4 Activities Arising from Book Diffusion and Distribution

• 4.1 Who are the diffusers and distributors?
• 4.2 The publishers distributed
• 4.3 Titles distributed
• 4.4 New titles released
• 4.5 Distribution of book resales and final sales

4.1 Who are the diffusers and distributors?

It is difficult to come up with an accurate number of diffusers and distributors serving Quebec and French Canada, since figures vary by source, and several businesses whose main activity is not book diffusion or distribution are included.

The Annuaire de l'édition au Québec et au Canada français 2007-2008 lists 49 Canadian businesses as diffusers and distributors. It shows some ten businesses that do self-distribution, six school distributors (which usually do self-distribution), three that diffuse or distribute only foreign publishers, and three bookstores that represent foreign publishers in Canada. The monthly survey of new book sales carried out by the Observatoire de la culture et des communications du Québec is based on the activities of 36 distribution companies; the Observatoire distinguishes businesses whose main professional activity is distribution from those for which distribution is only a side activity. The same is true for the État des lieux du livre et des bibliothèques, which finds that these 36 businesses accounted for more than 99% of sales by diffusers and distributors in 2002.

Another relevant measure of the number of businesses for which diffusion or distribution is a significant activity, excluding the academic sector, is membership in ADELF (Association des diffuseurs exclusifs de langue française [association of exclusive French-language diffusers]), which has 23 members, seven of which are diffusers only, and one, Socadis, a distributor only. ADELF members account for 95% of French-language distribution activities in Canada.

Lastly, the BTLF (Banque de titres de langue française [the French-language titles bank]), which constitutes the most complete source of information, covering all book production and marketing activities in French Canada (obviously excluding Library and Archives Canada and Bibliothèque et Archives nationales du Québec), lists 52 active French-language distributors in Canada. This number includes distributors in both the trade and educational sectors.

This means there are few distributors, and it is rare for new players to enter the sector. Indeed, their number has decreased in recent years with the merger of two major distributors, ADP and Québec-Livres, and the recent closing of Distribution Univers.

The book distribution sector is also highly concentrated. The following table shows the level of concentration in the book distribution sector from 2002-2003 to 2005-2006, based on the share of sales by the largest distributors in their sales to the retail network, i.e., excluding sales that do not go through them.

Table 2. Largest distributors' share of book sales by distributors, Quebec, 2002-2003, 2004-2005 and 2005-2006,

	2002-2003	2004-2005	2005-2006
3 largest distributors	66.9%	66.4%	79.7%
5 largest distributors	86.2%	84.1%	90.2%
10 largest distributors	96.3%	94.5%	97.1%

Source:   Observatoire de la culture et des communications du Québec, Institut de la statistique du Québec, 2008.

The extent of concentration among book distributors can be seen in 2005-2006, where the three largest distributors controlled 79.7% of the market, and the five largest 90.2%. This leaves only 9.8% of the market for the smallest distributors, which are relatively high in number. We see a significant increase in concentration between 2004-2005 and 2005-2006, mainly explained by the merger of Québec-Livres and ADP following the acquisition of Sogides (which owns ADP) by Quebecor (which owns Québec-Livres) in 2005. Moreover, it comes as no surprise that concentration is even greater in the big-box stores, considering the considerable resources that book distribution demands in this market segment, with a significant number of distributors joining other larger distributors to cover it.

Comparing the rates for 2005-2006 with those for 1998-1999,¹ we find that concentration has increased radically in seven years, since it was then 49% for the three largest distributors for the whole network, 63% for the five largest distributors and 73% for the ten largest distributors, an increase in the market share of the three largest distributors of more than 30 percentage points.

Whereas in the 1960s about 40% of book distributors were foreign-owned, today foreign ownership is marginal. Only two large distributors, Socadis and Diffusion du livre Mirabel, are foreign-owned. Their market share is perhaps less, if we consider that these two companies are among the five largest French-language distributors in Canada. Lastly, it should be noted that all of Canada's French-language diffusers and distributors are located in Quebec.

