Canada Market in a Word: Tight

If there is one consistent theme heard across the entire breadth of the Canadian publishing industry, it's that the market is "tight." In a country of 30 million people that has available just about every English book title in the world, having a great frontlist, a supporting backlist or next megabestselling author isn't the path to success it once was. For many players in the reportedly stagnant Canadian market it is something far less exciting: operational efficiency; that is, getting books to people who want to buy them, when they want to buy them, in the wake of the perceived declining value placed on books by the Canadian consumer.

The View from Above

This is all very much in the Canadian character—laconic, unflappable, not given to careless excitation. But if you happen to catch the ever-engaged Michael Levine, a Toronto-based entertainment lawyer, chairman of Westwood Creative Artists and a partner in Goodmans LLP, you get to hear from a significant book-deal maker who is only too happy to enumerate the more exciting development of the past year:

The growth of narrative nonfiction, particularly biography;The increasing importance of on-line for both promotion and sale;The growing appetite of the audiovisual media for Canadian literature as drama, high-lighted by such programs as the Canadian Broadcasting Corporation's From Stage and Page to Screen including, in its first season, works by Margaret Atwood, Mordecai Richler, Guy Vanderhaeghe and Douglas Coupland;The prospect of considerable funds being generated as a result of the CTV/ Chum and CanWest Global/Alliance transactions, which may result in increasing Canadian drama based on literary adaptations.

As far as an appraisal of the current competitive landscape, Levine says, "The good news is that there have not been any major bankruptcies in the current period, and while government largesse has not increased, it has been quite stable. As a literary agent, I have found the landscape simpatico, with the possibility of placing a variety of works. There is a growing appetite among Canadian publishers for world rights and, in some cases, this has had a very successful result, particularly in nonfiction."

The views of Carolyn Wood, executive director of the Association of Canadian Publishers (ACP), have a more urgent tone: "Find new ways of doing business," she says. "A range of research shows that demand for books—printed books—is holding steady, but many of the old ways of connecting with readers are being rendered obsolete." Conversations with the heads of multinational publishers operating in Canada confirm Wood's perspective."

By the Numbers

How many books were sold in Canada in 2006? Based on BookNet Canada's BNC SalesData, sales for the Canadian retail market stacked up as follows:

Total Volume in Units Sold in 2006: 47,805,000Total Value Sold in 2006: $785,330,302 CDN

For this analysis, sales were tracked between January 1, 2006 and December 31, 2006. Booknet Canada says that BNC SalesData (not unlike BookScan in the U.S.) represents about 70% of industry sales, so by extrapolating, it can be estimated that the total number of units sold in Canada was nearer to 70 million, with a value of about $1.1 billion.

As for the top 10 selling books in Canada, it is clear that Dan Brown dominated, taking the first three spots; on the publishers' side, Random House, with some help from its Doubleday Canada imprint, took four of the top 10 spots.

Breaking things down on a book-by-book basis:

Average list price for titles tracked in 2006 (all publication dates and categories): $18.46

Average list price by subject (based on top 10,000 titles tracked in 2006)

Fiction: $14.80Nonfiction: $23.81Juvenile Fiction: $11.50Juvenile Nonfiction: $14.12

Industry Challenges

If you had to sum up the major challenges facing players in the book industry in Canada, you could do it with the triad of stagnant markets, supply chain management and technological hurdles. The majority of issues facing the industry stem from those three issues.

Stagnant Markets

Prominent Canadian book industry executives seemed unified in their opinion that the Canadian publishing industry and bookselling market is stagnant, and many offered their reasons for the stagnation and how they were feeling the strain financial. Joel Silver of Indigo summarizes the situation: "While book consumption in Canada is stable, consumers have a tremendous amount of choice as to how to spend their time. Books will always form a core of that reading time, but there is intense pressure from an explosion of online activities that now consume significant leisure time."

Kim McArthur of McArthur and Co. says, "I think the biggest challenges facing the Canadian industry today are the size of our market—tiny compared to the U.S. and U.K.—and the retail landscape, which is shrinking. The number of both chain and independent customers has shrunk dramatically in the 20 years I've been running a company in Canada, since starting Little, Brown Canada in 1987."

Firefly's Lionel Koffler points out that as a result of big book retailers holding back on advertising, other media are taking away customers' attention. "You don't see the advertising for the big U.S. and Canadian chains in the same places they used to." Additionally Koffler notes the increasing competition for consumer dollars by nonbook retailers: "I think [booksellers] are losing ground to places like Best Buy and Home Depot as good places to shop—the book business is falling behind at the retail level."

Les Petriw, managing director and international sales director of National Book Network; Oliver Salzmann of Madison Press; and Chris Hall, senior inventory manager for McNally Robinson Booksellers, all agreed that another driving factor behind stagnation in the Canadian market is competition from other media sources, such as the Internet and a 500-channel TV universe.

