Effects of Changing Public Policies of Cultural ... - AMA Journals

Effects of Changing Public Policies of Cultural Protectionism on Sources of Cultural Identity and Consumer Information Bruce A. Huhmann and Najam U. Saqib Advertiser-supported cultural industries provide (1) advertisers with vehicles to reach consumers, (2) consumers with information about products that suit their needs and local sources of availability, and (3) countries with tools for maintaining cultural identity. The impact of abolishing cultural protectionism is examined through the analysis of Canadian magazine industry data and advertising content. Three studies reveal the adverse effects of ending protectionist policies on market share/circulation of leading domestic magazines. In addition, new magazine growth was stagnant for leading domestic magazines but robust for smaller niche magazines. Imported U.S. magazines maintained market share, thus weakening domestic magazine advertising as a marketing communication channel between Canadian advertisers and consumers.

lthough free trade is lauded for making prices more competitive and business operations more efficient, there is also a concern that free trade will harm domestic industries (Granzin, Brazell, and Painter 1997). Internal pressure to protect domestic jobs and industries can lead a country to adopt protectionist policies, despite the disputes that such policies often create with trade partners. Trade disputes may deteriorate into a trade war (Jones 1994). Such a trade war almost erupted between the United States and Canada over the Canadian magazine advertising industry. Cultural products are an increasing proportion of international trade (Scott 2000). Fear of losing cultural identity often leads governments to adopt protectionist policies that are aimed at maintaining cultural industries (e.g., motion pictures, music, television programming, literature, periodicals). Advertiser-supported cultural industries not only help maintain a country’s cultural identity but also provide vehicles for domestic advertisers to promote their products and inform consumers about marketing-related issues through both editorial and advertising content. When such vehicles are not available for the domestic market, marketers are deprived of a communication channel with their consumers.

In addition, consumers are deprived of a source of information about goods and services that are locally available or targeted to their specific needs. Thus, changes in public policies that could lead to the loss of an advertiser-supported cultural industry have important implications for marketers. Supporters of cultural protectionism point to the necessity of protecting cultural industries from larger foreign (often U.S.) competitors to maintain the integrity of the domestic culture (e.g., De Bens and De Smaele 2001; Hesmondhalgh and Pratt 2005; Nordenstreng and Varis 1974; Tunstall 1977). Critics charge that this is merely a convenient excuse for offering domestic firms easy access to profitable markets (Chadha and Kavoori 2000; Scott 2000). For example, the Canadian magazine advertising market had revenues of $672 million in 1999 (Television Bureau of Canada 2005). However, legislation protected this industry from foreign competition. This article examines the impact of ending cultural protectionist policies in the context of the Canadian magazine industry. Under pressure from the World Trade Organization (WTO) and the U.S. government, the Canadian Parliament passed the Foreign Publishers Advertising Services Act (1999), commonly referred to as Bill C-55, which opened the Canadian magazine advertising industry to foreign competition for the first time in more than three decades. To determine the effect of exposing a previously protected cultural industry to foreign competition, this article analyzes industry data and the advertising content of Canadian and U.S. magazines available in Canada. Three studies find that eliminating cultural protectionism has allowed leading importers to maintain circulation and market share, despite the increasing fragmentation of consumer media. Alternatively, leading domestic competitors were harmed, and smaller domestic competitors (i.e., magazines

A

Bruce A. Huhmann is an associate professor, Department of Marketing, College of Business, New Mexico State University (e-mail: [email protected]). Najam U. Saqib is an assistant professor, School of Business Management, Faculty of Business, Ryerson University (e-mail: [email protected]). The authors thank the anonymous JPP&M reviewers for their significant editorial improvements. The authors also thank Celina Lac and Laurel Sedor for their assistance in coding the advertisements. This article was accepted under the former editor, Joel Cohen.

© 2007, American Marketing Association ISSN: 0743-9156 (print), 1547-7207 (electronic)

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Vol. 26 (1)

Spring 2007, 75–88

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Public Policies of Cultural Protectionism

targeting niche and language-minority audiences) have thrived.

Cultural Protectionism: The Case of Canadian Magazine Advertising Canadian publishers had long lobbied for cultural protectionist policies in fear of larger U.S. competitors. They believed that U.S. magazines would introduce split-run editions into the Canadian market and drive Canadian magazines out of business by undercutting the price of ad space. Whereas Canadian magazines would need to cover the expense of generating editorial material, the editorial expense for U.S. split-runs would already have been covered by U.S. ad revenue. Split-run editions are versions of a magazine with all or mostly the same editorial material but with advertising tailored to a particular geographic audience. For example, U.S.-based Hearst Magazines publishes 36 split-run editions of Cosmopolitan and 10 split-run editions of Esquire for various international audiences. Split-runs can also be published for specific geographical regions within a country, such as Sports Illustrated, which has 9 split-run editions for various regions of the United States, as well as Canadian and international editions (Standard Rate and Data Service 2004). Before cultural protections against split-run magazines had been enacted in 1965, Time magazine and Reader’s Digest had begun Canadian editions. Reader’s Digest publishes mostly editorial content unique to the Canadian edition and, since 1976, has been published by a 75% Canadian-owned foundation. Thus, it is now considered a Canadian magazine rather than a split-run version of the U.S. Reader’s Digest. Conversely, the Canadian edition of Time fits the definition of a split-run magazine; it uses mostly the same editorial content but generates additional ad revenue from Canadian advertisers (Granatstein and Masterton 1999). The combination of legislation (see Table 1) that formed Canada’s public policy protecting its domestic magazine industry gave Canadian magazines a distinct advantage over foreign competitors in both circulation and ad revenue markets (Schwanen 1998). Although Canada’s policy of cultural protectionism made it unprofitable for foreign magazines to develop Canadian split-run editions, Canada never completely closed its borders to foreign magazines. Subscription prices of foreign magazines were frequently higher as foreign publishers attempted to recoup higher postage costs, but foreign firms often pass higher operating costs in a country along to that country’s consumers (Feenstra 1995). Despite higher prices, foreign magazines garnered approximately 80% of all newsstand sales in Canada by 1998. For example, U.S. magazines represented 95% of foreign magazine newsstand sales in Canada, and 71 U.S. magazines had Canadian circulations of 30,000 or higher. When only English-language publications are considered, Canadian magazines garnered only 18.5% of newsstand sales (Thirty-Sixth Parliament, 1st Session 1998; WTO 1997).