4.2 The publishers distributed

The most recently published figure for the number of publishers distributed in Quebec and French Canada dates from 2003 and is taken from the Observatoire de la culture et des communications du Québec.²

Table 3. Number of Publishers Distributed by Quebec Distributors, 2002-2003

	Number	%
Number of publishers distributed	2,553	100.0
Number of Quebec publishers distributed	724	28.4
Number of Canadian publishers distributed	42	1.6
Number of foreign publishers distributed	1,787	70.0

Source:   Enquête mensuelle sur la vente de livres neufs [Monthly survey of sales of new books], Observatoire de la culture et des communications du Québec, Institut de la statistique du Québec, 2003.

We see the relative magnitude of the number of foreign publishers distributed in Quebec (1,787 publishers, representing 70% of publishers distributed). However, as we see below while discussing activities related to the marketing of new titles, these figures must be balanced by the fact that a large number of these publishers, even though they are distributed in Canada, have limited activities here; therefore, 70% foreign publishers does not necessarily represent a 70% share of the Quebec and French-Canadian market.

While the figure of 724 Quebec publishers distributed might be surprising, it is important to consider that, of these, several publishers are inactive or have even ceased publishing activities, but their titles are still being distributed on the retail market.

The data from the Annuaire de l'édition au Québec et au Canada français 2007-2008 is perhaps less scientific than what is published by the Observatoire de la culture et des communications du Québec, but nevertheless it provides us with information about publishers distributed in Quebec and French Canada. We learn, for example, that 577 domestic publishers and 1,744 foreign publishers are distributed there.³

The BTLF lists 2,048 Canadian French-language publishers in its database, 1,915⁴ of which are distributed, representing 93.5% of the Canadian publishers listed. This data shows the effectiveness of the French-language book trade in Canada in making books from nearly all active publishers accessible in the market. The BTLF lists 57,712 foreign publishers, about 2,200⁵ of which are distributed in Canada.

4.3 Titles distributed

The large number of titles distributed by French-Canadian distributors shows the scale of the inventory warehousing and management requirements. By definition, this number continues to increase from year to year, first because the annual production of titles is increasing, and second because the number of titles in the catalogues also grows as publishing houses mature.

Table 4. Number of titles distributed by Quebec distributors, by book language and origin, 2002-2003

	French			English			Total
	Number	% by Language	% by Origin	Number	% by Language	% by Origin	Number	% by Origin
Quebec titles	55,611	98.1	19.1	1,057	1.9	3.1	56,668	17.4
Canadian titles	971	22.2	0.3	3,401	77.8	9.9	4,372	1.3
Foreign titles	234,205	88.7	80.5	29,825	11.3	87.0	264,030	81.2
Total	290,787	89.5	100.0	34,283	10.5	100.0	325,070	100.0

Source:    Enquête mensuelle sur la vente de livres neufs, Observatoire de la culture et des communications du Québec, Institut de la statistique du Québec, 2003.

Table 4 shows the number of titles distributed (available through distributors) by language and book origin. We still see a large number of foreign titles, which represent 81.2% of the total number of titles distributed here. For the first time, Canadian French-language titles from outside Quebec are differentiated. They total 971, representing 1.72% of Canadian French-language titles. The vast majority of these titles are from the same distributor, Prologue. It is also interesting to note that in 2002-2003, 3,401 Canadian English-language titles were distributed by Quebec French-language distributors. However, this number appears to have decreased since then, due to the difficulty of working extensively with a retail sector largely concentrated in a single bookstore chain in English Canada.

The BTLF lists 95,644 Canadian French-language titles to date (which, however, includes a number of titles that are out of print), 85,390 of which are distributed across Canada,⁶ which represents 89.3% of the titles listed. Once again, we see that a very large proportion of published titles are actually available in the supply chain, which remarkably demonstrates the ability of French-Canadian distributors to provide access to a wide diversity of Canadian titles. The BTLF lists 1,073,942 titles from foreign publishers, 665,599 of which are distributed in Canada and 547,824 are actually available. This large proportion of foreign titles distributed in Canada contrasts with the low proportion of foreign publishers distributed (57,712 for­eign publishers listed against 2,200 distributed).

The following table shows the number of copies (rather than titles) distributed by Quebec distributors in 2002-2003, with the language and source of the titles differentiated. It gives a slightly more accurate idea of the scope of the work required from distributors for domestic and foreign titles.

