in a dead-end alley,” says White. “The best-case scenario for Harbour is that we would continue to do exactly what we’ve always done, except that we send the printer-ready files off to Amazon or Google or somebody like that.” His take is that e-book sellers won’t move into content creation, especially if that content is as specialized as the books of B.C. coastal history that have been Harbour’s mainstay for 34 years. “But I’ll be happy to broker it and market it and make it available.”
One thing that has kept B.C. publishers like Harbour alive has been a long-standing system of federal grants. Figures for 2006-2007 show, for example, that Harbour got $124,000 in grants from the feds, D&M got $314,000, Raincoast $155,000, Orca Book Publishers $152,000 and Talonbooks $60,000. There is also a provincial tax credit that matches 90 per cent of the Ottawa money. Still, with margins being exceptionally tight, cutting prices in response to a rising dollar has proven particularly difficult without the larger press runs of big U.S. publishers. D&M’s McIntyre cites a title his company is co-publishing this year with Knopf Publishing in New York. “They’ll probably do 10,000 copies and price it at, let’s say, $27. Well, for us, we’ll have to originate 3,000 or 4,000, so our price should be $35, but the pressure on us will be huge to bring prices down, and we will.”
E-books, on the other hand, cost no more to produce than the money spent on acquisition, editorial work and marketing. In a digital world, says D&M’s Mark Scott, printing and book storage costs will plunge. “People always wring their hands and say, ‘Oh my God, publishing is going to disappear,’ but none of these skill sets are going away. So it’s not a bad story for the publishing industry.”
Without citing specifics, Scott says that D&M is also gearing up to take advantage of new technologies. “If you look at the business as the traditional publishing business, then you probably don’t see a lot of growth potential,” says Scott. “But if you look at the business and you say, ‘Well, you’ve got all of these very talented people and have a great backlist, a fabulous brand, then there’s no reason why you can’t leverage that skill set into some new opportunities.”
Whatever the opportunities, Scott doesn’t expect books to become quick-sale, low-price commodities once in digital form. He cites a current D&M title, A Secret Between Us – the Giller-nominated novel by Ottawa-based francophone writer Daniel Poliquin – as an example.
“A Secret Between Us is not like a piece of music where you download it from iTunes and consume it in three minutes,” says Scott. “Books are something that are consumed over a longer period of time; it’s a different kind of purchase decision. So I don’t think you’re going to see books driven down to 99 cents a copy. Maybe some will be 99 cents, but people are prepared to pay more, and we can only sell at a certain price that gives a return.”
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Children’s-book publisher Orca Books of Victoria already produces a simultaneous e-book version of every one of the 60 Canadian-written young-reader titles it publishes annually. It also has e-books for each of its 350 back titles and is going to have four stand-alone audio titles to go along with the 50 audio versions of previous books by the end of this year.
Even so, associate publisher Andrew Wooldridge doesn’t see the printed book fading away anytime soon, particularly in the young-reader market, which may never be suited to the e-book revolution. “The printed book is a perfect piece of knowledge,” says Wooldridge. “There’s just nothing else like it that a kid can hang on to.”
Wooldridge says that while he does see a future in which B.C.’s publishers are forced to merge and smaller ones disappear – because of a changing marketplace, as well as competing media – he believes that Orca will continue on. “Building from within works well for us. We’re at a size where we think it’s manageable the way we have it set up now. I also think publishers are very independent people who are doing it for more than just business reasons.” Margaret Reynolds agrees: “These are smart businesspeople. They’re making money out of a business that’s very difficult to run. They could go somewhere else and make way more, but they’re interested in publishing.”
Raincoast, for one, is uninterested in publishing its own books, returning to its distribution roots after its spring 2008 lineup. Yet despite giving up on being “content generators,” Raincoast management sees no reason to fear the digital revolution. “Through the course of my career people have been talking about the rise of the e-book,” says Raincoast’s vice-president of marketing, Jamie Broadhurst. “Before that it was CDs and DVDs. But our business plan is predicated on the fact that the pre-printed, paper-bound book is going to be around for a long, long time.”