Table 1.

A Brief Chronology of Cultural Protectionism and the Canadian Magazine Industry

Date

Event

1792

The first Canadian magazine, Nova Scotia Magazine and Comprehensive Review of Literature, Politics, and News, begins publication. Publication ends after three years.

1875

The Postal Act offers subsidized, lower postage rates to domestic Canadian periodicals.

1965

Parliament enacts Tariff Code 9958, which prohibits importation of split-run magazine issues that contain advertising primarily directed at Canadians (e.g., listing Canadian sources of availability) that is not identical to all editions of the periodical.

1976

Canada prohibits income tax deductions for advertisments in foreign-owned publications to maintain the domestic advertising revenue pool to support Canadian publications.

1993

Technological advances enable foreign publishers to circumvent Tariff 9958. Investment Canada rules that Tariff 9958 will not apply to a Canadian split-run edition of Sports Illustrated, which will be electronically transmitted to publishing facilities in Canada.

1994

In its recommendation to close the loophole in Tariff 9958, the government-appointed Task Force on the Canadian Magazine Industry reports that 53 U.S. consumer magazines and 70 business and trade magazines are poised to begin publishing Canadian split-run editions using the same technology as Sports Illustrated.

1995

In December, Parliaments enacts Bill C-103 (Tax on SplitRun Periodicals), which levies an 80% excise tax on ad revenue from split-run editions of foreign magazines.

1997

On June 30, the WTO dispute-settlement panel and appellate body rules against Canada’s tariffs, excise taxes, and postal subsidies.

1998

In response to the WTO ruling, the Minister of Canadian Heritage introduces Bill C-55 into the House of Commons on October 8. Bill C-55 eliminates preferential postal rates but makes it a criminal offense for Canadian firms to advertise in foreign magazines, with fines of up to $250,000, and creates an investigative body with search-and-seizure rights to confiscate foreign magazines with illegal advertisements run by Canadians.

1999

The United States threatens to implement US$3 billion in retaliatory measures. A trade war is averted when a substantial revision of Bill C-55 (Foreign Publishers Advertising Services Act) is passed. Criminalization of foreign advertising and the search-and-seizure powers are dropped. Canadian advertisers can now buy advertisements in split-run foreign magazines and receive a tax deduction for 50%. Canadian advertisers can receive a 100% tax deduction if the magazine features at least 80% unique Canadian content. Foreign publishers still cannot have full ownership of Canadian publishers.

Journal of Public Policy & Marketing

To the surprise of the magazine industry, the Foreign Publishers Advertising Services Act of 1999 (Bill C-55) passed, ending three decades of cultural protectionism (Stein 1999a). The bill had been radically transformed (see Table 1) at the last moment before its passage in May (Granatstein 1999; Thirty-Sixth Parliament, 1st Session 1998). In addition, Canada has a reputation for successfully protecting its cultural industries through public policy, despite the proximity to the United States and the shared language among both countries’ majority populations. Thus, unlike many trade policy changes (Dutt and Mitra 2005), Bill C-55 appears to be exogenous. Although Canadian publishers were shocked, U.S. publishers and Canadian advertisers were pleased. Publishers in the United States stated that their Canadian counterparts should not feel threatened by the deal because spending on magazine advertisements should increase as more magazine options become available to Canadian advertisers (Stein 1999a). Canadian publishers feared that magazine ad spending would shift from Canadian magazines to split-run editions of U.S. magazines, which would lead to a “death spiral” for many of the approximately 1500 Canadian magazines; lower ad revenues would lead to lower-quality editorial content, which would be followed by even lower revenues (Schwanen 1998). Publishers in the United States countered that if Canadian magazines were forced to compete for advertising dollars with split-run editions of foreign magazines, their editorial product would become much stronger and would boost their circulation (Stein 1999b).

Study 1 Study 1 investigates the impact of changes in public policy that protect a cultural industry that provides important advertising vehicles for communicating with consumers. Magazines typically depend on two main sources of revenue: advertising revenue and paid circulation. Given that economic research has found that trade liberalization often redistributes resources away from previously protected sectors (e.g., Eastman and Stykolt 1967; Feenstra 1995; Feenstra and Hanson 2003; Harris and Lemieux 2005), we hypothesize the following impacts on leading English Canadian (EC) magazines and their imported U.S. competitors: H1: Bill C-55’s passage will adversely affect (a) the circulation and (b) the rates charged for ad placement in leading EC magazines. H2: Bill C-55’s passage will positively affect the circulation of leading U.S. magazines sold in Canada.

