Excellent. Thank you for the opportunity to appear before the committee. We certainly appreciate the opportunity to add our perspective to what is a very critical area of concern for us and for all of our stakeholders.
As mentioned, my name is David Swail, and I'm president of the Canadian Publishers' Council. Our organization represents 16 of Canada's largest publishers operating across all segments of our industry, including trade publishing, higher education, K-12, and professional markets. Our members are a mix of Canadian-owned firms and the Canadian subsidiaries of global publishers such as Penguin Random House, HarperCollins, Pearson, Scholastic, and Nelson, among many others.
Our members' aggregate revenue in 2017 was $853 million, $384 million of which was with our customers in K-12 and higher education. Collectively, we directly employ more than 3,000 highly skilled, knowledge-based workers and many thousands more in freelance and contract capacities, such as writers, editors, subject-matter experts, designers, illustrators, researchers, printers, and the list goes on, as you would imagine.
In 2017, we spent $40 million in advances and royalties with Canadian authors, and our members sell over 90% of the books that are purchased by Canadians each and every year. All of our members are for-profit, taxpaying companies in Canada, and the majority of our members receive no government grants.
I would like to focus my remarks on three main areas that have been affected by copyright modernization, and in particular by the fair dealing exception for education. Those three areas are jobs, investment, and innovation.
Before that, I would first like to make clear to the committee that the Canadian Publishers' Council members count the education sector among its most important customers. During consultations on CMA pre-2012, we were clearly in support of the concept of fair dealing, including fair dealing for education. Our only ask at that time was for language in the act that would clarify the intent of the education exception and, in particular, definitions that would safeguard the commercial market for the resources that our members develop on behalf of education sector customers. Our understanding then was that this was a shared goal with our education customers.
Much of what has transpired since 2012 has confirmed our deepest concerns with the vagueness of definitions in the act. Therefore, our ask of this committee and this review process is that some clarity and balance be brought back to our marketplace.
Let me now return to the three themes of jobs, investment, and innovation.
As mentioned, we employ more than 3,000 Canadians directly but many times that number more in the important ecosystem that develops educational content for Canadian students and educators. These are predominantly highly skilled jobs that rely on an expert understanding of key subject areas, such as math and science, and the ways in which our education sector teaches those subjects to Canadian students from province to province.
Canadian publishing professionals are recognized widely for their expertise by the global firms that employ them, and they are regularly called in to help with international projects where our skills at understanding instructional design and learning outcomes are highly respected. We pride ourselves in developing content that is matched to provincial curricula, has the highest level of quality and relevance, and importantly, is a strong reflection of the key elements that constitute Canadian identity and culture. This cultural relevance is a core requirement of our customer base, and it is what differentiates our products from foreign-sourced materials that were previously predominant in Canadian classrooms.
The lost income that has resulted from collective licences being abandoned has had a significant impact on Canadian publishers' margins. You heard a figure of $30 million, which is roughly 16% of industry profit, according to some measures. That makes Canadian publishing firms inherently less profitable and therefore less able to support employment levels. Over the past five years, our members have reduced their workforce by 5% each and every year, a number that equates to close to 200 jobs, year in and year out, for many years running. At the same time, we have increased our technology-based jobs and introduced roles like developers, programmers, webmasters, etc., and related skill sets to our workforce. We've retrained our customer support people to handle technology support. We send experts to Canadian schools and campuses to help educators learn how to use digital resources in their classrooms effectively. However, we are still down 5% per year in employment even after those add-backs.
Turning now to investment, a critical strategy for Canadian publishers continues to be the development of digital platforms and products to serve the education sector. We do this in response to demand for these kinds of innovations from educators. Canadian publishers have been world leaders in the development and adoption of these key technologies, building Canadian solutions and adapting global platforms for Canadian use.
This effort has led to significant redirect of publishing investment away from print and towards technology that is often adaptive to student needs, and therefore, more efficient, more current, and often less expensive for customers. That investment is inherently at risk when the return on investment is reduced. The result is that global publishers increasingly see Canada as a less viable and more risky market than it was pre-2012, and investment levels in our sector continue to be at risk and to drop.
Three of our members, Oxford University Press, Emond Publishing, and McGraw-Hill Education, have exited the K-12 sector since 2012, which has led to a reduction in resources and diversity for K-12 classrooms in particular. Employment has decreased, but as you would expect, other areas of publishing investment have also been dropping.
Last, let me touch on innovation, which of course is closely tied to investment. I have mentioned our members' strategic shift towards digital resources. This has had a major impact not just on our employment and the nature of that employment, as mentioned, but more importantly on students and teachers and student outcomes. Today, all of our members have digital solutions that adapt to student needs, presenting only the most relevant and timely material to optimize their study time and learning outcomes. We enable teachers across the entire spectrum of K-20 to assign, grade, and assess student outcomes in a far more efficient manner than ever before using these technologies. This is particularly important for distance learning, as you would imagine, which encompasses many first nations students.
This significant progress, in which Canada has been a world leader, is driving our students' abilities to compete in a global economy, but it is at serious risk when investment levels drop. The opportunity to both originate and adapt global solutions for our classrooms is lost when global firms find it more efficient to simply offer unadapted global content with minimal or no Canadian input.
As we make this critical transition in our business, it is clear that some degree of reliance on print will continue to have a role in classrooms: hence, the 600 million pages that are copied without compensation every year in Canadian schools, colleges, and universities. We ask that the legislative language we have tabled be used to restore this marketplace for content reproduction as a properly compensated one. This will enable critical funds to continue to flow back into the creation of Canadian educational resources with the attendant benefits to students, teachers, creators, and knowledge workers, who have long been a part of our country's high achievement in education.
Thank you.
