Sector profile: cultural industries

Overview

Cultural industries are the businesses engaged in creating, producing, and distributing cultural goods and services.^{footnote 146[146]} Ontario’s cultural industries include film and television production, interactive digital media, the music industry, and book and magazine publishing. The economic activity generated by the cultural industries reflects the shift from industrial-based to knowledge-based economies in Ontario and in many jurisdictions around the world.

Companies in the cultural industries develop, produce and market products and services whose value resides in their intellectual property. They trade in intellectual property rights, in particular copyright,^{footnote 147[147]} which secures the economic value of these goods. Statistics Canada’s creation of the Canadian Culture Satellite Account (CSA) recognizes the vital purpose that intellectual property serves in the cultural industries’ economic value chain.^{footnote 148[148]}

The Ontario government primarily supports the province’s cultural industries through the programs and services offered by the Ontario Media Development Corporation and the Ontario Arts Council.

The cultural industries share common opportunities and challenges:

• the digital transformation has profoundly altered production of content, business models, and modes of content consumption
• income is lost to piracy
• rapid dissemination reaches wider audiences, but does not necessarily translate into more income and
• huge volumes of content, produced by both amateurs and professionals, increases the challenge of discoverability (the means by which content is found online by the target audience)

Ontario has the largest cultural industries sector in the country, accounting for almost half of all cultural industries GDP in Canada.^{footnote 149[149]} The majority of cultural industry businesses are small or micro enterprises, of which many lack access to capital to grow their businesses.^{footnote 150[150]} Jobs within this sector represent a mix of employment types, including permanent employees, self-employed entrepreneurs, and contract workers or freelancers. Because of the sector’s potential for job creation, the cultural industries will continue to be critical to Ontario’s growth and prosperity.^{footnote 151[151]}

Ontario’s cluster-based approach to the cultural industries

Since the 1990s, the Ontario government has taken a cluster-based approach to growing the cultural industries in the province, defining the “Creative Cluster” as the individuals and companies whose primary occupation is the creation, production, and/or monetization of intellectual-property based creative products.^{footnote 152[152]} The creative cluster includes all activities directly involved in the development and production of creative products and services, as well as the supporting industries that enable the production and distribution of creative content.^{footnote 153[153]}

The cluster approach facilitates co-location, or geographic clustering of complementary industries, and the removal of barriers to collaboration, whether physical, social, or cultural.^{footnote 154[154]} This approach was outlined publically in the 2010 report Ontario’s Entertainment and Creative Cluster: A Framework for Growth.

Although the province’s primary supports focus on the cultural industries segment of the creative cluster, the province recognizes the importance of nurturing the entire creative ecosystem. Cluster theory states that interrelated firms and industries benefit from being co-located in regions where they both compete and cooperate. These benefits include greater opportunities for accessing expertise and skilled workers, financing, business and research networks, and enhanced collaboration and transfer of knowledge. Through targeted investments across the creative cluster ecosystem and through programs that support collaboration and partnerships, Ontario’s cluster policy has focused on building the province’s rich ecology of companies and institutions to create these important cluster benefits.

The cluster approach is consistent with other jurisdictions. In the US, states such as Arkansas, Colorado and Mississippi are supporting the development of innovation hubs, cultural districts and the creation of spaces for artists and creative talents to cluster.^{footnote 155[155]} Strong clusters are also associated with innovation and entrepreneurship.^{footnote 156[156]}

Ontario’s Entertainment and Creative Cluster: a Framework for Growth identified six pillars to support the growth of the creative cluster in Ontario.  Ontario’s creative cluster policy has been focused on building these pillars: developing private investment and financing; developing a global presence and market expansion; fostering innovation and digital transition; developing a strong ecosystem; developing skills and leadership infrastructure; and fostering industry-government collaboration. These cluster-based policy priorities underpin Ontario’s investments in this sector, helping to build connections within the cultural industries of film and television production, interactive digital media, music, and book and magazine publishing, as well as connections between these industries and the cluster’s artistic core, the supporting creative industries, and the wider economy. 

Film and television production

The film and television production industry includes companies engaged in production and post-production, animation, and visual effects. They produce content for television programs and feature films, which is then sold or licensed to broadcasters and/or distributors. The industry also includes distributors, guilds, film festivals, trade associations, broadcasters, and many ancillary industries.