Method An indicator of the health of an advertising vehicle is its circulation. Another is the amount charged for ad placement. We chose two common ad rates as benchmarks: the rates for one-page black-and-white advertisements (BW-RATE) and one-page four-color bleed advertisements (4C-RATE). “Bleed” means that the ad visual extends to the edge of the paper (i.e., no margins); bleed has traditionally been more expensive than margins. Study 1 examines the effect of Bill C-55 on circulation, BW-RATE, and 4C-RATE for leading EC and U.S. magazines sold in Canada between 1996 and

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2002. The sources for the data we used in this study were the monthly Canadian Advertising Rates & Data, published by Maclean Hunter, Toronto, and the yearly Media Digest, published by the Canadian Media Directors’ Council and relying on Print Measurement Bureau data. Circulation data were available for leading EC and French Canadian (FC) consumer magazines with audited circulations of at least 30,000 and U.S. consumer magazines with paid Canadian circulations of at least 25,000; however, ad rate data were available only for EC and FC magazines. To standardize the data across the years, we converted BW-RATE and 4CRATE into constant dollars to adjust for inflation, and we converted circulation data into circulation per million (CIRC) to account for population changes. We used a dummy variable (PREPOST) to test whether the passage of Bill C-55 had an effect on the dependent variables. One level (0) indicated that the circulation and ad rate data were collected before the passage of Bill C-55, from February 1996 to February 1999. The second level (1) indicated that the circulation and ad rate data were collected after the passage of Bill C-55, from February 2000 to February 2002. Many other variables could also influence ad rates or circulation (e.g., increasing Internet use as a source of entertainment and news; the overall economy; changes in the Canadian advertising industry; two new assistance programs, the Publication Assistance Program begun in 1999 and the Canada Magazine Fund begun in 2000, that were instituted to help Canadian magazines compete after the passage of Bill C-55). Therefore, we created dummy variables for each year of the analysis, and we included the circulation or ad rate data for a control group of magazines (or a counterfactual) in the analyses. Because this was a nonexperimental study of the impact of policy changes, we used counterfactuals to control for other characteristics that may have also affected the variables of interest (White 2005). Because the U.S. magazines sold in Canada are almost exclusively written in English, Bill C-55 should not have affected FC magazines; however, FC magazines are subject to the same economic, industry, and market forces as EC magazines. Thus, FC magazines are well suited to be the counterfactual in each of the studies. Each regression analysis includes year dummy variables, a dummy variable for EC or U.S. magazines sold in Canada, and an EC × PREPOST or a U.S. × PREPOST interaction. The year dummy variables measure the level of the dependent variable for the FC magazines in each year. The EC (or U.S.) dummy variable measures the difference in the dependent variable between the EC (or U.S.) and the FC magazines, net any interaction effect. The interaction is the part of the regression analyses of greatest concern. The interaction measures the change in the dependent variable in the period following the passage of Bill C-55, net any changes that would have occurred anyway over the years as controlled by the inclusion of the FC magazines. A negative regression coefficient for the interaction indicates a decrease in the dependent variable for the EC (or U.S.) magazines in the post–Bill C-55 period. A positive regression coefficient indicates an increase in the dependent variable after Bill C55 relative to what happened to the counterfactual.

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Results H1 predicted that the passage of Bill C-55 would have an adverse impact on the circulation of and ad rates charged by leading EC magazines because resources would be redistributed away from these previous protected domestic producers. The results for CIRC (see Table 2) show a significant, negative EC × PREPOST interaction, in support of H1a. In the years following the passage of Bill C-55, CIRC for EC magazines declined compared with what happened to FC magazines (i.e., compared with what we assume would have happened had Bill C-55 not been passed). However, the results in Table 2 do not support H1b, because there were no EC × PREPOST interactions for 4C-RATE or BWRATE. H2 predicted that Bill C-55 would positively affect the circulation of leading U.S. magazines sold in Canada. The

Table 2.

lack of a US × PREPOST interaction (see Table 3) leads to the rejection of H2. We conducted follow-up analyses to investigate the proportion of EC magazines that decreased their circulation and ad rates after Bill C-55 and to explicate the EC × PREPOST interaction on CIRC. Follow-up analyses show that 72.3% of EC magazines decreased their circulation after Bill C-55, but EC magazines were about an even split between those that raised and those that lowered ad rates; 48.2% lowered their 4C-RATE, and 49.4% lowered their BW-RATE after Bill C-55. The EC magazines that lowered their 4C-RATE were almost always the same as those that lowered their BW-RATE (r = .992, p < .01). In addition, strong correlations were present for EC magazines between CIRC and 4C-RATE (r = .694, p < .01) and CIRC and BW-RATE (r = .690, p < .01). Further analysis shows that EC magazines

Bill C-55’s Effect on the Circulation and Ad Rates of Leading EC Magazines, with Leading FC Magazines as a Counterfactual