Jamie Broadhurst, v-p, marketing, of Raincoast, cited demographic issues—declining birthrates, increasing rates of aliteracy versus illiteracy. In his words, "People can, but choose not to read." He adds, "The number-one issue is that the next generation picks up a book. While it may not grab the headlines, it is what drives our business. One of the most gratifying things about working on Harry Potter is that two or three weeks after the release of any of the books, I can walk down the street and see people reading it. I hope to have more of that excitement with other books."

Kids Can Press v-p and publisher Karen Brunsek sees the stagnant, increasingly competitive market in terms of dollars and sense. "The squeeze on margins by the changes in the marketplace, which is demanding deeper discounts, necessitates a fresh look at the publishing business model," she says. "We need to work with our partners—our customers and our authors and illustrators—to address the changes realistically and figure out what the new model can be."

Tundra Books publisher Kathy Lowinger points out that there are some challenges specific to selling children's books, namely, "the narrow margins imposed because people are inexplicably reluctant to spend the same money on a book for a child as for an adult, and because of reduced budgets in schools and libraries." But the reality is that the same can probably be said for the entire book publishing industry.

Supply-Chain Management

Without a doubt, internal operations and supply chain activities have a big role to play in an industry facing falling margins and an ever-increasing number of new books. "With the drift toward concentration in the supply chain, the potential for success tips on a narrowing range of players. All this in a Canadian market of only 30 million" says Ed Carson, CEO of the Penguin Group (Canada). "Bibliographic standards and certification, as well as the accuracy of data shared among publishers, retailers and wholesalers, is an ongoing challenge for publishers and distributors in Canada. It's not sexy, but in a country where just about every book in English (and French) from the rest of the world is published or distributed, maintaining clean lines of information and rights management is complex and evolving almost daily."

Patrick Crean of Thomas Allen Publishers is a little more blunt in his assessment of the situation: "Inventory is the bane of publisher's existence. We've got to get to print on demand. It is so obvious. We say how many books we are going to print or we wait and see what the backorders are going to be—it is a guesstimate." This is compounded by the fact that book retailers have changed their buying habits. As McClelland & Stewart's Doug Pepper puts it, "You used to have a certain level of confidence that a book would be bought, without a lot of reordering. Now accounts are buying for the short term, and because we can print and ship faster than ever before, retailers are relying on us to do the warehousing for them. This is wonderful if you have the stock and demand to match, otherwise you are sitting on money. Warehouse space isn't free—this is a challenge for every Canadian publisher."

Technology Hurdles

Books are increasingly competing against other forms of entertainment for a very limited currency—consumers' attention. And the increasing ease with which music, works of literature and video can be distributed means that someone sitting at a computer could just as easily be downloading a copy of the latest Dan Brown novel, a recent episode of 24 or the latest single from the Black Eyed Peas.

Advances in information technology, be it in the area of cataloguing, scanning, reproduction or distribution, mean the publishing industry is being lumped in with other forms of information and entertainment and therefore facing more competition. David Kent, CEO of HarperCollins Canada, explains, "Remember the old Harvard Business Reviewstory on how the railroad business forgot it was not in the train business, but the transportation business? We are in the information and entertainment industry, and it's a very crowded marketplace."

This leads to an obvious problem—how does one succeed in a digital world with a print-based model? The printed book isn't going anywhere, but the ways to reach readers are changing and the challenge is figuring out the best methods to do it. The first hurdle is copyright.

The problems of copyright protection brings book publishers together with other media, such as music, television and motion pictures. According to Jacqueline Hushion, executive director, Canadian Publishers' Council, technology "arm[s] those who would infringe copyright with the tools necessary for widespread illegal dissemination of works and thus the undermining of publishing.?"

Wilf Clark, v-p of sales for H.B. Fenn and Company, voiced similar concerns: "Barefaced noncompliance with Canada's Copyright Act, with respect to both piracy and violations of Canada's book importation regulations," is one of the biggest threats to the industry.

The ACP's Wood acknowledges that although there are many technology challenges, "some of these represent new opportunities for publishers. While digitization threatens copyright protection, it also offers new revenue opportunities. New marketing technologies can help to level the playing field." CPC's Hushion agrees, "The greatest challenge is also the greatest opportunity, and that is the huge bundle of new technologies. They provide the potential for new marketing to old channels, the opening of new channels, forays into the Internet marketplace, strategies for content management and rights management and titles perpetually available in print."

Brad Martin, CEO of Random House Canada, offers this caveat about electronic distribution: "We believe the electronic copy is going to become valuable property, and you have to figure out a way to monetize it, so that the author, publisher and marketer have a revenue stream." Martin recounts a story of an e-tailer who offered customers the e-copy for another 20% if they purchased a print copy of any book. In Martin's mind, that is saying that the electronic copy is worth 80% less than the hard copy. "We are selling creative content. It doesn't matter what the delivery method is, it is about what the content is worth, and what it is worth for the person who shapes it and markets it." He adds, "It shouldn't change what the author gets. And the publisher needs to get paid as well."

Reaching Customers

"Publishers are only as good as the foot soldiers, the retailers," says Firefly's Koffler. "If they don't make their sales, we get all our books returned to us. We need to find ways to help them to do better."