Ontario continues to be the leading jurisdiction for film and television production in Canada, contributing $2.3 billion in production expenditures in Ontario (accounting for 40% of the national total) and supporting 44,410 direct and indirect jobs in 2013-2014.^{footnote 157[157]} The province is the second-largest Canadian destination for foreign production after British Columbia, accounting for 24% of the total national foreign production in 2013-2014.^{footnote 158[158]}

Film and television production contributed $1.9 billion to Ontario’s GDP in 2010.^{footnote 159[159]} The sector’s economic contribution also manifests itself over time through industry development, and through spillover effects captured by the construction and tourism sectors.^{footnote 160[160]}

The average Canadian watches domestic films through Video on Demand (VOD) and Pay-per-View (PPV) services a few times per year, and 12% of Canadians download or stream Canadian films from the Internet at least once per week.^{footnote 161[161]} Monthly use of paid streaming to watch films increased from 22% of Canadians in 2012 to 30% in 2014.^{footnote 162[162]}

More films are viewed worldwide today than ever before, in many formats and on a wide range of devices.^{footnote 163[163]} The proportion of Canadians watching films on mobile devices each month is growing, increasing from 9% in 2012 to 17% in 2014.^{footnote 164[164]} Preferences have shifted from movies to television series,^{footnote 165[165]} increasingly viewed on mobile devices. Between 2012 and 2013, the number of Canadians who watched television on their mobile devices increased by 34% to almost 2.5 million.^{footnote 166[166]} In the US, television viewing time on mobile devices surpassed television screen viewing time in 2014.^{footnote 167[167]}

In 2013, Canadians watched, on average, 29 hours of traditional television per week. Those watching over the Internet typically spent just over five hours viewing programs.^{footnote 168[168]} On average, Canadian programming accounted for 43% of all weekly viewing. Independent of country of production, drama and comedy ranked highest in popularity, capturing 41% of weekly viewing. One-off documentaries captured 4%, and music, dance, and variety captured almost 2%.^{footnote 169[169]}

The move away from traditional screens to new devices has created gaps in audience measurements that affect both the industry and public policy-makers. The CRTC’s “Let’s Talk TV” decision to establish an industry working group to develop a set-top box audience measurement analytics system is intended to address this gap.

Key trends

The financing environment

Internet-based content distributors and aggregators such as Netflix, Hulu, YouTube and Amazon are producing their own original content to differentiate their services, in some cases spending more than they spend on acquiring catalogue content.^{footnote 170[170]} These services offer producers new sources of financing and opportunities to monetize their content on alternative and new platforms. This trend is expected to grow as strong branded content offers a competitive differentiation strategy for promoting and selling distribution services.

A promising trend for lower-budget independent films is the relatively new practice of equity crowdfunding. This is the fastest growing source of equity financing and is expected to raise $2.6 billion in 2015.^{footnote 171[171]} In Canada, consolidation in the private broadcast sector has narrowed the number of financing windows for producers and alternative financing tools have become popular in this tightening financing environment.^{footnote 172[172]}

The Documentary Australia Foundation is leading a funding initiative that leverages support from the philanthropic sector. The Foundation supports documentary filmmakers’ efforts to raise funds, promotes their projects on line, and provides them with fundraising tools, a crowdfunding platform, and a charitable receipting service. The Foundation also hosted Good Pitch² Australia, a successful event to bring together the philanthropic and documentary sectors for a day of fundraising.^{footnote 173[173]}

A number of jurisdictions are supporting low-budget filmmaking, such as the Rookie Film program of the Swedish Film Institute. It provided 80% of the financing for films with a maximum budget of $1.08 million Euros ($1.56 million Canadian) Run as a pilot program launched in 2009, it supported five films. In France, the Institute for Film Financing and Cultural Industries is charged with facilitating access to bank financing. A partnership between the French state and public and private banks, it provides loan guarantees for audio-visual productions and film companies.^{footnote 174[174]} This facilitates timely access to financing adapted to their needs.^{footnote 175[175]}

Many jurisdictions have reassessed their direct business supports for film and television production. Some, such as Saskatchewan, have eliminated their film tax credit. Others, such Nova Scotia, have replaced tax credits with grants. In recent years, some reports, including the Commission on the Reform of Ontario’s Public Services, have recommended that the Ontario government should restrict or redesign direct business supports, including Ontario’s cultural media tax credits.^{footnote 176[176]} In its 2015 budget, the Ontario government reduced the production services and computer animation tax credits.