Table 5. Number of copies distributed by Quebec distributors, by book language and origin, 2002-2003

	French			English			Total
	Number	% by Language	% by Origin	Number	% by Language	% by Origin	Number	% by Origin
Quebec titles	10,482,402	95.7	43.6	470,449	4.3	17.1	10,952,851	40.8
Canadian titles	778,244	40.9	3.2	1,123,657	59.1	40.9	1,901,901	7.1
Foreign titles	12,807,862	91.7	53.2	1,156,132	8.3	42.0	13,963,994	52.1
Total	24,068,507	89.7	100.0	2,750,238	10.3	100.0	26,818,745	100.0

Source:    Enquête mensuelle sur la vente de livres neufs, Observatoire de la culture et des communications du Québec, Institut de la statistique du Québec, 2003.

The breakdown of distributor activities by the number of copies distributed rather than number of titles gives a somewhat different picture of the effort required for the distribution of domestic and foreign titles. Indeed, the foreign titles that previously represented 81.2% of the titles available represent only 52.1% of the copies distributed, with Quebec titles representing 40.8% of the copies distributed. Canadian French-language titles outside Quebec rise from 1.72% of titles available to 6.9% of Canadian French-language copies distributed.

Table 6. Average number of copies by title distributed by Quebec distributors, by book language and origin, 2002-2003

	French	English	All Titles
Quebec titles	188.5	445.0	193.3
Canadian titles	801.0	330.0	435.0
Foreign titles	54.7	38.8	52.9
All titles	82.8	80.2	82.5

Source:   Observatoire de la culture et des communications du Québec.

Moreover, this picture reveals that for Quebec French-language titles in 2002-2003, the average number of copies distributed per title was 188.5, while it was only 54.7 for foreign titles. Surprisingly, the average number of copies of Canadian French-language titles distributed is 801. To clearly understand this situation, the relevant titles included in these 971 Canadian French-language titles should be verified. Lastly, it is surprising to note that among Quebec titles, the average number of copies distributed per title is definitely higher for English-language titles. However, this finding is subject to the fact that, given the marketing methods in English Canada that provide for massive placement in bookstore chains, it is possible that this high ratio does not really represent a high number of copies sold.

4.4 New titles released

A large number of the copies distributed relate to restocking — orders submitted by the retailer without right of return — and require less effort from distributors than do new titles. An analysis of activities surrounding the marketing of new titles will provide a better idea of the amount of work performed by distributors. In this regard, an extensive study on the marketing of new titles was recently commissioned by the Table de concertation interprofessionnelle du milieu du livre, and a comprehensive report was released in November 2007.⁷ The data used in the study is based on marketing activities for new titles by 10 Quebec distributors, whose activities represent some 90% of the Quebec market, bookstore and mass-marketing sales combined. The study dealt with titles placed on the système d'office between February 1, 2004, and January 31, 2005, and monitoring of these titles continued over an additional year in order to take returns and restocking for each of the titles concerned into account. Data on Quebec titles includes Canadian French-language titles.

Table 7. Number of new titles, distribution of net sales of new titles by channel and average number of sold copies per title, 2004-2005

	Number of Titles — New Titles	Copies Sold, Bookstore channel	Copies Sold, Mass-Market Channel	Copies Sold, All Channels	Average Number of Copies Sold per Title
Quebec titles	3,873	2,990,325	1,613,338	4,603,663	1,189
Foreign titles	25,444	3,718,149	1,276,533	4,994,682	196
TOTAL	29,317	6,708,474	2,889,871	9,598,345	327

Source:    Étude sur la mise en marché des nouveautés par le système de l'office au Québec, Table de concertation interprofessionnelle du milieu du livre, 2007.

We can first see from Table 7 that the number of new titles released annually in Quebec is very impressive. Each week, an average of 564 new titles are shipped to bookstores and mass-market channels in Quebec. These titles represented some 10% of the titles available in the market in 2002-2003 (See Table 4 above).