The company has no intention of entering the e-book market, says Broadhurst, except to provide online booksellers such as Amazon.com and Indigo Books & Music Inc. – both expected to have double-digit increases in their paper-based book sales over the next few years – with the best possible service. “Our future plan will be, basically, what’s worked in the immediate past,” says Broadhurst, who admits Raincoast’s website isn’t even enabled for e-commerce and won’t be anytime soon. “Our online strategy isn’t the most sexy, but it’s certainly the most effective.” He says he doesn’t see books and e-books as an either/or proposition: “We actually see them as being complementary.”
Raincoast’s success with the Harry Potter series – selling to the very generation that should be most attracted to e-books – gives Broadhurst hope that those wedded to the traditional publishing model can, indeed, survive. “The Harry Potter reader is someone who is getting information online, going to websites, texting to their friends – and at the same time they think nothing about sitting down and reading a 700-page printed book. They don’t make a distinction between printed and online – they just view it as a great story.”
For Scott McIntyre, that’s good news. “I’m an old-fashioned guy, right? I mean look at my age, look at the colour of my hair, and I still think the physical artifact has magic. Is that the case just for people over 40, over 50 or over 60? Maybe. But people forget the book is probably the most efficient mechanism ever devised to deliver an idea in privacy.”
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Howard White, at Harbour Publishing, also has faith that there’s a place in the future for the tactile product he’s spent 34 years pumping out. That said, he’s prepared for the new world order and excitedly mentions the digitally sophisticated staff at Harbour, mostly under age 30, as being fully prepared to take the reins – when and if he decides to retire.
“A lot of them have come through various publishing programs at SFU or back east, and they’re primed about all the technological change,” says the optimistic White. “They may not know any better than I do exactly what shape it’s going to take, but they’re certainly more fit to deal with it than my generation is.”
Count Scott McIntyre among the lucky few. As B.C.’s publishing veterans near retirement, many – like McIntyre – are looking to exit with some jingle in their jeans. But benevolent investors such as Douglas & McIntyre’s new president, Mark Scott, are few and far between, while Canada’s laws prohibit potentially lucrative foreign takeovers.
“A lot of publishing firms are started by people who really don’t have much money. They find a way to get by and they grow the business organically,” says Kevin Williams, formerly executive vice-president at Raincoast Books, who, with his wife Vicki, recently bought a 50 per cent share of Vancouver’s Talonbooks. Williams says he was attracted to the 41-year-old firm because its owners, Karl and Christy Siegler, had a good backlist (including top-selling drama The Ecstasy of Rita Joe), they were carrying no debt and Karl would stay on as publisher, with Christy continuing as production manager.
Here is what some other publishing firms are plotting for their next chapter:
• Arsenal Pulp Press,
founded in Vancouver in 1971, issues 12 to 18 titles a year (bestsellers include How It All Vegan!). Publisher Brian Lam says associate publisher Robert Ballantyne has a five-year plan to purchase half of co-owner Stephen Osborne’s 50 per cent interest in the company.
• Harbour Publishing, founded in 1974, publishes 25 new titles a year from its remote Pender Harbour offices. Founder Howard White – who says he’s most proud of his mammoth Encyclopedia of British Columbia – indicates that there are plenty of young people on staff ready to take over when he retires.
• New Star Books, launched in 1969, releases six to 10 titles each year. Publisher Rolf Maurer, 52, says he’s proudest of his support for writers such as Lisa Robertson, Mark Edge and Terry Glavin. If and when he retires, Maurer says, he’d like to provide a path for someone young to get into the business without the tough times of having to start a new literary press.
• Orca Books, founded in 1984, publishes 60 “young reader” titles a year. The Victoria-based house plans to have associate publisher Andrew Wooldridge become a full partner with owner Bob Tyrell this spring, with Wooldridge eventually buying Tyrell’s share.
• Raincoast Books, co-founded in 1979 by Allan MacDougall, is best known as the Canadian publisher of the Harry Potter series. Raincoast executives expect MacDougall, 61, to remain in his job for many years to come. “If it ain’t broke, don’t fix it,” says vice-president of marketing, Jamie Broadhurst.
• Whitecap Books, founded in North Vancouver in 1977, published 36 titles in 2007 with an emphasis on food, wine and children’s titles. Its all-time bestseller is The People’s Princess, which sold 200,000 copies. President Michael Burch says succession plans are confidential.
Photo of Mark Scott by Barry Gnyp.