Marketing, February 10, 1997
Some magazine publishers are making moves that seem like pre-emptive strikes aimed at second-guessing the fast-changing rules governing their business in Canada.
Escalating changes in communications technology, combined with liberalizing international trade, may mean that current Canadian-content rules on magazines will have to be altered or demolished. Even if they’re not, there is already a preponderance of American magazines on Canadian newsstands. In that climate, licensed Canadian editions of established U.S. titles may turn out to have the advantage in a changed magazine business: they get the rights to an established U.S. title and brand, while offering Canadians some glimpse of what’s happening in their own country through homegrown editorial. At the very least, they’re already counting on name recognition and brand identity as a means for boosting circulation and attracting advertisers.
Last month, International Trade Minister Art Eggleton was making noises about the possibility that Canada’s long-standing measures to protect its cultural industries might not survive in their current guises much longer. He even suggested that such protectionism is outmoded and no longer defensible.
Catherine Keachie, president of the Canadian Magazine Publishers Association, contends that the protection has to remain in place. She says that without those measures, the few Canadian titles will cease to exist. “Protesting existing Canadian magazine regulations is like getting a free lunch, and then complaining there’s no dessert,” she says.
Yet even as she’s making that point, Canadian dailies rely on U.S. syndicators and wire services for pictures, copy and connections. Canadian TV newscasts would be little more than talking heads were it not for pictures from NBC, ABC, CBS, CNN and a slew of foreign satellite video-feed services. Canadian radio stations run call-in shows from U.S. syndicators. The state of the world — even without taking into account the World Trade Organization’s preliminary ruling that Canada’s 80 percent tax on split-run magazine editions violates international trade deals — makes definitions of what constitutes Canadian culture or product indistinct.
The line between Canadian and “foreign” — just like the imaginary line along the 49th parallel dividing the True North Strong and Free and The Land of the Free — is getting blurrier.
Politicians and lobbyists can debate the fine points of policy. But magazine publishers are realizing that hitching your content to a brand from south of the border offers leverage and adaptability. If the magazine protections stand, great. If split runs — with Canadian ads surrounding editorial largely supplied by a U.S. parent — are allowed, licensees can argue that they already have a Canadian bureau in place, which probably looks like a better idea than waiting for the U.S. head office to set one up.
Cross-border hybrids in the magazine business aren’t new. Reader’s Digest has had a Canadian edition since the institution of the current Canadian laws on magazine content in 1976. The magazine is owned by a U.S. parent, with a Westmount, Que. office combining U.S. content with Canadian features and condensed articles.
In 1989, Hachette of Paris set up a French-language edition of its women’s title Elle in Quebec in a joint venture with Télémédia Inc. of Montreal. The content is largely domestic, and Elle Québec is counted as a Canadian magazine. The language difference helps make the situation clearer — Time Warner doesn’t have a raft of French-language titles it’s eager to duplicate in Canada.
Another new magazine is now launching in Quebec; it also has a foreign partner. But this magazine is a franchise, paying for the rights to a name and trying to match the tone and style of its U.S. predecessor. Ocean Drive Montreal — the franchisee of a Miami monthly of the same name — is aiming itself at an affluent readership. Its editorial mix, mostly in English but some in French, is rich in restaurant reviews, gossip, fashion spreads and short, chatty profiles of people who are famous for acting as though they’re famous.
Ocean Drive Montreal debuted with its January, 1997 issue. Thirty thousand copies are distributed free through restaurants, bars, health clubs, hair salons, retail boutiques and hotels. The publisher, Stephan Fortier, continues in the restaurant business (his restaurant is called — not surprisingly — Ocean Drive), launching the magazine as a sideline and brand extension.
“We have the rights to the name Ocean Drive for Canada, including Montreal, Toronto and Vancouver,” says Laurie Zakreski, Ocean Drive Montreal’s marketing vice-president. Under the licensing deals, Ocean Drive Montreal gets the rights to the name and to some editorial, including columns by Manhattan-based gossipmonger George Wayne and Hollywood columnist Jeanne Wolf.
Canadian-content rules dictate that no more than 20% of a magazine’s editorial content is from outside Canada. “I don’t know what the limit is,” Zakreski says. “But we’re well under it; 90 percent of the editorial is generated by Montreal writers and photographers.”
Advertising is a separate issue, too. All the advertising in Ocean Drive Montreal is sold by the magazine’s own salespeople.
So what exactly is it getting for its licensing fee, besides the rights to a name and second-window gossip? “Their know-how,” Zakreski says. “They know how to develop a relationship with advertisers as potential distributors of the magazine; it’s like a win-win-win situation. The magazine is a success in Miami; there’s no reason we can’t duplicate that success here.” If your magazine is distributed through retail outlets you also hope to sign up as advertisers, friendly editorial can help cement all aspects of the relationship.
Fortier and Zakreski plan to replicate this formula with editions in Toronto and Vancouver. “I’ve been saying we’ll have those in six months, but people keep telling me to stop saying that,” Zakreski says. “Within a year, anyway.”
While people in government and the magazine business may detect subtle differences in nationality and content between publications, things are simpler for media directors: is buying space in a particular magazine worth the money? “It depends on the ability to reach a particular audience and the cost of doing business,” says Hugh Dow, president of Toronto’s Initiative Media. “We’ve never had any of our clients ask us to preclude any publications because of their nation of origin or any other factor.”
While Ocean Drive seems to be a vanity project that’s turning a profit, Computer Reseller News Canada is an altogether more hard-nosed initiative. The Publishing House in Toronto concentrates on newspaper supplements and advertorial inserts — most recently for AT&T’s Lucent Technologies and Sun Microsystems.
The company was looking for a magazine that would fill a niche and turn a profit. “We decided to go with Computer Reseller News because the name has tremendous brand recognition throughout North America,” says Stephen Wexler, editor-in-chief of Computer Reseller News Canada. The Publishing House struck a licensing agreement with CMP Media Inc. of Manhasset, N.Y., which runs the U.S. weekly Computer Reseller News. Like its American counterpart, the Canadian CRN is aimed primarily at dealers. Both are controlled-circulation books; CRN Canada is biweekly.
“Through our agreement with CMP Media, we have access to their information and their information network; their news gathering across the U.S. and around the world,” Wexler says. “Of course, we’re always cognizant of the fact that no more than 20% of our editorial content can be from non-Canadian sources.” CRN Canada also has ad reps working on its behalf through M&T Inc. of San Mateo, Calif., which CMP Media bought last year.
Both Ocean Drive and CRN Canada are finding that ad sales one of the easier aspects of running a magazine, confounding contentions that more magazines will mean fewer ad dollars to go around. Wexler says: “It looks to us like the market is spending money to support more publications, more choices.”
But with the fluid, uncertain future for Canada’s current regulatory and trade climates, how are media directors and advertisers supposed to know what to do next? They can’t, Hugh Dow says. Instead, they’re monitoring the situation on a daily basis and trying to keep up with the latest.
Finally, the two poles of nationalist pride and the dictates of business mean the the situation is blurry for people who buy advertising too.
“It’s almost impossible to resolve,” Dow says. “Everybody’s torn between the cultural and emotional aspects of the Canadian perspective versus the business decision of buying efficient media space and advertising time. I wish I knew what the solution was. I’d have tabled it if I thought there was one that successfully addressed this scenario.”