The number of new Quebec titles is 3,873, which amounts to 13.21% of the 29,317 new titles. It is interesting to note that the proportion of new titles from foreign sources compared to Quebec titles is therefore greater than the proportion noted in 2002-2003 for the titles distributed, 86.8% compared with 81.2%. However, the average number of copies sold presents a very different situation between all titles in distribution in 2002-2003 and new titles in 2004-2005. Thus, the average number of copies distributed for Quebec titles in 2002-2003 was 193.3, whereas the average number of copies sold for new Quebec titles in 2004-2005 was 1,189. This marked difference demonstrates the degree to which revenue in the sector depends largely on the sale of new titles. We can also infer that processing new titles represents much of the work done by distributors. Moreover, when we compare the average number of copies sold for Quebec and foreign titles, we find that six times more copies of Quebec titles are sold, which reveals the effectiveness of Canadian distributors in making Canadian French-language titles available.

However, the level of risk and performance varies greatly by category of book released, meaning that the distributor's levels of risk and effort to manage movement of these titles are not the same. We know that, logically, categories of books that sell a larger average number of copies will require less handling on the part of the distributor, since it is less demanding to process a stack of 20 copies of the same title than one copy each of 20 different titles, and that the return rate on better-selling titles is usually lower.

Table 8. Average number of copies sold by category, new titles, 2004-2005

	Quebec Titles	Foreign Titles	All Titles Combined
Fiction	883	269	344
Fine arts	512	61	76
Humanities and social sciences	872	104	210
Encyclopedias and dictionaries	742	702	704
Scientific and technical texts	2,115	58	402
Youth literature	1,286	200	367
How-to books	1,726	170	371
Miscellaneous	1,072	134	266
Total	1,189	196	327

Source:   Étude sur la mise en marché des nouveautés par le système de l'office au Québec, Table de concertation interprofessionnelle du milieu du livre, 2007.

Table 8 shows the average number of copies sold by book category. Without yet considering the number of copies placed on the système d'office and the return rate by category (which will be discussed below), we can already note that certain categories — and guess that certain sub-categories or certain genres — require more effort than others on the part of distributors. We note for example that in all categories, foreign titles are much less successful than Quebec titles. Yet we recall that the number of foreign titles is much greater than the number of Quebec titles, and they require the same effort from the diffuser/distributor: data entry, presentations to retailers, shipping to retailers, stock management, etc.

This concentration of the diffuser/distributor's effort on a large number of titles that sell the least is even more striking when we observe the number of copies sold by sales bracket.

Table 9. Average number of copies placed on the système d'office by sales bracket, Quebec and foreign titles combined, 2004-2005

Number of Copies Placed on système d'office	Number of Titles	Return Rate on système d'office–Bookstore channel (% of no. of Copies)	Return Rate on système d'office and Restocking — Bookstore channel (% of no. of Copies)	Average Number of Copies Sold by Title
1 to 500	22,471	64.28%	41.95%	97
501 to 1,000	1,624	49.94%	32.47%	688
1,001 to 2,000	811	41.09%	25.91%	1,311
2,001 to 5,000	341	31.94%	18.41%	2,829
5,001 and more	87	21.96%	11.64%	11,951
Total titles	25,334	49.49%	30.84%	251

Source:    Étude sur la mise en marché des nouveautés par le système de l'office au Québec, Table de concertation interprofessionnelle du milieu du livre, 2007.

Analysis of the data presented reveals the extent to which a very small number of titles pay for the activities required to manage most of the other titles; only 87 titles have sold more than 5,000 copies, their return rate is lower than for any other category, and the average number of copies sold was 11,951 (four times more than the average for the 2,001-to-5,000 copies bracket, and 123 times more than the average for the 1-to-500 copies bracket).

At the other extreme are the 22,471 titles placed on the système d'office at less than 500 copies (they represent 88.7% of all titles); their return rate is higher than for any other category, and the average number of copies sold was only 97. This imbalance among brackets reveals the difficulties faced by diffuser/distributors, which have to deal with an increased number of titles with reduced print runs.

The study also shows that 52% of Quebec titles have been placed on the système d'office at less than 500 copies, while the ratio is 94% for foreign titles. Similarly, of the 22,471 titles placed on the système d'office at less than 500 copies, 20,724 or 92.2% are foreign titles. We may consider that several are circulated only for institutional or specialized purchaser networks.