Westwood chairman Levine challenges publishing industry players to step up the level of creativity in publicity operations although he feels there is growing recognition of the value of publicity, as more authors become personalities, and more exposure, as awards and interviewers with a particular penchant for books to assure an increasing exposure of the Canadian public in all media to forthcoming titles.

Talk to Carolyn Wood about the topic of traditional versus nontraditional sales channel and she is quick to point out this meaning of this term "varies greatly from one publisher to another, and it's impossible to give a general answer. Some see direct sales through publishers' web sites as non-traditional. Most are interested in moving forward on this front, and some have active programs. In general those who are active have found that sales activity through this channel is fairly modest. Very few are yet at a stage where they can undertake the kinds of marketing support needed to drive such sales, but they are getting there. Some remain philosophically opposed to bypassing independent retailers."

Hushion also acknowledges the wide range of outlets that could be considered "nontraditional" sales channels for book publishers—"The grocery store, the gift show, Internet-based 'communities', house wares and appliance depots, and myriad others in many sales channels—both static and electronic—have exploded into the consciousness of book marketers." Hushion feels that non-traditional sales channels can be used to better reach certain demographic groups. She offers the example of a publisher wanting to target 18-29-year-olds to do so by ensuring that books are available in shops they frequent where they might not otherwise expect to find them. For example, books in music stores.

According to Kevin Hanson of Simon & Schuster, "typically you see the industry look to non traditional market places when their traditional market place so signs of fatigue."

So when it comes to the traditional versus non-traditional sales channel debate, you can ask ten industry people as to what they consider a traditional and non traditional sales channel and you are more than likely to get 10 different answers. Oliver Salzmann of Madison Press put it best by saying "We regard any outlet that is not primarily devoted to the selling of books (i.e., bookstores, book retail chains, retailers with book merchandising plans as a permanent part of their mix), as nontraditional.

Multinational Profiles

Simon & Schuster Canada—Double-Digit Sales Growth in a Flat Market

"If you look back over the last 24 months, the big story was the effects of the currency exchange rate on pricing—prices have fallen relative to the U.S.," says Kevin Hanson of Simon & Schuster Canada. "On new hardcover releases you can point to a 25% decrease over the last 24 months, so publishers have been working hard to sell more units, but prices have stabilized. Last year, S&S Canada was able to sustain sales growth in the double-digit range in a Canadian sector that was flat by all accounts. We have some books that are really running, The Secret is a huge book."

The biggest challenge confronting Hanson for 2007 is continuing to grow Simon & Schuster Canada at the rate at which it has grown over the past few years. Simon & Schuster Canada recently reconfigured staffers into a number of highly focused teams that work very closely with Simon & Schuster's U.S. and U.K. publishing colleagues.

What separates the company from others in the market is that the focus at Simon & Schuster Canada is completely on its import lists from the U.S. and the U.K. Simon & Schuster then applies a "Made in Canada" approach to building sales and marketing strategies for key titles through our various imprint teams.

Simon & Schuster Canada distribution is through the U.S. Its Canadian warehouse was shut at the time Simon & Schuster acquired Distican in 2002. According to Hanson, this frees the company to focus on selling and marketing. This is further enhanced by the fact that Simon & Schuster Canada does not have an indigenous publishing program so the company does not spend time exporting books to the U.S. market.

Simon and Schuster Canada focuses primarily on growing its core business and enhancing capabilities to support; nontraditional channels are less of a priority at the moment (the company doesn't consider Costco nontraditional). Having said that, Simon & Schuster Canada did a huge premium incentive program with General Mills Canada last year but those sorts of project are more the exception than the rule.

Random House of Canada: The Thrill of the Giller

"We were having a steak dinner and watching CTV; we had the printer standing by in the U.S. We called from the table and ordered 40,000 copies and they ran them that night and another 40,000 the next morning." That's Brad Martin, CEO of Random House Canada, talking about the night Vincent Liam's Bloodletting and Other Miraculous Cures won the Giller Prize. "We have been involved with a number of Gillers over the years and in hardcover, sales can go as high as 60,000 and as low as 35,000—this was in paperback and the biggest Giller we have seen, with 180,000 units sold, 170,000 of them after the Giller."

Martin likes to describe Random House as "not just a publishing company, but publishing services company, since we provide marketing, sales, design and production services for McClelland & Stewart, as well as providing marketing and sales services for all the U.S. and U.K. Random House books brought in to Canada."

As Martin put it, Random House had a big fiction year: "We hit all our targets last year. Our Canadian publishing program had its biggest year ever." In Martin's eyes, duplicating this year's success is his biggest challenge.

One area where Random House of Canada clearly benefits from being part of the Random House family is in the area of logistics and distribution, which is done out of two warehouses in the U.S. As Martin points out: "There is no double stocking. It makes it more efficient for us. I came from a situation where we double-stocked all the U.S. and U.K. products, except for the slow mover. It provided a challenge and a built-in inefficiency because you can never be right all the time." Martin is quick to add that this arrangement means "that we are a day or two behind someone who has books here in Canada and it does mean we cant just simply go into the warehouse and get them on a truck, but we can expedite this stuff. Consistency in the supply chain is what is important, and the individual business model dictated the premium you want to put on your turnaround time."

