Thank you, Mr. Chair and distinguished members.
My name is Matthew Holmes. I'm the president and CEO of Magazines Canada, and we take great interest in the subject of Canada Post, as you can imagine. Magazines and papers, along with parcels, are probably some of the few items remaining that Canadians look forward to receiving in the post.
We are the national trade association representing cultural, consumer, and business magazine titles, of which there are about 2,000 in the country. This is a $2-billion-per-year sector, directly creating tens of thousands of high-quality knowledge economy jobs across all regions and across all platforms, print and digital.
The latest data shows that 70% of Canadians read magazines, and this is true and consistent across all age groups, including youth. Notably, 92% of those magazine readers are reading some combination of print—either print only or print and digital—so the Canadian reader is still very dedicated to the print platform.
I imagine that many here in the room and on the committee were taking in some of the presidential debate last night. The magazine market in Canada is very similar, in that it's almost impossible to avoid the content from the United States. Because of that, the Canadian marketplace has developed a unique situation, and we've become famous in the magazine world for that. Our base of about 80% for Canadian magazines is through subscription rather than newsstand sales. Subscription is a core element of the Canadian magazine. As you can imagine, subscription is dependent on a viable postal delivery system.
At the same time that the Minister of Canadian Heritage is conducting a major consultation on culture and how to better distribute and showcase Canadian content, my members are facing a financial and logistical bottleneck in their principal means of reaching their clientele. Most certainly, digital content consumption is on the rise, and Canada's magazines are drawing large and growing audiences in digital formats across all channels; however, the base still is dedicated to print.
We would argue that during your review it's critical not to lose sight of Canada Post's mandate to deliver a public service to all Canadians, no matter where they live in Canada. We would note that the independent task force's own public opinion research bears this out. Importantly, in all regions, Canadians believe that Canada will always need a postal service owned and operated as a public service.
This is also reflected in discussions with key stakeholders, including rural youth, and it can quickly go beyond just a rural consideration. I'm sure the member for St. John's East can appreciate that the people of Newfoundland, after the National Post and The Globe and Mail cancelled their newspapers in Newfoundland, now receive their news from the rest of the country through magazines delivered by Canada Post or through online means. That economic argument, coupled with our ample geography, can suddenly leave us as a nation of solitudes.
For this reason, we would speak against the price-based strategy, or what's often called “distance-related pricing”. Canada Post has already experimented with this in its publications mail clients, and magazines in particular, and it's had a devastating effect on our members. We find the rates punitive and lacking a rationale.
Furthermore, as the task force discussion paper notes, “While mail revenues can be propped up over the short term by increasing prices, over the longer term, such a strategy” will only accelerate consumer shifts away from the service. We're clearly seeing that in magazines, which are pulling out of Canada Post at a rate that is quicker than any attrition in the wider industry.
On top of this is an unfortunate irony: many of the larger-volume Canadian magazines are getting hit the hardest in terms of rate increases. Strangely, these are the same customers who provide Canada Post with pre-sorted bundles that bypass almost all Canada Post operational channels—and thus operational expenses—and are placed almost directly in the hands of neighbourhood letter carriers.
In these cases, Canadian magazine publishers have already internalized and absorbed a considerable share of pre-delivery costs of the product, yet there is no pricing relief or incentive for this practice. Magazines, in essence, are being punished for helping to improve Canada Post's operational flow and productivity. For this reason, Magazines Canada has convened a national group of alternative delivery providers to study and conceptualize how we might circumvent this service for most of our needs, though we wish it were not so.
In conclusion, Mr. Chair, the Government of Canada has always maintained policies concerning the creation and distribution of Canadian content and cultural content to Canadians, a mandate perhaps no more compelling than now, as we prepare for the country's sesquicentennial next year. What the magazine sector would look for are stable long-term outlooks and pricing contracts that we can rely on and base our business upon.
Thank you.