4.5 Distribution of book resales and final sales

Since 2001, the Observatoire de la culture et des communications du Québec has been gathering monthly data on final book sales by each category of book trade professionals: publishers, booksellers, school co‑operatives, distributors, etc. Over the years, methods have become more refined and today they provide a fair and accurate portrait of the distribution of final books sales in each sales channel in Quebec.

Table 10. Final sales of books, by retail outlet category, Quebec, 2001-2007

	2001		2002		2003		2004		2005		2006		2007		Change 01/07
	$K	%	$K	%	$K	%	$K	%	$K	%	$K	%	$K	%	%
Distributors	28,412	4.6	32,034	4.9	36,955	5.6	25,030	3.8	26,901	3.7	29,803	3.9	22,369	2.7	-21.3
Publishers	108,209	17.6	111,662	17.3	110,819	16.8	127,728	19.2	154,885	21.2	151,418	19.8	174,352	20.9	61.1
Bookstores and co-ops	377,740	61.3	409,792	63.3	418,445	63.4	431,371	64.9	446,801	61.1	469,167	61.2	518,646	62.1	37.3
Mass-market channels	101,867	16.5	93,682	14.5	94,063	14.2	80,910	12.2	102,367	14.0	115,938	15.1	119,767	14.3	17.6
Total sales	616,229	100	647,170	100	660,282	100	665,039	100	730,954	100	766,327	100	835,135	100	35.5

Source: Observatoire de la culture et des communications du Québec, Institut de la statistique du Québec.

The analysis by the Observatoire de la culture et des communications du Québec distinguishes between a final sale and one intended for resale. Thus, the sale of a book by a distributor to a bookseller does not represent a final sale, since it is the bookseller that will make the final sale to the customer. However, the sale of a book by a distributor to an institution appears in the final sale category.

Thus, it is not surprising to note first that final sales make up only a small part of a distributor's revenue, since supplying retailers is the major part of the distributor's work. In Quebec, except for textbooks, public institutions (schools, libraries, etc.) are not permitted to obtain their inventory directly from the distributor, which seriously limits its final sales. We note nevertheless that, from 2001 to 2007, the net value of distributors' final sales decreased 21.3%, while it increased 61.1% for publishers. This situation can be partly explained by direct sales by publishers in certain sectors, through the Internet or by direct promotion, and by the increase in textbook sales,⁸ which represent final sales for publishers.

Book sales in mass-market channels (big-box stores, warehouse clubs, discount stores, pharmacies, specialized boutiques, etc.) have grown considerably since the early 1990s. Mass-market channels and bookstore channels, the two main resale networks for distributors, sometimes compete aggressively to maintain or expand their sales of books, particularly bestsellers, a niche that allows bookstores to achieve relative profitability.

It was long feared that the mass-market channels, particularly the discount stores (Price Club-Costco, Maxi, Wal-Mart), would capture a growing part of the book market and replace bookstores, particularly the independents. However, their share appears to be stabilizing, since their share of the final sales market increased only 17.6% from 2001 to 2007, whereas the bookstores' share (including school co‑operatives) increased 37.3%. In fact, we note that publishers and bookstores are the two categories that have benefited from the increase in final sales over the seven years studied.

However, if we wish to measure the range of distributor activities and quantify the role of distribution in the Quebec book market, we should also measure the distributors' share of the book resale market, which means measuring the proportion of the books that pass through the distributor to reach their final retail outlet.

Table 11.  Value of retail network sales and final sales, by category of retail outlet, Quebec, 2001-2006

	2001		2002		2003		2004		2005		2006		Change 01/06
	$K	%	$K	%	$K	%	$K	%	$K	%	$K	%	%
Retail network sales	479,607	77.8	503,474	77.8	512,508	77.6	512,281	77.0	549,168	75.1	585,106	76.4	22.0
Value of sales by distributors	303,015	63.2	313,176	62.2	313,603	61.2	282,007	55.0	327,143	59.6	346,633	59.2	14.4
Value of sales by Quebec publishers and foreign suppliers	176,592	36.8	190,298	37.8	198,906	38.8	230,275	45.0	222,025	40.4	238,473	40.8	35.0
Final sales by distributors	28,412	4.6	32,034	4.9	36,955	5.6	25,030	3.8	26,901	3.7	29,803	3.9	4.9
Final sales by publishers	108,209	17.6	111,662	17.3	110,819	16.8	127,728	19.2	154,885	21.2	151,418	19.8	39.9
Total sales	616,229	100	647,170	100	660,282	100	665,039	100	730,954	100	766,327	100	24.4

Source:    Observatoire de la culture et des communications du Québec, Institut de la statistique du Québec.