Changes on the regulatory front arising from the CRTC’s decisions in its “Let’s Talk TV” proceedings may further alter financing prospects for screen-based content producers. The elimination and reduction of some Canadian content regulatory supports and the move toward unbundling TV channels are just two of the significant recent changes that may affect the production sector in Ontario.^{footnote 177[177]}

Discoverability

The types of screens on which film and television is viewed will continue to multiply, and at home or on the move, VOD and Internet-based services will be accessed on a variety of devices. Nevertheless, theatrical releases will continue to provide Canadian feature films with a critical opportunity to build awareness and will drive consumption on all other platforms.^{footnote 178[178]}

These trends have implications for all activities in the sector, but in particular for producers and distributors. Distributors have embraced new business models such as event scheduling, shorter exhibition windows, and multiplatform release strategies. Innovative marketing and promotion to enhance the discoverability of Canadian television programs and feature films will be an increasing priority.

The CineCoup Film Accelerator is a unique Canadian model that both supports the productions of independent filmmakers and engages with audiences. The model helps filmmakers develop their projects by building fan support through online marketing.^{footnote 179[179]}

Recognizing that Canadian-made programs must be widely available and visible to succeed in the current environment, CRTC intends to host a summit to engage stakeholders in the development of strategies and mechanisms to enhance the discoverability and promotion of Canadian content.^{footnote 180[180]}

Many factors drive discoverability and promotion is chief among them. While seeking innovative strategies to exploit intellectual property, the Institute for Capitalising on Creativity (ICC) at the University of St. Andrews established a Knowledge Transfer Partnership (KTP). The KTP brings together a researcher, an industry partner and the Institute on industry-initiated projects. In this case, the project explored best practices to develop intellectual property strategies in order to bolster return on investment. Critical issues looked at included: Digital Rights Management, licensing, direct sales, alternative revenue streams, Creative Commons, branding, and formal intellectual property rights (patents, trademarks, copyright, trade secrets and design rights). As a result, Creative Scotland-the national funding body for the arts, film and creative industries-increased its funding for marketing and distribution projects ten-fold.^{footnote 181[181]}

The British Film Institute provides support to distributors for using new ways of reaching audiences, new marketing techniques, distribution platforms, or innovative exhibition models.^{footnote 182[182]} The Institute has also supported trials of simultaneous multiplatform film releases.^{footnote 183[183]}

Sustainability through the global marketplace

Films are “capital assets with seemingly increasing shelf lives which can grow with the emergence of markets around the world.”^{footnote 184[184]} International treaty coproduction allows Canadian producers to access larger production budgets and to gain exposure in foreign markets while enabling them to go beyond the Canadian market which, given its small size, makes it difficult to recoup the cost of production. If a producer now has the opportunity of selling in new territories, these opportunities are countered by the fact that many of Ontario’s film production companies are small, and their lack of international contacts hinders their access to the global marketplace.

With bases in 13 European Union Member States, the European Creative Business Network (ECBN) encourages greater collaboration by connecting creative entrepreneurs and development agencies across Europe. Through exchanges and trade missions, the ECBN helps creative companies overcome barriers to working internationally, such as difficulties with finding the right information, bureaucracy, and limited contacts and collaborators.^{footnote 185[185]}

Australians in Film is an industry association for Australian filmmakers and performers in the US, operating with support from the Australian government. It provides members with access to writing and producing labs, industry panels and seminars, and networking opportunities with other industry professionals.^{footnote 186[186]}

Interactive digital media

The interactive digital media (IDM) industry encompasses video games, mobile applications, interactive media, and e-learning. Most IDM companies use digital distribution channels, reaching their customers directly or through online stores and third-party applications.^{footnote 187[187]}

Demand for IDM products is growing. One survey report stated that more than half of Canadians had played a video game in the four weeks prior to the survey.^{footnote 188[188]} Recent developments will continue to fuel demand for video games. These include free-to-play games, new game consoles and other hardware, and user-generated gameplay videos.^{footnote 189[189]}

The IDM industry in Ontario^{footnote 190[190]} contributed $917 million to GDP and 8,041 jobs to the economy in 2010.^{footnote 191[191]} The province has the highest number of IDM companies in Canada, about 31% of the Canadian total. As many as one-third of the very large companies are multinationals, which generate the vast majority of revenue for the sector in Canada.^{footnote 192[192]} A few have annual revenues above $10 million,^{footnote 193[193]} but the majority are small- or medium-sized companies earning less than $1 million in revenues in 2011.