Martin explains that the cost difference of shipping cross border is not an issue, since 72%—75% of Random House's business comes out of the U.S., so running a separate Canadian supply chain would involve an exponentially increased level of material handing compared to the company's current arrangement. "As it stands now, when filling customer orders, the books are handled once when they leave the U.S. warehouse and then once again if there are any returns. This is in stark contrast to the situation if Random House maintained a separate Canadian distribution system—this would require material handling in U.S. and twice in Canada (once into inventory and once out of inventory) as product is delivered to customers and then rehandling a portion of it when it came back from the customer. That is a lot of material handling. With our current arrangement, we handle it once when it leaves the U.S. warehouse and a portion when it comes back."

What Martin really finds really exciting are the changes going on in the area of marketing plans. According to Martin, prior to about two years ago, all plans looked rather generic, but in the last two years, there have been a lot more opportunities in the online world in what you can do to get exposure. And in the online realm, nothing is most exciting to Martin than Random House's loyalty program, Book Lounge. "We have over 6,000 loyalty club members. And we are now dialoguing with these people. We are asking them questions about our marketing. The key thing we hear is that they want to know about new books. It is an opportunity to market direct to the consumer," says Martin. "When we set this up, there was a survey out there saying there were avid readers in Canada reading 10 to 15 books every three months. These people differ from the next 2.5 million people who read two to three books every three months. The second group was bewildered by all the choice, the first group wasn't bewildered, they wanted to belong more. We ran our 'New Face of Fiction,' a program we have been running for 12 years—we profile two new authors on the Knopf list. We had a launch with the Gladstone Hotel— we went to the loyalty club and said the first 30 people will get tickets and the response we got back from these people was great. It is about creating exposure, and word of mouth is the most effective way to market books."

As far as Random House is concerned, the mass marketer is a traditional market for them. If you visit the company's Web site, it is obvious the company is selling direct to consumers in both Canada and the U.S., although Martin is quite clear that "in Canada all our initiatives are on the marketing side. While we have the facility to sell direct to consumer, the sales are so far relatively insignificant; the greatest win for the author is the opportunity to interact directly with the reader. Right now what we are interested in is creating more of a buzz for our books by being in direct contact with our consumers and driving them to the store."

From a consumer's point of view, Random House is rolling out the "Insight Widget" on Random House's American Web site, with the Canadian Web site to follow. It allows people to sample a book and post book content on their personal Web sites.

HarperCollins Canada— Awards Galore

Ask David Kent about the biggest successes for HarperCollins Canada over the past year and he's likely to rattle off a list of awards that include multiple awards at last year's Book Expo Canada, including Publisher of the Year—the third time in five years; Children's Author of the Year, Kenneth Opal; and Marketing Campaign of the Year for Chronicles of Narnia. Additionally HarperCollins Canada won the Gold Award in the Publishing Products and Services category and the Award of Merit for an Integrated Multi-media Campaign: Budget under $1,000,000 at the 2006 Canadian Marketing Association Awards for its campaign for The Weather Makers by Tim Flannery.

Kent will probably also tell you about Heather O'Neill's debut novel, Lullabies for Little Criminals, winning the CUBIC Canada Reads contest and shooting to #1 on bestseller lists across the country, along with numerous other #1 national bestsellers, including Make It Right by Mike Holmes, The Book of Negroes by Lawrence Hill, Helpless by Barbara Goody and Flannery's The Weather Makers.

What Kent probably wont tell you about, unless you press him, is the "boring" operational details, like the 90% of orders shipping out of the 100,000-square-foot HarperCollins Canada distribution center the day they are placed; the 99.79% order accuracy; or the stock turns of approximately 90 days. In a market as tight as Canada's, internal operational efficiency can make the difference between a good year and a great year. Accordingly, Kent sees the biggest challenge for his firm next year in terms of operation—the implementation of a new global JD Edwards ERA System in early 2008. Kent says, "HarperCollins Canada was chosen to go live first because we are a microcosm of the entire company, selling books from all of the other HC divisions. The project is currently on schedule, and we are confident that we will implement on time with minimal impact to our customers and client service levels."

With "nontraditional" channels being put forth as a solution to many publishers' flatlining sales, Kent is pretty clear that HarperCollins Canada will keep doing what it is already doing, "with a few key exceptions, where we have products that don't cannibalize our traditional sales." HarperCollins Canada operates on the basis that nontraditional sales channels in Canada will not become more important than its traditional retail channels.

In approaching the U.S. market, HarperCollins Canada continues to refrain from selling finished books and focus on only offering subsidiary rights to its Canadian-authored titles to a wide variety of U.S. publishers, including HarperCollins U.S.

HarperCollins Canada is looking to incorporate new technologies into both the marketing and distribution aspects of the business. On the marketing front, next year will see the company roll out three dedicated audio programs and two new video programs; rich media originally intended for online being repurposed for the company's traditional marketing channels, including advertising in movie theaters and in print; and showcasing on flat-screens in bookstores and at literary event venues.