Even though distributors' sales to the retail (i.e., resale) network increased by 14.4% from 2001 to 2006, this growth is markedly slower than that experienced by Quebec publishers and foreign suppliers (35.0%) or the retail network as a whole (22.0%). Combined with the reduction in the distributors' share of final sales, this data reveals a decrease in the economic weight and strategic role of the distributor in Quebec's book supply chain.⁹

Table 12.  Value of book sales through Quebec distributors, 2001-2006

	2001 $K	2002 $K	2003 $K	2004 $K	2005 $K	2006 $K	Change 01/06 %
Value of distributor sales to retail network	303,015	313,176	313,603	282,007	327,143	343,633	13.4
Final sales by distributors	28,412	32,034	36,955	25,030	26,901	29,803	4.9
Total distributor sales	331,427	345,210	350,558	307,037	354,044	373,436	12.7
Total sales	616,229	647,170	660,282	665,039	730,954	766,327	24.36
Distributor sales as share of total sales (%)	53.78	53.34	53.09	46.17	48.44	48.73	–9.4

Source:    Benoît Allaire, "Les distributeurs de livres au Québec : un chiffre d'affaires de 239 M$ en 2005-2006" [Book distributors in Quebec: $239M in sales in 2005-2006], Observatoire de la culture et des communications du Québec, Institut de la statistique du Québec, Statistiques en bref, no 38, June 08.

Although distributors' share of total book sales in Quebec remained relatively stable from 2001 to 2003, at around 53%, it fell to 46.17% in 2004, 48.44% in 2005 and 48.73% in 2006, which represents a decrease of 9.4% between 2001 and 2006. [translation] "These six years are not a very long period, but long enough to allow us to affirm that this downturn for distributors […] is probably not a hiccup. It would appear that the distributor's traditional role in the supply chain has entered a transformation phase."¹⁰

Since the diffuser/distributor plays a major role in the marketing of new titles, and the results from the different categories of book retailers greatly influence its efforts and activities, a closer look should be taken at the net sales of new titles in both principal sales channels: bookstores and mass-market channels.

Table 13.  Distribution of net sales of new titles by channel, 2004-2005

	Quebec Titles				Foreign Titles				All Titles Combined
	Copies	%	$	%	Copies	%	$	%	Copies	%	$	%
Bookstore channel	2,990,325	65.0	55,080,745	63.3	3,718,149	74.4	84,762,019	75.6	6,708,474	69.9	139,842,765	70.2
Mass-market channels	1,613,338	35.0	31,996,604	36.7	1,276,533	25.6	27,351,299	24.4	2,889,871	30.1	59,347,902	29.8
Both	4,603,663	100	87,077,349	100	4,994,682	100	112,113,318	100	9,598,345	100	199,190,667	100

Source:    Étude sur la mise en marché des nouveautés par le système de l'office au Québec, Table de concertation interprofessionnelle du milieu du livre, 2007.

Table 13 reveals that for new titles, retail sales in the bookstore channel represent 70.2% of total sales, all titles combined, and those of the mass-market channels represent 29.8%. The difference between the two networks is greater for the new foreign titles category, where sales in the bookstore channel amount to 75.6% of total sales of new foreign titles (compared with 63.3% for new Quebec titles), which implies that only 24.4% of sales of new foreign titles take place in the mass-market channels, compared to 36.7% for new Quebec titles. However, from another point of view, sales of new foreign titles represent 46.1% of total sales of new titles in mass-market channels, against 53.9% for new Quebec titles. The gap between the two categories of new titles is thus less pronounced.

We have no data on final sales of new titles by publishers or by distributors. However, looking at only final sales for the bookstore channel and the mass-market channels for 2005 from Table 10, we can conclude that 81.4% of these sales were in bookstores and 18.6% in the mass-market channels. We therefore note, comparing this data with that relating to net sales of new titles by network, that a higher proportion of new titles than total titles are sold in mass-market channels.

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