Ontario’s internationally recognized “indie” games scene is attracting investment to the province. There were 96 video game companies in Ontario in 2012, directly employing over 1,850 individuals.^{footnote 194[194]} Of these, 88% were Canadian-controlled, compared with the Canadian average of 76% of firms.^{footnote 195[195]} The average salary for full-time employees in these companies was $76,400, slightly higher than the national average of $72,500 in this industry.^{footnote 196[196]} According to a survey, 67% of Canadians believe that the video game industry provides good career opportunities for young people.^{footnote 197[197]}

An important social benefit of video games is their application to learning and business environments. “Gamification” applies game play elements to activities such as training, education, and marketing. In education, e-learning is perceived to benefit both students and teachers.^{footnote 198[198]}

Key Trends

Developing for global markets

IDM companies are increasingly developing their products for global markets, localizing them through language, names, and other culture-specific features.

Revenues for the Ontario mobile app industry are projected to reach $1.9 billion in 2016 and $3.3 billion by 2018.^{footnote 199[199]} Much of this growth is expected to come from international sources. The US is a key export market that generates approximately 27% of the industry’s revenues.^{footnote 200[200]}

Globally, sales of mobile games are expected to overtake console game sales in 2015,^{footnote 201[201]} generating $30.3 billion compared with $26.4 billion for console games. Much of this revenue growth is coming from emerging markets in Southeast Asia and China.^{footnote 202[202]} This rapid growth in mobile game revenue is a positive development for Ontario, which has a large share of mobile developers.^{footnote 203[203]}

In North America, however, console game sales are expected to continue to exceed mobile game sales. In 2015, console game sales are projected at $11.1 billion, compared with $7.2 billion for mobile games.^{footnote 204[204]} This trend will shield console game developers from the worst impacts of a shrinking market.

Early-stage financing

Loan and venture capital financing are difficult to obtain in Canada,^{footnote 205[205]} and many IDM companies face challenges with accessing early-stage financing. Survey findings indicate that self-financing and internal company financing may be the predominant sources for start-up capital.^{footnote 206[206]} Some IDM companies look to the US for early-stage financing.^{footnote 207[207]}

The Canada Media Fund has introduced a number of innovative funding initiatives to facilitate access to investors. The Accelerator Partnership Pilot Program (A3P) is designed to provide access to digital media accelerators, which assist digital media companies with mentorship and to access markets and capital.^{footnote 208[208]}

The Seed Enterprise Investment Scheme (SEIS) in the UK is designed to help small, early-stage companies raise equity financing by providing tax breaks to individual investors. The SEIS also provides tax relief at a higher rate for early-stage companies.^{footnote 209[209]} In addition, the UK government has launched a new tax relief program for certified British video games. Productions must pass a cultural test, based on a points system awarded to cultural content, cultural contribution, the location of the game’s development, and the nationalities of key personnel working on the project.^{footnote 210[210]}

Skilled labour

To compete globally, IDM companies need workers in multiple areas. There are gaps in access to some highly skilled workers. Technical skills are the biggest gap and will be increasingly in demand in the coming years. In addition to technical and creative skills, business and data analytics skills are also in demand, and monetization expertise is critical to be able to take advantage of opportunities in the app sphere. There are also gaps in leadership and production management skills.^{footnote 211[211]} Canada’s skills gaps are being filled internationally. For example, almost 40% of video game companies outsourced one or more of their functions in 2012.^{footnote 212[212]}

The UK’s creative industries strategy recognizes the importance of STEAM (Science, Technology, Engineering, Arts, Math) skills to foster innovation capacity. The strategy supports creative subjects, intellectual property awareness, computing, and enterprise/business skills in the British school curriculum.^{footnote 213[213]}