On the distribution side, Kent says HarperCollins Canada "utilizes state-of-the-art distribution technologies. We actively participate, and are considered to be leaders, in all industry technology and IT initiatives (EDI, ONYX, ISBN-13, etc.). As with other industry-wide initiatives, we will actively lead the effort to implement RID in conjunction with our customers."

Penguin Group Canada: Changing of the Guard

Ed Carson, president, and David Divider, publisher and as of the time of writing, soon to be president, of Penguin Group Canada, point out that their list was a powerhouse of bestsellers, with the entire list's growth in 2006 at 30%. The company boasted a number major titles in the fall, such as Secretsfrom the Vinyl Café(Stuart McLean), Heart Matters (Adrienne Clarkson), Nixon in China (Margaret Macmillan), Knights of the Black and White (Jack White), Ysabel (Guy Gavriel Kay), The Inheritance of Loss (Kiran Desai), On Beauty(Zadie Smith), Tales from Dog River(Michele Sponagle) and The Mission Song(John le Carré).

"A substantial and very successful re-structuring within the sales and marketing groups in April/May 2006 brought about a renewed energy and focus to the company as a whole," says Carson, who is leaving the company at the end of April. "These changes were the last of a series of material, structural, staffing and business plan changes brought in as part of Penguin Canada's revitalization program initiated five years ago."

With Dividar taking over for Carson in a well-planned transition, the company is looking forward to even stronger Canadian and international lists throughout 2007, and a much greater focus on strategic marketing and publicity tied to bestselling authors and their titles across a range of media. This involves working closely with Penguin's U.S. and U.K. cousins to introduce key authors to the Canadian market.

Penguin, shortlisted for the CBA's Libris Award as Publisher of the Year for 2007, is deploying technology to grow and develop its digital and customer data bases, especially in the area targeted direct-to-consumer online marketing

Penguin has strongly embraced several new technologies, especially in the marketing of authors and their books. Over the past two years, Penguin increased its online presence, including a number of dedicated microsites packed with bonus interactive content, allowing readers an extended insight into the book.

Consumers can keep track of upcoming author events through Penguin's Facebook.com page, interact with their favorite characters through Myspace.com, and while away the hours with streaming event video footage and author interviews on YouTube.com. Also in the works is a planned presence on the popular 3D virtual reality site SecondLife.com.

Home-Grown Talent: Canadian Publishers

Government Support

No discussion of the Canadian publishing industry is complete without a mention of the role of the Canadian government in fostering the industry through Heritage Canada and its Book Publishing Industry Development Program (BPIDP).

According to Carla Curran, director, book publishing policy and programs at Heritage Canada, "The objective of the Book Publishing Industry Development Program [BPIDP] is to support the production and promotion of Canadian-authored books through contributions to Canadian-owned and controlled publishers.

The program employs a wide range of performance measures, such as title production and sales data, to determine whether this objective is being achieved in an effective and efficient manner."

Curran says the program's audience-driven, sales-based funding structure is designed to encourage efficiency, and the financial support provided through BPIDP rewards success in selling Canadian-authored books by providing funding based on a recipient's total sales of eligible titles. Off the record, many Canadian publishing executives disagree with this assessment.

As to the success of the BPIDP's approach, Curran offers examples:

There are nearly three times as many Canadian-owned publishers as there were in the 1970s, four times as many books published each year by Canadian houses and five times as many Canadian authors. The 2004 evaluation confirmed this view by noting that BPIDP has had a significant impact on increases in the production and sale of Canadian books in Canada and around the world, has contributed substantially to diversity in the Canadian book publishing industry, and has helped many companies to grow.

BPIDP's Supply Chain Initiative component: Through this component the program was instrumental in bringing together diverse industry participants to address the broad challenges surrounding the modernization of the book supply chain. In 2005—2006, BookNet Canada, with the assistance of Supply Chain Initiative funding, launched a comprehensive Sales Data Analysis service for the Canadian English-language market. This service tracks sales from more than 650 sources across Canada, from traditional book retail chains, independent booksellers and college/university stores to nontraditional sources such as airport shops and grocery chains. The service provides real-time reports to publishers and retailers on what is selling, helping the industry to optimize print runs, analyze pricing strategies and maximize sales.

The Small Presses

According to Ronda Kellington, executive director of the Literary Press Group of Canada, a national trade association that advocates for independent Canadian literary publishers as well as offering sales and marketing services, the biggest challenge publishers face "is the current state of the marketplace. Sales are flat, at best. Return levels are high, and with one dominant retailer, there's concern about the lack of diversity of titles in the marketplace on offer to Canadian readers."

Fitzhenry & Whiteside Ltd.— Family Owned and Still Going Strong After 40 Years

Talking with Stephanie Stewart, U.S. sales & marketing manager for Fitzhenry & Whiteside, you get a sense of the enthusiasm that has kept the company going strong for the past 40 years. In fact, celebrating 40 years in business was one of the company's biggest successes last year. The other success was the book Sidney Crosby: Taking the Game by Stormby Gare Joyce. The paperback edition came out in January and the company already plans to reprint.