Independent Variable

Regression Coefficient

Standard Error of Coefficient

Standardized b

CIRC = β11996 + β21997 + β31998 + β41999 + β52000 + β62001 + β72002 + β8EC + β9EC × PREPOST Adjusted R2 = .394, Mean-Square (9, 854) = 46,680,306.859, F = 63.288, p < .001 1996 2915.115 748.482 .126 1997 2461.952 748.482 .106 1998 2445.617 748.482 .105 1999 2212.678 748.482 .095 2000 3405.669 787.880 .147 2001 3044.231 787.880 .131 2002 2733.359 787.880 .118 EC 4628.136 648.268 .428 EC × PREPOST –2336.947 1135.844 –.123

t-Value

3.895*** 3.289** 3.267** 2.956** 4.323*** 3.864*** 3.469** 7.139*** –2.057*

4C-RATE = β11996 + β21997 + β31998 + β41999 + β52000 + β62001 + β72002 + β8EC + β9EC × PREPOST Adjusted R2 = .692, Mean-Square (9, 854) = 690,460.166, F = 214.375, p < .001 1996 53.738 6.199 .200 1997 53.380 6.199 .198 1998 56.047 6.199 .208 1999 57.347 6.199 .213 2000 60.922 6.526 .226 2001 57.494 6.526 .214 2002 55.254 6.526 .205 EC 41.299 5.369 .329 EC × PREPOST –4.100 9.408 –.019

8.668*** 8.611*** 9.041*** 9.251*** 9.336*** 8.811*** 8.467*** 7.692*** –.436

BW-RATE = β11996 + β21997 + β31998 + β41999 + β52000 + β62001 + β72002 + β8EC + β9EC × PREPOST Adjusted R2 = .668, Mean-Square (9, 807) = 424,387.409, F = 183.137, p < .001 1996 43.941 5.423 .199 1997 44.151 5.423 .200 1998 45.494 5.423 .206 1999 44.932 5.423 .203 2000 49.168 5.709 .223 2001 48.830 5.709 .221 2002 45.143 5.709 .204 EC 34.303 4.697 .333 EC × PREPOST –7.243 8.230 –.040

8.102*** 8.141*** 8.388*** 8.285*** 8.613*** 8.553*** 7.908*** 7.303*** –.880

*p < .05. **p < .01. ***p < .001.


that lowered their ad rates in the years after the passage of Bill C-55 had an average actual circulation of 255,722, whereas those that raised their ad rates in the years after the passage of Bill C-55 had an average actual circulation of 218,746. To test directly whether EC magazines with declining versus rising ad rates after Bill C-55 differed in circulation size, we conducted a regression on the EC and FC (as a counterfactual) magazine CIRC data. The model (adjusted R2 = .360, F = 154.488, p < .001) included EC, a Δ4C-RATE variable (0 = up, and 1 = down), and an interaction. The negative interaction (standardized β = –.122, t = –2.164, p < .05) means that the larger an EC magazine’s circulation, the more likely its ad rates were to decrease after Bill C-55. We also conducted a follow-up analysis on CIRC using an alternative counterfactual (i.e., U.S. magazines in the United States) to determine whether the lower circulations for leading EC magazines after Bill C-55 were part of an overall decline in leading North American magazines due to some outside factors (e.g., increasing use of the Internet, changes in reading habits) or, perhaps, because EC magazines had been in decline compared with FC magazines, regardless of Bill C-55’s passage. We gathered circulation data for leading U.S. magazines in the United States from reports published by the Magazine Publishers of America. We reran the same regression analyses on CIRC that appear in Tables 1 and 2 with these U.S. magazines in the United States as the counterfactual. As with the FC magazine counterfactual, the model investigating the impact on CIRC for EC magazines (adjusted R2 = .394, F = 63.898, p < .001) had a significant EC × PREPOST interaction (standardized β = –.118, t = –2.006, p < .05), but the model investigating the impact on CIRC for leading U.S. magazines sold in Canada (adjusted R2 = .362, F = 78.505, p < .001) had no US × PREPOST interaction (standardized β = –.007, t = –.187, not significant [n.s.]).

Discussion The circulation data for the Canadian magazine industry seems to indicate that opening the industry to foreign com-

Table 3.

petition has hurt leading EC magazines. In terms of circulation adjusted for changes in the Canadian population, EC magazines experienced an overall 18% decrease in the period following the passage of Bill C-55. This was a significant decline regardless of whether we used leading FC magazines or leading U.S. magazines in the United States as a counterfactual to control for extraneous influences on circulation. Conversely, in general, leading U.S. magazines sold in Canada have maintained circulation as the circulation of many of their primary competitors (i.e., EC magazines) has declined. Given strong sales pre–Bill C-55, it may have been difficult for U.S. magazines to increase their Canadian circulation significantly. In terms of ad rates adjusted for inflation, EC magazines were almost evenly split between those that raised and those that lowered 4CRATE and BW-RATE after the passage of Bill C-55. The relationship between demand and price (e.g., ad rates) depends on elasticity of demand and costs. Thus, it is possible that more EC magazines would have lowered ad rates if demand for advertising had been more elastic.

Study 2 Industry data on the circulation and ad rates analyzed in Study 1 were available only for leading Canadian magazines (i.e., circulation of at least 30,000). Although these larger magazines represent both the dominant culture and the large subcultural groups within Canadian society, the impact of Bill C-55 on magazines and, thus, advertising vehicles available to marketers interested in targeting even more specific subcultures and interest groups cannot be ascertained from these data. Many of these small-circulation Canadian (SC) magazines target specialized interest groups and thus are useful to marketers who are interested in reaching these niche markets. For example, Vines targets wine lovers, Pacific Yachting targets recreational boaters in British Columbia, and MusicWorks targets new music aficionados. Other SC magazines target specific language minorities (e.g., Zdrowy Styl targets Polish-speaking Canadians, Inuktitut targets Inuit-speaking Canadians).

