GATINEAU, QB—Publication printers and the magazine industry will be adjusting to radically new federal policies after March 31, when the traditional postal subsidy disappears—along with the long-standing “printed in Canada” rule.

For decades, the federal government and Canada Post have subsidized the mailing of eligible Canadian magazines and non-daily newspapers, creating incentives for publishers to promote subscription sales. The subsidy program, called Publication Assistance Program, is being cancelled and replaced with a new program of direct federal grants to eligible publishers.

Publishers can spend their grant money however they wish, including distribution, though they are no longer required to use Canada Post to mail their publications. Also, while publications had to be printed in Canada under the old subsidy program, that requirement has been quietly dropped under the new grant program, called the Canada Periodical Fund.

“Postal bills will be increasing by double-digits after April 1,” notes Doug Bennet, publisher of the magazine industry trade journal Masthead (a sister site to PrintCan.com). “This could be a disincentive for publishers to increase publication frequencies and page counts, especially above the 200 g threshold. It will also make publishers think twice about adding more enclosures in the polybag, particularly if advertisers aren’t willing to shoulder dramatically higher postage costs.”

At the same time, the new program may be an incentive for publishers to print more copies for newsstand distribution, since paid newsstand copies now count towards the grant calculation. “We could see a shift in strategy away from subscriptions to the newsstand, since publishers could elect to spend their grant funds on newsstand promotions,” says Bennet.

The removal of the printed in Canada rule means publishers could shop their printing in the U.S. or overseas and still receive federal funding—impossible before.

Bennet, speaking recently at a Toronto chapter meeting of the National Association of Major Mail Users, expects most publishers will use their grant money to continue offsetting postage costs during a transition period. “But until we're into the new program, we won't know exactly how it will change industry behaviour,” he says.

Publications must be Canadian owned, contain 80% Canadian content, and have more than 50% paid or direct-request circulation in order to be eligible for the new $75 million fund.

For Masthead’s analysis of winners and losers under the new fund, click here. For the Canada Periodical Fund website, click here.