In Stewart's mind, the challenges facing her firm are twofold: trying to keep a balance between supporting traditional booksellers—bricks-and-mortar booksellers—and trying to grow in nontraditional markets, which include online retailers, big-box retailers such as Costco, and niche market stores.

Another goal is keeping up with the way books are promoted to the general public yet trying not to jump on every single bandwagon. "This means making sure the company has diverse and innovative strategies that will work not only in the trades but also in the education market. If you look at teachers and librarians," says Stewart, "they are as quickly bored as the kids they deal with. They get so inundated with every single thing that publishers are trying to pitch as the new big thing."

As for marketing changes over the past year, Fitzhenry & Whiteside revamped its Web site and sells direct to consumer. Stewart is quite clear: "The retailer and institutional markets are our main focus right now. Direct-to-consumer is a secondary market for us.

When asked about her company's specific strengths, Stewart is quick to point out "a strong education side for k—12, with dedicated sales educational consultants. We put in a lot of time learning the specific needs of individual educational institutions."

In its U.S. operations, the company plays to its strength in the institutional markets. "At present, 16% of Fitzhenry's sales come from the U.S." Stewart says. "And because the U.S. is a larger market, we have a strong chance for growth, but it is important for us that for any books we launch into the U.S. market, we have the clear focus as to the target market for the book—institution versus. trade. We've been incredibly successful in the institutional market but our books are not the Harry Potters of the world. We do not have the mass market trade appeal yet. The one area we are really looking to grow is our science fiction, because we have Robert J. Sawyer's books. This is where we feel we can have the most growth within the adult trade side in the U.S."

On the technology side, Fitzhenry's focus is on its role in marketing—enhancing copy for both its own Web site and those of its retailing partners, especially the types of excerpt that can be provided. The biggest challenge in this are, a according to Steward, is in the area of working with picturebooks—"most excerpts require text, not images. So we are trying to come up with different ways, without giving away the entire book, to have that enhanced content out there."

Another example of the interaction between marketing and technology at Fitzhenry is changing the way of doing an author tour. Steward is quite front and center about the fact that "it isn't economically viable for us to be sending authors across the country. Even a five-city tour is expensive. Something we are embarking on—and we are starting it with Deborah Ellis and her book Jakeman—is a Webcast tour. We are going to bring her to students and teachers via an interactive Webcast."

Firefly Books—In Full Color

"We rarely have big-name authors," Firefly president Lionel Koffler says proudly. "We focus on big, bold four-color books in the area of practical, science, nature and wildlife. This year we did Insects: Their Natural History and Diversity by Stephen Marshall; it retailed for $95 and sold 7,000 copies. We did 35,000 copies of our new edition of Night Watch,and 16,000 copies of a new large-format book on the early days of the Rolling Stones.

Koffler's explains that Firefly has a "big investment in backlist and continuing to promote it. Almost all of it is four-color and it takes the public a long time to get familiar with it." Koffler says that it is Firefly's attention to quality that attracts authors from other firms. And he not shy about discussing Firefly's investment in its works. "We spend a lot of time on our books. We have several books coming this year that have been in the works for four years. The insect book took five years to produce— 700 pages and a real labor of love—but it sold because it was good quality. We sold a small amount in trade, and did a mailing to entomologist and plant professionals, and we saw loads of special orders through online booksellers. We are just about to go into second printing. It told us that making a better book and promoting it to the right people is what we need to do."

Koffler was quick to point out that one of the biggest challenges to his firm this year was the amount of advertising, or lack thereof, done by big retailers in the U.S. "I used to see ads for big retailers and now they are very lacking. There was just an article last week about the L.A. Times killing their book section and commentary from someone at of the big five or six standalone book reviews about not having a single ad from any publisher anywhere in one of their February issues. That is the biggest threat to book retailing and publishing, the kind of path of laying back. Everyone has a huge investment in the current structure and we need to do more to help it survive."

Firefly believes in promoting through what most publishers would consider nontraditional channels, for example, advertising in Canadian Geographic, because that is where their audience is. And being a producer of niche, expensive books, Firefly requires sizable international markets in order to be successful. Koffler makes no apologies for focusing on markets outside of Canada for the majority of his business: "60% of our sales are in the U.S., 35% in Canada and 5% in Britain." As a publisher doing expensive books, we need a big market to cover our costs; we often have as much as $400,000 to $500,000 invested in a book, so we need big market and long print runs. That's why we publish for the international market."

On the technology front, Firefly looks for improvements and applications that make four-color printing glow on the page. "We use technology to make better books. Now we get photography overnight—no more transparencies. We may not make a book faster, but we put more into them."

Thomas Allen Publishers— "Jim Allen is my secret weapon"

"One of the advantages I have is that our owner, Jim Allen, sells books personally," says Patrick Crean, publisher at Thomas Allen Publishers. "Jim is the consummate salesman, so he interacts directly with Indigo. When you own your own business, what a difference it makes, because all the marbles are on the line."