Bill C-55’s Effect on the Circulation of Leading U.S. Magazines Sold in Canada, with Leading FC Magazines as a Counterfactual




Standardized b

CIRC = β11996 + β21997 + β31998 + β41999 + β52000 + β62001 + β72002 + β8US + β9US × PREPOST Adjusted R2 = .560, Mean-Square (9, 762) = 976,073,401.8, F = 110.091, p < .001 1996 4257.359 336.067 .358 1997 4288.194 336.067 .361 1998 4163.006 336.067 .350 1999 4109.919 336.067 .346 2000 4327.978 351.790 .364 2001 4183.207 351.790 .352 2002 4192.937 351.790 .353 US –1355.446 291.847 –.237 US × PREPOST –331.646 445.804 –.038 *p < .001.

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t-Value

12.668* 12.760* 12.387* 12.229* 12.303* 11.891* 11.919* –4.644* –.744

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Because annual circulation data were not available for individual small magazines, we analyzed another indicator, the number of competitors. The number of competitors tends to decrease when a market is not growing. Given Study 1’s results, we expected the following: H3: The number of competitors has grown for (a) U.S. magazines sold in Canada but not for (b) EC or (c) SC magazines after Bill C-55.

Although annual circulation data for individual small magazines were unavailable, aggregate data were available; thus, we could calculate overall market share. Because leading U.S. magazines sold in Canada have maintained circulation and EC magazines have lost circulation, the market shares of these competing groups have likely shifted since the Canadian market opened to greater foreign (especially U.S.) competition. Thus: H4: Whereas (a) leading U.S. magazines sold in Canada have increased market share, the market share of (b) EC and (c) SC magazines has declined.

Method Whereas circulation and ad rate data for SC magazines were not readily available, information on the number of Canadian magazine titles and aggregate Canadian circulation was available from Magazines Canada, Canadian Advertising Rates & Data, and Standard Rate and Data Service. Thus, the change in the number of Canadian magazine titles with circulations of less than 30,000 (i.e., SC magazines) could be compared with the change in the number of EC magazine titles. Furthermore, market share for both groups could be compared with the market share of leading U.S. magazines in Canada. The number of titles and the market share of FC magazines (with circulations of at least 30,000) were counterfactuals in the analyses. To account for the increasing population between 1996 and 2004, we divided the number of magazine titles by the Canadian population in millions, as reported by Statistics Canada, to create the dependent variable TITLES/MIL. We calculated market share as a group’s circulation divided by the aggregate circulation of all consumer magazines in Canada. As with Study 1, dummy variables for each year control for changes other than the passage of Bill C-55 by indicating changes to the FC magazines each year. The two other independent variables were a dummy variable representing EC, SC, or U.S. magazines in Canada and an EC × PREPOST, SC × PREPOST, or US × PREPOST interaction. The PREPOST dummy variable indicates that the data are from before (0) or after (1) the passage of Bill C-55.

Results H3 predicted growth in the number of magazine titles for U.S. magazines in Canada but no growth for EC or SC magazines. The regression results in Table 4 show no US × PREPOST interaction, which rejects H3a, and no EC × PREPOST interaction, which supports H3b. H3c is also rejected. Table 4 shows an SC × PREPOST interaction with a positive regression coefficient, which indicates that the number of SC magazine competitors has increased in the period fol-

lowing the passage of Bill C-55. Follow-up analysis shows that TITLES/MIL for SC magazines has increased 25%, from a mean of 21.26 in the period before Bill C-55 to 26.73 in the years since the passage of Bill C-55. Again, we conducted follow-up analyses with leading U.S. magazines in the United States as the counterfactual rather than FC magazines. To calculate TITLES/MIL, we divided the number of leading U.S. magazines in the United States (according to Standard Rate and Data Service) by yearly Census Bureau reports of the U.S. population. In the model investigating TITLES/MIL for U.S. magazines in Canada (adjusted R2 = .999, F = 2265.299, p < .001), there was a significant US × PREPOST interaction (standardized β = .431, t = 1.503, p < .05); for EC magazines (adjusted R2 = .998, F = 680.454, p < .001), there was no interaction with PREPOST (standardized β = .037, t = 1.503, n.s.); and for SC magazines (adjusted R2 = .990, F = 167.418, p < .001), there was a significant SC × PREPOST interaction (standardized β = .166, t = 3.359, p < .05). H4 predicted a post–Bill C-55 market share increase for leading U.S. magazines sold in Canada but a decrease for EC and SC magazines. The results in Table 5 provide support only for H4b. The negative EC × PREPOST interaction indicates a decline in the market share of EC magazines. Leading U.S. magazines sold in Canada maintained (but did not increase) market share, but SC magazines increased market share after Bill C-55. We obtained similar results in alternative analyses with the counterfactual as the market share of the top 50 U.S. consumer magazines in the United States (according to the Audit Bureau of Circulation). In the model investigating the market share of leading U.S. magazines in Canada (adjusted R2 = .999, F = 1617.34, p < .001), there was no interaction with PREPOST (standardized β = –.030, t = –1.899, n.s.); for EC magazines (adjusted R2 = .998, F = 297.379, p < .001), there was a negative EC × PREPOST interaction (standardized β = –.106, t = –2.867, p < .05); and for SC magazines (adjusted R2 = .990, F = 163.901, p < .001), there was a positive SC × PREPOST interaction (standardized β = .166, t = 3.336, p < .05), indicating an increased market share after Bill C-55.