The music industry

Canadians believe that listening to music contributes to their quality of life and that it is important to have access to music by Canadian artists.^{footnote 214[214]}

Canadians, especially teenagers, are spending more time listening to music.^{footnote 215[215]} Most Canadians, 90%, listen to an average of 24 hours of music per week, but 95% of Canadian teens listen for an average of 31 hours. Most Canadians listen to music in the background. Teens spend one-third of their music-listening time doing other things, like playing video games, reading, and surfing the Internet.^{footnote 216[216]}

Music consumption on tablets and smartphones is at an all-time high, and music streaming is growing.^{footnote 217[217]} Among music listeners, at least half of all smartphone and computer owners use a digital music service.^{footnote 218[218]}

Most Canadians rely on radio and word of mouth to discover new music. Web-based sources such as online radio stations, social networks, and online music stores are also important in finding new music.^{footnote 219[219]}

Ontario’s music industry is the largest in Canada. It is responsible for 78% of the country’s recorded music sector revenues,^{footnote 220[220]} and 39% of music industry establishments are located in Ontario.^{footnote 221[221]} The industry includes artist entrepreneurs, Canadian-owned record labels and publishers (“indies”), foreign-controlled record labels (“majors”), live music businesses (agents, music managers, music festivals, promoters, and presenters), and music distributors (e.g., radio, streaming services). Supporting the music industry are industry associations, training institutions, and service and technical organizations (e.g., recording studios, music technology companies).

In 2013, the multinational foreign-owned record companies (e.g., Universal Music Group, Warner Music and Sony Music) accounted for nearly four-fifths of the industry's total sales.^{footnote 222[222]} The independent sector consists mainly of small- and medium-sized companies involved in music production, artist development, publishing, managing, and touring. These companies accounted for 69% of all music sales by Canadian artists in the same year.^{footnote 223[223]}

Revenues from live touring are important to musicians, and music tourism has the potential to increase these revenues.^{footnote 224[224]} The economic potential of music tourism is evident in Austin, Texas, which hosts two major live music festivals each year—South by Southwest Film, Interactive and Music Conference and Austin City Limits Music Festival. Music tourism accounted for nearly half of Austin’s $1.4 billion in tourism revenues in 2010. The Austin Convention & Visitors Bureau helped achieve this success by promoting local musicians and music entrepreneurs domestically and internationally.^{footnote 225[225]}

Similar initiatives in Australia have been shown to provide solid economic returns. A study by the Australian Live Music Office shows that every dollar invested in Australia’s live music industry returns three dollars to the wider economy.^{footnote 226[226]}

The music sound recording and music publishing industry in Ontario contributed $275 million to GDP and 5,296 jobs in 2010.^{footnote 227[227]} Ontario accounted for 43% of all jobs in the sound recording industry in Canada in 2010.^{footnote 228[228]}

The Ontario government is committed to a Live Music Strategy. First announced in 2013, it promotes Ontario’s live music sector and positions the province as a premier global destination for live music and music tourism.^{footnote 229[229]} In 2014, the Ontario government launched OntarioLiveMusic.ca, a portal dedicated to promoting live music in Ontario as part of the Live Music Strategy.^{footnote 230[230]}

Key trends

Music streaming services

Music industry revenues are drawn music subscription services, CDs, vinyl LPs, downloads, and performance rights licensing. A key driver of change has been streaming music services. Ad-supported and subscription streaming services accounted for 32% of global digital music revenues in 2014, up from 25% in 2013.^{footnote 231[231]} Research on 13 of the world’s leading music markets in 2015 showed that 38% of Internet users had accessed music on streaming sites such as Spotify in the previous six months.^{footnote 232[232]}

The music subscription model is the fastest growing area, driven by foreign services such as Spotify, Google Play Music, Rdio, Slacker, and Songza. Canada has lagged in offering streaming services, but they are proving popular with audiences. There was an increase of 127% in audio streams in the first half of 2015 compared to figures for the last six months of 2014 when numbers started to be tracked. That significant increase coincided with the arrival of Spotify in the latter half of 2014.^{footnote 233[233]}

This trend has also had an impact on the revenue streams of artists, providing them with an additional source of income. In the five-year period to 2014, revenues from streaming increased as a share of overall revenues for artists. However, income from streaming remains a relatively small portion of overall revenues.^{footnote 234[234]}