As far as Thomas Allen's biggest success's this year, Crean is quick to name a number of Houghton Mifflin titles from their distribution side: Richard Dawkins's God Delusion, The Trouble with Physicsby Lee Smolin and How Doctors Think by Jerome Groopman, as well as homegrown talents such as Caroline Adderson's collection of short stories, Pleased to Meet You, which was longlisted for the 2006 Giller Prize, and a book by Scott Griffin (publisher at House of Anasi), My Heart Is Africa.

When it comes to challenges in the coming year, Crean is very clear: "Reading levels are holding in Canada, so the biggest challenge is getting attention for your book. We work in arguably the most difficult book market in the world. We share a common language with the American and British. It is a game of inches—it's about getting attention."

What separates Thomas Allen Publishers from others in the Canadian market is the size of its list. "Jim and I decided that the imprint will publish 12 to 15, maybe 20 books a year—we are keeping it small to showcase our authors better," says Crean. "I don't have to fill a list. I wanted to create something where an author will have an excellent experience all the way through the process. And this is how we compete against bigger houses as we provide more personalized treatment and they feel they are invested. They feel that this is a house, a home."

When it comes to sales channels, Crean says, "We have always been very big in the gift market. We are a presence at the gift fairs. Our sales force will go to Whitehorse and sell a few copies rather than going out to London and saying this is as far as we are going to venture out to the hinterland. Our guys fan out and leave no stone unturned."

McClelland & Stewart: The Start of a New Century

Ask Doug Pepper, president and publisher of McClelland & Stewart, about the successes of 2006, and you will get an earful: "Last year was our 100th anniversary, and we did an extensive backlist promotion. We have an enviable backlist and it was a way to move up to the front of the store. We made a profit last year, which for a company like this is pretty good. We are looking to triple it or quadruple it this year."

"Financially the year started off with a boom, with Leonard Cohen's Book of Longing. I'm speculating about this, but feel pretty good in saying there is rarely a book of poetry on a national bestseller list, with the exception of Maya Angelou. Our poetry program has always been solid and while it doesn't make us much money, it allows us to publish the biggest names in poetry."

As to what separates McClelland & Stewart from other Canadian publishers, Pepper isn't shy: "The best Canadian bookselling brand. We have published almost every Canadian writer of note and still publish one of the most enviable literary fiction and nonfiction lists in the country. We are independent, although partially owned by Random House, and in a world where independents are disappearing, it is a selling point of the company." He goes on to add, "In the last few years, we've turned around the look of the company, we've added some real youth and now that we are working more with Random House, our backroom operations are more aggressive."

As far as the U.S. market goes, Tundra, McClelland & Stewart's kids' list, does 40% its sales in the U.S. but McClelland & Stewart likes to sell rights, rather than distribute directly in the U.S. in order to find people who know the market well.

For McClelland & Stewart, the story on the technology front is about archiving and downloading. "The real story for us here is the New Canadian Library series, and for its 50th anniversary we want to archive it all, to make it available to professors who want to order 60 copies when we don't get that many all year—it allows us to keep these books in print."

McArthur & Co: Waving the Flag

According to Kim McArthur, her firm's biggest successes included Maeve Binchy's Whitethorn Woods, the #1 fiction bestseller of 2006 in Canada on the year-end list in the Globe and Mail; doubling the sales of Ian Rankin's Naming of the Dead; and helping launch the More Canada program with Indigo and independent booksellers.

In McArthur's opinion, "The company's greatest strength is finding and launching new Canadian authors. We are also known for our original and creative marketing an author tours, to ensure that as many readers as possible hear about our books and buy them."

As for the biggest challenge in the coming year, McArthur is clear, it's all about the returns: "Our biggest challenge will be to keep returns at the lower levels achieved during 2006 , which were in stark contrast to 2005, when many of our lead titles were returned during November and December." McArthur is also on the hunt for new places to sell books as well: "Since regular retail channels are becoming fewer and fewer, McArthur & Company is looking to nontraditional channels such as Home Depot, gardening outlets and gift stores to carry those of our specialty books that suit their markets."

In terms of technology, McArthur & Company is embracing new technologies such as podcasts, rich ONIX bibliographic data, and BookNet on its own web site as well as taking advantage of the efficiencies of print on demand technology to better control its inventory of Canadian titles.

Raincoast Books: Business as Usual

With its head office situated on the west coast, Raincoast Books is probably best known to the general public for its involvement in the Harry Potter series but speak with Jamie Broadhurst, v-p of marketing for Raincoast Books and you get a much different view of the organization. "The heart and soul of the company is that we can ship books faster to anyone else in Canada," says Broadhurst. "At Book Expo Canada last year, the CBA voted Raincoast distributor of the year; I think it was the third year in a row."Raincoast and its affiliates run two warehouses—one in Toronto and one in Vancouver—and moved approximately six million units last year. This is an area where Raincoast continues to invest a lot of money in the back-office end of things."