Discussion Study 2 examined the effect of Bill C-55 on market shares and the number of magazine titles while controlling for changes in the population over the period from 1996 to 2004. The number of EC magazines (i.e., leading EC magazines with circulations of at least 30,000) remained relatively constant, but the number of titles of SC magazines increased 25% after Bill C-55. The number of leading U.S. magazine competitors was unchanged compared with what happened to FC magazines but increased compared with what happened to leading U.S. magazines in the United States, because several leading U.S. magazines in the United States ceased or suspended publication during the tight ad revenue years of 2000–2002 (e.g., Consumers Digest, Mademoiselle, McCall’s, New Woman, Teen, Working Woman). The after Bill C-55 environment in Canada was more favorable to imported U.S. magazines. Market share of EC magazines has declined, but leading U.S. magazines sold in Canada have maintained market


Table 4.

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Bill C-55’s Effect on the Number of U.S. Magazines in Canada and Leading EC and SC Magazine Titles per Million Population, with Leading FC Magazines as a Counterfactual




Standardized b

t-Value

TITLES/MIL = β11996 + β21997 + β31998 + β41999 + β52000 + β62001 + β72002 + β82003 + β92004 + β10US + β11US × PREPOST Adjusted R2 = .993, Mean-Square (11, 7) = 8.634, F = 219.730, p < .001 1996 1.426 .157 .207 9.102** 1997 1.706 .157 .247 10.889** 1998 1.691 .157 .245 10.794** 1999 1.653 .157 .240 10.548** 2000 1.696 .154 .246 11.046** 2001 1.835 .154 .266 11.952** 2002 1.763 .154 .256 11.485** 2003 1.616 .154 .234 10.526** 2004 1.593 .154 .231 10.378** US 1.120 .140 .344 7.994** US × PREPOST .001 .188 .000 .002 TITLES/MIL = β11996 + β21997 + β31998 + β41999 + β52000 + β62001 + β72002 + β82003 + β92004 + β10EC + β11EC × PREPOST Adjusted R2 = .993, Mean-Square (11, 7) = 12.548, F = 218.749, p < .001 1996 2.148 .232 .211 9.264** 1997 1.850 .232 .182 7.978** 1998 1.972 .232 .194 8.505** 1999 1.962 .232 .193 8.460** 2000 2.040 .227 .200 8.980** 2001 1.695 .227 .166 7.458** 2002 2.075 .227 .204 9.134** 2003 2.355 .227 .231 10.366** 2004 2.250 .227 .221 9.902** EC 2.260 .207 .471 10.896** EC × PREPOST .061 .278 .009 .220 TITLES/MIL = β11996 + β21997 + β31998 + β41999 + β52000 + β62001 + β72002 + β82003 + β92004 + β10SC + β11SC × PREPOST Adjusted R2 = .990, Mean-Square (11, 7) = 493.325, F = 161.147, p < .001 1996 –.727 1.694 –.011 –.429 1997 1.221 1.694 .019 .721 1998 3.283 1.694 .051 1.938 1999 4.156 1.694 .065 2.453* 2000 1.137 1.660 .018 .685 2001 1.786 1.660 .028 1.076 2002 2.024 1.660 .032 1.220 2003 2.177 1.660 .034 1.311 2004 3.291 1.660 .051 1.983 SC 24.053 1.515 .798 15.874** SC × PREPOST 6.597 2.033 .163 3.245* *p < .05. **p < .001.

share, and SC magazines have increased their market share. Since the passage of Bill C-55, SC magazines have become more important, which will provide domestic advertisers with vehicles to reach specific target markets more precisely and will provide Canadian consumers with information sources about products tailored to more specialized interests. We obtained these results regardless of whether we used leading FC magazines or U.S. magazines in the United States as the counterfactual.

Study 3 Study 2 shows that the number of active competitors among EC magazines has not changed. In addition, as a group, EC magazines have lost market share, whereas U.S. magazines in Canada have maintained market share. Study 1 found that paid circulation has declined for EC magazines, and further analysis found that EC magazines that lowered their ad rates after Bill C-55 had larger circulations than those that raised their ad rates in the years following the passage of Bill C-55.

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Table 5.

Bill C-55’s Effect on Market Share of Leading U.S. Magazines in Canada and Leading EC and SC Magazines, with Leading FC Magazines as a Counterfactual




