Radical funding overhaul by Canadian Heritage proposes merger of CMF and PAP

[This post has been updated.] The Department of Canadian Heritage is proposing a radical overhaul of its funding programs, combining the Canada Magazine Fund (CMF) and the Publications Assistance Program (PAP) into one, new program called the Canada Periodical Fund. It proposes that funding be used to encourage the development of digital and online intiatives of print publishers. [And it indicates that the $1 million program called Support for Arts and Literary Magazines (SALM) would be gone, a major hit for the hundreds of very small cultural magazines in this country.]

The department has launched a consultation process by posting a discussion paper, a PowerPoint presentation and various background documents on its website and asking for public and industry consultation and reaction by April 25. Individuals may respond and there will be roundtable discussions by invitation to stakeholder groups in the industry.

[UPDATE: Concern is already being expressed that the time allowed for consultation is extremely short in reviewing and commenting on such a sweeping change in policy, particularly one which, like the PAP postal subsidy, has been around for more than 100 years. While the proposals suggest that they are freeing magazines to be compensated for using alternative forms of delivery, for many smaller, independent magazines in this country this is not a reasonable or likely alternative. (Canadians have delivered to them more than 700 million copies of magazines every year through the mail.) The proposal, in effect, lets Canada Post off the hook from its long responsibility to allow Canadian publishers to reach Canadian readers in a cost-effective way.]

This review is not considering whether the Government should fund magazines and non-daily newspapers, [says the DCH document] but how they should be funded. Having considered the current environment and the history of the programs, Canadian Heritage has developed a proposal for discussion during these consultations: the development of a new, combined program tentatively called the Canada Periodical Fund.

All publications which now receive PAP or CMF funding -- that includes all consumer and trade magazines and community newspapers -- can expect to be affected by the proposed changes, says the ministry. No dollar figures are attached; the two programs together were worth $60 million to Canadian magazines in 2006-07 , although the PAP is set to lose $15 million effective March 31, 2009 when Canada Post withdraws the last of its financial support.

If the Canada Periodical Fund were to retain all of the current funding for CMF and PAP (less the departing Canada Post contribution), the merged program would have $60 million to spend, of which about $45 million (about 78%) could conceivably go to magazines. But there are no suggestions in the consultation documents of how much money the new fund may be getting. It could be less than it gets now; it is unlikely to get more.

Scott Shortliffe, the Director of Periodical Publishing and Programs bluntly told a Canadian Business Press meeting last June:

"Frankly, I think the idea of spending more is extraordinarily lofty. This government has been very consistent in saying it has new spending priorities and that more money will be allocated to the cultural industries. Even if someone came forward with a brilliant program that would cost $300 million, it's not going to happen."

Whatever the budget, the proposal is that 95% of the new Fund would go to periodical publishers (magazines and non-daily newspapers) and 5% to industry initiatives. Right now

• a fixed program budget would be allocated by formula to eligible publishers to reimburse magazine content and distribution expenses. Such a formula could be weighted by profitability, proportion of Canadian content, the ad:editorial ratio and whether the publication serves official and other language minorities, aboriginal or rural communities..

• The formula would be adjusted and refined annually.
  

• Publishers could apply and receive payment once a year for all their titles. In other words, application would be made by publisher rather than by title -- so Rogers Media and Transcontinental Media would make one application for support for their dozens of different consumer and trade magazines.The entire program budget would be allocated at one time.

• Eligible distribution expenses could be for either Canada Post or alternative delivery methods, a major change for the industry, which has already explored delivering magazines outside of the traditional and increasingly unaffordable mail system.

Somewhat ominously, the discussion document muses about "whether the relatively large share of program spending received by a relatively small number of large publishing companies is an appropriate and effective use of public funds". This can only be a reference to the postal subsidies and editorial content support being received by large companies like Transcontinental Media and Rogers Media Publishing and large circulation titles like Chatelaine and Maclean's or Canadian Living. DCH notes that 75% of the CMF goes to the 20 largest publishing companies.

It also questions whether the current funding regime is benefiting writers, photographers, illustrators and other creators. And whether federal government support for magazines should be focussed in areas that complement its Advantage Canada strategy to cut taxes and reduce the national debt.

The benchmarks for success of the program could be:

• Increased Canadian content in periodicals, measured by the number of pages of Canadian magazine content produced annually, the incomes of Canadian creators, and the diversity and number of Canadian magazines and non-daily newspapers;
• Greater access by Canadians to Canadian periodicals, measured by market share of Canadian magazines, circulation and access by in smaller communities;
• Greater stability and predictability in program delivery by establishing and adhering to service standards.

The discussion paper says that proposals, which are an outcome of a wide-ranging review over more than a year and a half, are intended to provide optimum value to Canadian readers and predictability and streamlined program delivery to publishers and DCH by merging two programs and delivering them by publishing company rather than by title. It also says that there will be greater flexibility in the type of distribution publishers may use now that Canada Post is withdrawing its last support from PAP effective March 31.

One of the most dramatic departures suggested by the discussion paper is that it contemplates directing money to support and encourage online and digital delivery of Canadian content.

The proposed approach offers opportunities to address changes in the way Canadians are consuming news and entertainment: through joint initiatives on industry-wide projects and by exploring the possibility of opening funding to new forms of publications or to online content produced by print publications.

DCH poses questions that people in the industry will undoubtedly want to answer, among which are (we're paraphrasing):

• Where should the government target its support?
• What types of publications should receive support and which should be excluded?
• Should the program support web-only magazines as well as digital ventures of online publishers?
• Should good environmental practices be rewarded within the program?
• Should appropriate compensation for writers and other contributors be a factor in the program?

There are probably a bunch of other questions to come, including the most compelling:

• Will there be more money, the same money spread differently or less money?

[Statement about consultation, from Magazines Canada.]

[More to come]