Broadhurst isn't shy discussing the company's greatest challenge for the company in the coming year on the table: ramifications from the AMS debacle in the U.S., as AMS has a 25% stake in Raincoast books. Although there are still many undetermined issues at this point, Broadhurst is clear: "We have been telling our customers that in terms of daily operating capital, AMS is not a factor, and in terms of executive decisions, it is a made-in-Canada decision"

In Broadhurst's eyes, the U.S. is a very tough market. "Some of the best retailers in the world are in the United States and they have high demands." Raincoast saw double-digit growth in the U.S. last year working with PGW and claims that selling and marketing into the United States has made them a better publisher. Raincoast's strategy in the U.S. is to focus on its picture books and young adult titles. In the next two to three years they want be viewed as a North American publisher.

On the technology front, Raincoast is applying it to both internal operations and marketing. The company is improving its business-to-business Web site by adding an online-trackable order system.

From the marketing side, Raincoast believes it is the first independent Canadian publisher to launch a podcast program. The impact, they found, and a pleasant surprise, was the uptake in the institutional market—teachers, librarians, instructors—who were really hungry for that material.

Madison Press: International Book Producer

In 2006 Madison Press Books launched a number of new art titles, including The Museum of the Missing: A History of Art Theft, Leonardo and The Mona Lisa Story, and others that have gone on to sell rights in many international markets. "Our most recent title for young readers by the Canadian artist Robert Bateman won two important and prestigious awards: the Silver Birch award and the Science in Society prize," says Oliver Salzmann, Publisher. "We expect its successor, Bateman's Birds of Prey, to sell over 100,000 copies in North America this year." Madison relaunched some classic bestsellers to great success in Canada, including the 25th-anniversary edition of The Art of Robert Bateman, which has sold more than 400,000 copies since it was first published.

Madison conducts a large amount of its business in U.S. dollars and Salzmann suggests that currency issues don't affect Madison as much as they might other Canadian publishers.

He considers the gain and loss on positive and adverse foreign exchange movements simply a cost of doing business.

Children's Market: Gunning for the U.S.

Kids Can Press

When asked to describe the strengths of her firm, Kids Can Press, a subsidiary of the publicly traded Corus Entertainment, Karen Boersma, v-p, publisher, summed it up by saying: "We are a publisher of high quality, critically acclaimed, well-produced children's books with a strong market orientation and considerable technological savvy for our size." She goes on to say, "Our strength as a market leader, as innovators and as producers of superb books with strong sales around the world makes us very attractive to many people."

According to Judy Brunsek, v-p, sales & marketing, Kids Can Press had some great successes across the list. Scaredy Squirrel was the company's top-selling book in 2006. It was a summer Book Sense pick, and was recently selected as an ALA Notable for 2006. Herb Shoveller's Ryan & Jimmy and the Well in Africa That Brought Them Together sold out its print run in the fall after some major touring that featured Ryan & Jimmy being interviewed by Maya Angelou for Oprah & Friends and the book appearing on Oprah's Web site as recommended reading.

"We have a sort of happy challenge this coming year, " says Boersma. "Our fall 2007 picture book list is an embarrassment of riches. We have four books that on any list would be lead titles, but which we happen to have all on one list. Frank Asch and Devin Asch return with Mrs. Marlowe's Mice, Melanie Watt has an audacious new character in Chester, Wallace Edwards is following up his success last with A Painted Circus and Heather Collins has collected and illustrated an amazing nursery rhyme book that takes a child through the course of a day in Out Came the Sun. Our challenge will be to ensure our customers appreciate the strength of each title and give each its due—we have very high expectations for these titles and other on our fall list."

In Canada, Kids Can has long been selling to nontraditional channels. Brunsek says that Kids Can Press "has a good handle on the marketplace and broad success in a variety of areas. However, we are always weighing the risks against the rewards of nontraditional channels. We are very open to opportunities but extremely aware of some of the inherent dangers in some areas. Since they often require a major investment of resources, our US efforts have been more focused on our traditional market. "

The U.S. market is critical to Kids Can Press success, as it represents a full third of the company's sales. It is the market where Brunsek sees the greatest potential for growth and she's working hard to build it. Kids Can has been selling direct, as opposed to licensing rights, into the U.S. market for almost 10 years now.

Like other publishing companies, Kids Can Press is exploring print-on-demand technology but, as Boersma says, "Children's publishers have the extra challenge of four-color printing and quality expectations that we have not yet seen with POD."

Tundra Books: The 40-Year-Old Kid

"We had a great year. Our Ice Time: The Story of Hockeyhas done extraordinarily well. Our picture books The Birdman, Let's Go for a Rideand Taming Horrible Harrywere all finalists for the country's most prestigious prize, the Governor Generals Award for Literature," says publisher Kathy Lowinger. "Our novels continue to sell well; Stealing Homewas our U.S. bestseller."

With 30%—50% of Tundra's sales coming from the U.S., the company has to grow sales against a strong Canadian dollar in addition to the challenges of publishing for children today, Lowinger says there are some challenges specific to selling children's books, namely "the narrow margins imposed because people are inexplicably reluctant to spend the same money on a book for a child as for an adult, and because of reduced budgets in schools and libraries."

Since Random House handles Tundra's sales in Canada and distribution in the U.S. Tundra benefits from an array of cutting-edge technology that would otherwise be beyond the reach of a small independent publisher.