The Treasury Board made me do it

Today, a packed roomful of concerned individuals, mostly involved in circulation, gathered at the Courtyard Marriott in Toronto to hear about the impact from the Department of Canadian Heritage's decision to cut Publication Assistance Program (PAP) support November 1.

While doubtless there will be a fuller report in Masthead and elsewhere, here are some notes jotted down at the time:

Michael J. Fox, the Senior Vice-President of Circulation for Rogers Media Publishing, took the room through a demonstration of just what impact a shortfall of $11 million will have: essentially, a transfer of 11 - 18 cents a copy for postage from the government program to publishers of consumer magazines. He said the PAP cuts may cause:

• Big cuts in other costs like freelance and content payments and printing
• A freeze on selling subscriptions (as a way of saving money)
• A consequent reduction in circulation (and possible reductions in what advertising can command for that circ)
• A restart of the conversation about alternative delivery systems (alternative to the current Canada Post Corporation monopoly)
• A faster switch to digital editions (he noted that with its anniversary issue, Maclean's is the first Canadian consumer magazine to offer a fully digital edition on the Zinio system)
• Closure of magazines
• A reduction in frequency
• A over all damper on growth

Fox said that the typical response from bureaucrats was "raise your price", which is unrealistic in an era of price deflation, multiple media choices etc. He showed examples of typical small-, medium- and large-sized magazines generally getting less revenue and fewer orders with price increases. With a heavy note of irony, he added: "If you're going to cut your circulation in half, go for it!"

"This is a change in government policy," said Fox, noting that nobody knows what will happen after April 2006.

He said that people had to stop calling PAP a "subsidy". It's really a "reader-driven incentive", he said, to create new content, make it more widely available, meet the expectations of Canadian readers, reach those who want to read Canadian content and invest in developing new kinds of compelling content.

Perhaps signalling how the the industry will be approaching the government, Fox said that he felt far from cutting PAP, there should be a new"Reader Development Fund" of $10 million.

Then it was Gordon Platt's turn. Platt, formerly the literature officer of the Canada Council, now the Acting Director General of Policy and Programs for the Department of Canadian Heritage, repeated his assertion that the industry knew the cuts were coming as early as 2003. Sheila Copps, then the Minister, said that support for larger magazines would decline by up to 30%, he said.

Then he went on to enumerate some good things that Heritage has done for the industry recently:

• negotiating the lowest rate increases from Canada Post in years
• undertaking a comprehensive program evaluation of PAP and the Canada Magazine Fund (not yet published, he noted)
• Maintained the $65 million funding for PAP (about $20 million of which goes to community newspapers)

"However the industry and DCH and Canada Post Corporation (CPC) share a collective challenge; how to live within our means," he said. "This program is not indexed."

"We are faced with a number of questions," he said. Among these:

• Should there be 1,200 - 1,300 periodicals? "Do 1,300 titles cohere to our core mandate, or are some less essential?"
• Can DCH consider helping startups and newer ventures and then "weaning" people off programs (after they're on their feet)?
• Should the concentration be on supporting editorial, rather than delivery?

"We've tried to be everything to everybody in the past, although controlled circualtion titles wouldn't agree." The changes that started to be introduced in 2003 reflected a changing emphasis of government policy, a skewing of support based on size and other criteria -- support of aboriginal publishing, agricultural publishing and community newspapers and a decline in support to larger publishing entities. "The announcement (of the PAP cuts) of September '05 is consistent with that policy," he said.

He added that there are a number of dilemmas, including:

• the program is not indexed, and the Department of Finance was dead set against indexed programs, going back as far as the 1980s and early 90s.
  
• There are competing priorities, particularly between the program as it was and the policy to support more diversity of choices.

"The program is between a rock and a hard place...where should it slide? Towards diversity, or towards support of large, well-established titles? The 2003 announcement moved that slider and we're just being consistent with where that marker moved," he said.

Platt said the department didn't have a fixed view and that he was there to listen. "Every group says there's a better way to square the circle. Big publishers said we should have spread the cuts more widely; small, diverse publications said no way. Our role as public policy people is to play the role of Solomon in this."

"We think the PAP has a very healthy future. It's a very successful program and a model for other programs," Platt concluded. (Terry Sellwood, the General Manager of Quarto Communications, the publishers of Cottage Life and Explore magazines, said: "Gordon, if the PAP is a model for other programs to follow, then we're in deep shit.")

Platt acknowledged, in answer to a question, that while DCH had run some scenarios for its own use, it hadn't done a comprehensive impact analysis, one that would say how many magazines might close, what it expected was the outlook for government policy and what the steady erosion of inflation might do to the program in the next 5 years.

Update: Should have mentioned this session was co-sponsored by Magazines Canada and the Circulation Marketing Society of Canada, a commendable cooperative venture, useful to the whole industry.