Export expansion

Canada has a strong international reputation as an incubator of great musical talent. Independent music companies are primarily oriented to the domestic market, but there are opportunities for Canadian companies to develop international relationships to market, promote, and support touring for Canadian talent.^{footnote 235[235]}

In the UK, the Music Export Growth program provides grants to independent music companies to market UK music overseas.^{footnote 236[236]}

The Nordic Music Export Program (Nomex) is a joint platform of the music export offices of five Nordic countries: Sweden, Finland, Denmark, Iceland and Norway. The program aims to strengthen the market in the Nordic region, and to promote Nomex projects in other jurisdictions. The initiative includes a booking platform for touring artists, a Nordic playlist online, and live music showcases in the UK and Japan.^{footnote 237[237]}

Book and magazine publishing

Canadians believe in the value of reading and associate it with strong social benefits, including literacy, creativity, quality of life, social cohesion, and strength of the economy.^{footnote 238[238]}

Studies have shown that there is a relationship between reading and social engagement. Book readers volunteer their time at non-profit organizations and donate money or goods to non-profit organizations at much higher levels than non-readers do. Generally, they have a stronger sense of belonging to Canada.^{footnote 239[239]}

Reading occupies about a quarter of all leisure time among Canadians. Most Canadians (8 in 10) read books and spend an average of over five hours per week reading. About one-third of Canadians spend 75% or more of their reading time on fiction.^{footnote 240[240]}

Ontario’s book publishing industry includes foreign-owned and Canadian firms. Foreign-owned publishers tend to be large, multi-national companies. Canadian-owned publishers tend to be small and specialize by genre. Most of Ontario’s book publishers are English-language imprints and are based in Toronto. Ontario also has a number of French-language publishers, located in Ottawa, Sudbury, and Toronto.

Sales from physical books represented the vast majority (89%) of the revenues of Ontario’s Canadian book publishers in 2011.^{footnote 241[241]} Bricks-and-mortar retailers accounted for 50% of these revenues, and digital sales channels accounted for just under 4%.^{footnote 242[242]}

In the last few years, book publishers have witnessed the growing popularity of e-books. About half of all readers in Canada read e-books. Younger readers read them most often, but as many as four in ten older readers read some books digitally, whether on mobile devices or computers. They particularly value e-books for being convenient for travel.^{footnote 243[243]}

Ontario’s book publishing industry is the largest in Canada,^{footnote 244[244]} generating almost $1.23 billion in revenues in 2012, or nearly two-thirds of the industry’s national revenues.^{footnote 245[245]} In 2010, the book publishing industry in Ontario contributed $499 million to GDP and created 5,435 jobs.^{footnote 246[246]}

Ontario also has the largest magazine industry in the country, generating $1.13 billion in revenues in 2013.^{footnote 247[247]} Magazine publishing contributed $739 million to GDP and 8,516 jobs in Ontario in 2010.^{footnote 248[248]} In 2013, Ontario magazine media reported $511 million (about half of the national total) in advertising revenues and $306 million (about two-thirds of the national total) in circulation revenues.^{footnote 249[249]}

Most major national magazines are published in Ontario. The sector includes consumer, business-to-business, and cultural magazines, published in English and French as well as Indigenous and other languages.^{footnote 250[250]} Magazine publishers are highly diverse in their scale and output. The largest release more than 20 titles in a variety of categories; smaller publishers may produce only one or two niche titles.^{footnote 251[251]} Magazine publishers deliver content in print, online and for mobile devices.^{footnote 252[252]}

Magazine readership among Canadians is strong across all demographics and in virtually every life phase. Despite the adoption of digital platforms, readers aged 12 to 24 read almost as much as the average magazine reader who devotes 44 minutes to read a print magazine.^{footnote 253[253]} The readership of Canada’s 47 top-selling English-language magazines ranges from 166,000 to 3.9 million readers per issue.^{footnote 254[254]} Magazines with a focus on Canadian content account for 41% of magazine spending with Canadian titles accounting for 80% of magazine subscription delivery.^{footnote 255[255]}

Key Trends

Digital publishing

Digital publishing is expected to have a permanent and growing impact on book and magazine publishing. Globally, growth is expected to be driven by sales of e-books and digital magazines.^{footnote 256[256]}

