Canadian Magazine Industry News
2 September 2009,     OTTAWA
CBP asks government to expand, increase CPF funding
Last month, the Canadian Business Press submitted its pre-budget recommendations to the federal government. Its key proposals are:
  • The Government of Canada should expand the eligibility of the Canada Periodical Fund to recognize the unique circumstance of business publishers. Specifically, the fund should be separated into five categories—Consumer, B2B (including farm), Community Newspapers, Scientific and Religious—with eligibility criteria unique to each business model.
  • The Federal Government increase its funding for the publishing sector and target that funding at ensuring the short-term viability of as many existing titles as possible and to assist the industry in the future through a period of transition.
The CBP proposal highlights three major challenges facing the b-to-b sector right now:
  • High cost to distribute periodicals through Canada Post. "For most B2B publications," the report says, "the only cost that has consistently gone up, even in the recession, is the amount paid to Canada Post."
  • Foreign competition, which represents "represent an 'under-the-radar'
    threat to Canada’s periodical industry, especially since many of these publications also take ad revenue out of the country."
  • Limited access to government assistance. The CMF and PAP models, the CBP says, were "based upon a consumer magazine business model which most B2B periodicals cannot meet because they must achieve high levels of penetration in small, vertical communities, rather than broad readership among Canadian consumers."
Here, the CBP is referring to the fact that the Canada Periodical Fund, like the CMF and PAP before it, will give preference to magazines with paid circulation. This is unfair to business publications, the CBP argues, because most trade magazines use request circulation models.
 
"The difference between the two is...not based on content or importance to the Canadian magazine industry. Both are viable business models for magazines...Both types face exactly the same business challenges – rising postal and distribution rates, foreign competition, the struggle to secure advertisers, the transition to digital media – yet “paid” subscription-based magazines continue to be favoured in the funding formula."

This funding formula has long-hurt trade publications, the CBP argues.

"Under the soon to be phased out Canada Magazine Fund (“CMF”) and Publications Assistance Program (“PAP”), B2B periodicals received less than 8% (or $4.67M) of eligible funding. Despite representing approximately one quarter of Canada’s magazine industry (by any reasonable measure), B2B periodicals have always received a lower proportion of funds designed to support the magazine industry.

"This inequity was always justified in the past by the need to support the extension of Canada’s “culture” through magazines. Yet, a closer examination of the criteria actually supported more successful
consumer-oriented magazines indistinguishable from U.S.-based competition rather than important or leading edge publications that emphasized a uniquely Canadian cultural perspective. The most glaring
example is that eligibility provisions such as weight were part of the criteria – the heavier the magazine, the more subsidy it received. A glance at your average popular consumer magazine will reveal that much of the magazine’s content, and therefore weight, is comprised of paid advertisements on heavy glossy paper. Therefore, the more ads the publication sells (and therefore the more successful it is) the more the
magazines qualified for funds under the program.

"To address these issues and to ensure a wider cross-section of publications received assistance, the Government of Canada undertook to revisit the eligibility criteria for its new program, the Canada
Periodical Fund (“CPF”). Unfortunately, the first set of rules that were released underscore the Canadian Business Press’ concern that B2B magazines will continue to be grossly underrepresented in the program. Simply put, the new eligibility criteria are too much like the old ones and the old inequities will continue."

The CBP's recommendations are more drastic than those submitted by Magazines Canada. Whereas the latter primarily suggested adjustments to the basic Canada Periodical Fund outline (transferring responsbility for small mags to the Canada Council, rolling the program out rather than dropping it all in one day) the CBP is essentially asking for a total reallignment of the basic CPF set-up, as well as more money.
 
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