Thank you, Mr. Chair, and thank you for the invitation to present to you today.
The Association of Canadian Publishers, ACP, represents 115 Canadian-owned, English-language book publishers. Along with our francophone counterparts, we are responsible for 80% of the new books written by Canadian authors each year and contribute to a $1.6-billion industry.
We are creative partners in the development of books of all genres and are active exporters. Publishers are at the centre of the book supply chain and have direct business relationships with authors, illustrators, printers, distributors, bookstores, libraries and the education sector.
The continued relevance of books for information, education and escape has come into sharp focus over the last two months. Teachers are reading books online to their students, recreating classroom storytime. Festivals and reading series have put their programming online, matching authors with readers across Canada and around the world. Demand for e-books and audiobooks through public libraries has skyrocketed, and independent bookstores have quickly changed the way they serve their customers, offering curbside pickup and home delivery.
Despite continued demand for books, our industry has been hit hard by COVID-19. Some printers have temporarily closed, publication dates have been postponed and in-person promotional events have evaporated. Literary festivals and trade events are cancelled or tentative. Export travel is suspended indefinitely. Wholesalers and retailers are returning books and delaying payment.
For the seven-week period ending May 3, sales through physical bookstores are down 63% year over year. Overall, the market is down 39% in both dollars and unit sales compared to the same period last year, a decline of $45 million. When we look further out, 40% of publishers anticipate losses of 50% or more over the course of 2020.
In addition to plummeting sales revenue, demands from the education and library sectors for relaxed copyright provisions and free digital content have grown more intense. Publishers have responded to these requests with flexibility and generosity, but are proceeding with caution and concern for the long-term sustainability of their businesses. Publishers' intellectual property is their key asset, and current demand for their books demonstrates its value. The ability to monetize this IP will be essential to our recovery.
For publishers, the impact of the crisis will extend beyond this spring. Credit is already stretched and future financing is uncertain. Publishers' ability to pay off royalties, printers and wages may be compromised.
The Canada book fund and the Canada Council for the Arts have accelerated this year's grant payments in response to the crisis. This is greatly appreciated, but it is a stopgap measure and does not represent new or emergency investment.
Prior to the crisis, it was widely acknowledged by industry and government, including by this committee, that the Canada book fund is under-resourced. Early grant disbursements will relieve some short-term pressure, but lower sales, higher returns and slower collections mean that cash flow challenges will persist. Those publishers ineligible for these programs have even less capacity to respond to this unprecedented crisis.
ACP commends the government for its quick and direct response through universal programs. Though some publishers' short-term needs will be addressed by the emergency measures that have been announced, our sector is not universally served by programs like the Canada emergency wage subsidy and Canada emergency business account. Many book publishers use staffing models that rely on contract and freelance staff rather than full-time employees and are not covered by the wage subsidy. Others are owner-operated and publishers do not draw a salary or meet the minimum payroll to apply for these benefits. As public sector entities, university and museum presses are not eligible for these programs but are experiencing the same decline in sales as other publishers.
We are encouraged by last month's announcement of $500 million in emergency support for arts, culture and sports organizations, and eagerly await further details of this investment, hoping it will fill some of these gaps.
As the industry shifts from an immediate crisis response to planning for stabilization and recovery, a strategic combination of financial support and policy tools is needed to ensure Canadian publishing infrastructure remains intact to continue to serve Canadian readers. With that in mind, ACP makes the following recommendations:
Provide an emergency supplement to this year's Canada book fund grants to respond directly to the COVID-19 crisis.
Introduce a broad and flexible benefit similar to the wage subsidy for those whose staffing models, company structure or revenue patterns make them ineligible for the universal benefit.
Provide an immediate increase to the permanent budget of the Canada book fund, as recommended by this committee in 2016.
Finally, implement ACP's long-standing recommendations for copyright reform, put forward during the 2018 review of the Copyright Act.
Thank you for your time and for your efforts in responding to the COVID-19 crisis.
I look forward to the discussion and your questions.