The majority of publishers in Ontario are publishing e-books, but digital sales are only beginning to replace revenues lost from the decline in traditional print sales. The demand for digital books and magazines has grown, but the opportunity promised by new digital distribution channels has not yet been realized. Most publishers report that digital sales account for less than 15% of their revenue.^{footnote 257[257]}

Traditional print book sales globally are expected to fall at a Coumpound Annual Growth Rate (CAGR) rate of -3.1%. Demand for e-books will drive growth in sales globally, with year on year increases of 1.3% expected towards 2019.^{footnote 258[258]}

The growing number of digital magazines and the launch of subscription services will likely maintain and slightly increase total magazine revenue globally over the next four years. However, declining print circulation and falling advertising revenues will continue to affect the magazine sector.^{footnote 259[259]}

The Australian government is implementing a number of national initiatives to support its book industry, particularly to support digital expansion. It has established the Book Industry Collaboration Council, a public-private advisory body representing the entire book supply chain, to give advice on priority issues for the industry.^{footnote 260[260]}

Quebec launched a 12-component Book Action Plan in April 2015. One of the components aims to support innovative projects seeking to increase the digital products offered by accredited bookstores.^{footnote 261[261]} A portion of the Book Action Plan is funded by the province’s Digital Culture Strategy, launched in 2014, which seeks to address three main goals: enhancing digitally available cultural content, ensuring that digital content is accessible and disseminated, and creating an environment where digital culture thrives.^{footnote 262[262]}

The Association of Canadian Publishers and the Organization of Book Publishers of Ontario have received government support to advance the industry, from both levels of government, such as the creation of BookNet Canada. Through this industry-led initiative, the book industry is developing technologies to promote and sell books, streamline workflows, and analyze and adapt to a rapidly changing market.^{footnote 263[263]} This initiative supports publishing companies, retailers, distributors, sales agents and libraries.

Online marketing and discoverability

Magazines have responded to the opportunities and challenges of the digital transformation with innovative ways to utilize the Internet and mobile applications to extend and deepen their relationship with readers.

As a result of the evolving Canadian retail market and the decline of bricks-and-mortar book stores, discoverability is a significant challenge, especially for smaller book publishing companies. Internet-related approaches have yet to supplant traditional outlets as a way to discover new books.^{footnote 264[264]} Traditional outlets are still an important factor, albeit a diminishing one.

Internationally, some jurisdictions have launched initiatives to support online marketing and discoverability of books. The UK’s Digital R&D Fund for the Arts was an innovative three-year program to support collaboration between organizations with arts projects, technology providers, and researchers.^{footnote 265[265]} The fund supported the development of the Bookspotting app, based on a curated selection of Scottish-interest books.^{footnote 266[266]}

In Canada, collaborative projects support the digital discoverability of books. A project of the Association of Canadian Publishers and Canadian Publishers’ Council, 49thShelf.com seeks to make it easier for readers to discover Canadian books of all genres from a wide pool of authors and publishers from anywhere in the country. The project is supported by the federal and provincial governments.^{footnote 267[267]}

Digital technology has introduced new efficiencies and models on the distribution side. Technology-driven improvements such as better inventory management, communication networks, and sales data tracking have produced significant efficiencies in the distribution system. Online marketing can similarly provide opportunities to reach audiences.

Digital Skill Sharing in the UK brought together librarians and publishers to collaborate on reading campaigns through the use of digital communications platforms and social media. Publishers shared their skills and expertise through talks and showcases on the benefits of digital platforms and social media, including website and social networking master classes with digital innovators.^{footnote 268[268]} The case studies have been made available online to disseminate key findings.

Access to capital

The small size of the domestic market continues to challenge the ability of smaller book publishers to grow. A lack of access to capital makes it difficult for some publishers to invest in the systems and technologies they need to achieve a stronger competitive footing.^{footnote 269[269]}

Magazine publishers face similar challenges. The development of digital products has been hindered by lack of access to capital. In addition, the sector is facing declining advertising revenues.^{footnote 270[270]}

CultuurInvest is a public-private investment fund in Belgium to support publishers. The fund provides project financing, growth capital, and loans. CultuurInvest also provides management support and training to entrepreneurs to facilitate industry development.