Standardized b

t-Value

MKTSHARE = β11996 + β21997 + β31998 + β41999 + β52000 + β62001 + β72002 + β82003 + β92004 + β10US + β11US × PREPOST Adjusted R2 = .994, Mean-Square (11, 7) = 268.055, F = 267.101, p < .001 1996 13.042 .792 .339 16.468*** 1997 13.869 .792 .361 17.511*** 1998 13.562 .792 .353 17.124*** 1999 13.132 .792 .342 16.582*** 2000 14.162 .776 .368 18.250*** 2001 13.493 .776 .351 17.389*** 2002 13.437 .776 .350 17.316*** 2003 13.512 .776 .351 17.413*** 2004 12.526 .776 .326 16.142*** US –.085 .708 –.005 –.120 US × PREPOST –2.242 .950 –.092 –2.359 MKTSHARE = β11996 + β21997 + β31998 + β41999 + β52000 + β62001 + β72002 + β82003 + β92004 + β10EC + β11EC × PREPOST Adjusted R2 = .989, Mean-Square (11, 7) = 2366.281, F = 150.278, p < .001 1996 18.825 3.137 .165 6.001*** 1997 10.774 3.137 .094 3.435* 1998 13.809 3.137 .121 4.402** 1999 10.197 3.137 .089 3.251* 2000 13.527 3.074 .118 4.401** 2001 11.744 3.074 .103 3.821** 2002 15.215 3.074 .133 4.950** 2003 14.563 3.074 .127 4.738** 2004 12.081 3.074 .106 3.931** EC 44.155 2.806 .819 15.737*** EC × PREPOST –10.578 3.764 –.146 –2.810* MKTSHARE = β11996 + β21997 + β31998 + β41999 + β52000 + β62001 + β72002 + β82003 + β92004 + β10SC + β11SC × PREPOST Adjusted R2 = .958, Mean-Square (11, 7) = 615.102, F = 38.593, p < .001 1996 7.828 3.156 .133 2.480* 1997 15.812 3.156 .270 5.010** 1998 13.309 3.156 .227 4.217** 1999 16.657 3.156 .284 5.278*** 2000 12.242 3.092 .209 3.959** 2001 14.696 3.092 .251 4.752** 2002 12.563 3.092 .214 4.062** 2003 13.274 3.092 .226 4.292** 2004 14.356 3.092 .245 4.642** SC 2.324 2.823 .084 .823 SC × PREPOST 12.721 3.787 .343 3.359* *p < .05. **p < .01. ***p < .001.

Therefore, we conducted Study 3 to determine the effect of eliminating cultural protectionist public policies on revenuegenerating advertising content of some specific EC magazines in comparison with some specific leading U.S. magazines sold in Canada. Ad revenue represents approximately two-thirds of Canadian magazine industry revenues (Thirty-Sixth Parliament, 1st Session 1998). However, general audience magazines are more dependent on advertising revenue than are niche magazines (Schwanen 1998). Although advertising rates and circulation are good indicators of the health of periodi-

cals, declining ad rates or circulation is not necessary for a periodical to cease operations. For example, when the U.S. general-interest magazines Look and Life died in 1971 and 1972, respectively, they still had a combined audience of 70 million readers per issue. It became apparent that these two publications were in trouble only when the number of ad pages was examined. Ad pages for Life and Look dropped 34% from 4834 in 1966 to 3196 in 1970 (Perlstein 2001). A magazine can collect its ad rate only when an advertisement is placed. In addition, advertising revenues are higher for larger ad sizes and if an advertisement includes certain spe-


cial ad formats, such as color, bleed, mail-in cards attached to the advertisement, or a smaller-than-magazine-sized insert. Because Studies 1 and 2 suggest that eliminating protectionist public policies adversely affects leading domestic brands compared with leading imports, we expected the following: H5: The number of ad pages per issue will (a) decrease for EC magazines but (b) increase for U.S. magazines sold in Canada after Bill C-55. H6: The size of advertisements will (a) decrease in EC magazines but (b) increase in leading U.S. magazines sold in Canada after Bill C-55’s passage. H7: The usage of cost-increasing ad formats (i.e., color, bleed, mail-in cards, or inserts) will (a) decrease for advertisements run in EC magazines but (b) increase for advertisements run in U.S. magazines in Canada after Bill C-55.

Method To test the impact of ending cultural protectionism on some specific leading domestic cultural products, we selected five of the most read, nationally distributed EC consumer magazines (according to the 1998 Media Digest) for a longitudinal content analysis: Canadian Living, Chatelaine, Homemaker’s Magazine, Macleans, and Reader’s Digest (Canada). For comparison, we selected five leading U.S. consumer magazines sold in Canada (Cosmopolitan, Good Housekeeping, National Geographic, People, and Young and Modern). To negate the impact of changes in the Canadian economy or magazine industry other than the passage of Bill C-55, we used three FC magazines (Châtelaine, L’Actualité, and Selection du Readers Digest) as the counterfactual. We purchased issues of the EC, U.S., and FC magazines from newsstands in Canada. We hired two judges and trained them to code the December issues of these magazines from 1998 (preceding the passage of Bill C-55), 1999 (the year of Bill C-55’s passage), 2000 (one year after Bill C-55), 2001 (two years after Bill C-55), 2002 (three years after Bill C-55), and 2003 (four years after Bill C-55) to provide sufficient time for any change to be observed. If the magazine was a weekly or biweekly, the first December issue was coded. The judges coded the following categories: the number of ad pages in each magazine issue; the size of each advertisement; and whether the advertisement was on a front or back cover, used color or bleed, had an attached mail-in card, or was an insert smaller than magazine size. Following the work of Rust and Cooil (1994), we calculated interjudge agreement in terms of proportional reduction in loss, which ranged from 94 for bleed to 99 for an attached mail-in card. The regression analyses for Study 3 used a similar procedure to that used in Studies 1 and 2. Year dummy variables represent the annual level of the dependent variable for FC magazines. Another dummy variable represents the change in the dependent variable due to being an EC magazine or a U.S. magazine sold in Canada, net any interaction effect. Again, the interaction with PREPOST is of primary importance because it represents any change in the dependent variable between the periods before and after Bill C-55’s

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passage, net any changes that may have happened anyway given the changes to the counterfactual. We studied three dependent variables that influence a magazine’s ad revenues: the number of ad pages (ADPAGES); the size of the advertisements (ADSIZE); and the use of formats that increase ad cost, such as the use of color, bleed, cover positions, attached mail-in cards, or smaller-than-magazine-sized inserts (COSTMORE). We tested ADPAGES at the magazine issue level of analysis (i.e., 30 EC or 30 U.S. magazine issues, with 18 FC magazine issues used as a control group), but we tested ADSIZE and COSTMORE at the individual ad level of analysis.

Results The hypotheses predicted that there would be a decrease in ADPAGES (H5), ADSIZE (H6), and COSTMORE (H7) for advertisements run in EC magazines but an increase in these variables for advertisements run in U.S. magazines sold in Canada after Bill C-55. The regression results show a lack of any interactions with PREPOST for EC (see Table 6) or U.S. magazines sold in Canada (see Table 7). Alternative analyses with data on leading U.S. magazines in the United States did not alter the nonsignificant interaction effects. This means that when the effects of economic, industry, and market factors are accounted for through the FC magazine counterfactual, there are no significant changes in ADPAGES, ADSIZE, or COSTMORE for either the EC magazines or the U.S. magazines sold in Canada. Thus, we reject H5–H7.

Discussion Whereas the macrolevel results of the first two studies demonstrated some negative consequences of the passage of Bill C-55 for EC magazines, the results are less clear for specific magazine publications at a micro level. When we accounted for other economic, industry, and market factors using the FC magazine control group, there were no changes in the three ad revenue variables for the sample of EC magazines or U.S. magazines sold in Canada.

General Discussion The three studies we presented in this article examine the effect of ending protectionist public policies on cultural industries that serve as important cultural identity agents for countries, information sources for consumers, and marketing communication channels for domestic advertisers. Specifically, we examined the health of the Canadian magazine industry before and after the end of 34 years of public policy that promoted cultural protectionism. In 1999, Bill C55 (i.e., the Foreign Publisher’s Advertising Services Act) opened the Canadian magazine advertising industry to foreign competition. A resource-advantage view of competition (Hunt and Arnett 2001) holds that eliminating public policies that limit economic freedom (e.g., Canada’s protectionist tariffs, excise taxes, and postal rate subsidies that formed the cultural protectionist regime for the Canadian magazine advertising market) should promote productivity and economic growth in an industry. Thus, a resource-advantage view pre-

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Table 6.

Bill C-55’s Effect on the Number of Advertisements, Ad Size, and Cost-Increasing Formats for Leading EC Magazines, with Leading FC Magazines as a Counterfactual




Standardized b

ADPAGES = β11998 + β21999 + β32000 + β42001 + β52002 + β62003 + β7EC + β8EC × PREPOST Adjusted R2 = .791, Mean-Square (8, 40) = 31,983.232, F = 23.767, p < .001 1998 56.854 17.561 1999 56.479 17.561 2000 64.260 15.437 2001 61.010 15.437 2002 67.635 15.437 2003 61.760 15.437 EC 14.833 18.943 EC × PREPOST 4.150 23.201

t-Value

.289 .287 .327 .310 .344 .314 .146 .033

3.238* 3.216* 4.163** 3.952** 4.381** 4.001** .783 .179

ADSIZE = β11998 + β21999 + β32000 + β42001 + β52002 + β62003 + β7EC + β8EC × PREPOST Adjusted R2 = .786, Mean-Square (8, 3440) = 524.620, F = 1580.580, p < .001 1998 1.121 .036 .350 1999 1.131 .036 .355 2000 1.180 .029 .398 2001 1.118 .030 .366 2002 1.054 .028 .363 2003 1.130 .030 .375 EC –.023 .038 –.016 EC × PREPOST –.006 .046 –.003

31.432** 31.151** 41.087** 37.258** 37.145** 38.210** –.624 –.128

COSTMORE = β11998 + β21999 + β32000 + β42001 + β52002 + β62003 + β7EC + β8EC × PREPOST Adjusted R2 = .946, Mean-Square (8, 3440) = 1524.155, F = 7602.946, p < .001 1998 1.885 .028 .376 1999 1.831 .028 .367 2000 1.895 .022 .410 2001 1.886 .023 .395 2002 1.926 .022 .425 2003 1.963 .023 .417 EC .005 .030 .002 EC × PREPOST –.025 .036 –.009

67.597** 64.528** 84.417** 80.392** 86.884** 84.920** .169 –.691

*p < .01. **p < .001.

dicts that ending cultural protectionist public policies benefits both consumers (through increased market information availability) and domestic advertisers (through increased numbers of and more precisely targeted marketing communication vehicles). Although change may be painful, according to this view, eliminating anticompetitive public policies should benefit consumers and the economy in the long run. Conversely, the views of the Canadian publishers and other proponents of cultural protectionist public policies reflect the theoretical belief in cultural protectionism as a necessary barrier to entry, which preserves marketing communication channels for domestic advertisers and consumers as well as the cultural identity of smaller national markets that can never achieve the economies of scale realized by competitors from larger national markets (e.g., Hesmondhalgh and Pratt 2005; Nordenstreng and Varis 1974; Preston and Kerr 2001; Tunstall 1977). Three studies provide mixed results with regard to the value of public policies of cultural protectionism. In all three studies, we used FC magazines as a counterfactual to

account for the influence of other economic, industry, market, regulatory, and “historical” factors. Study 1 found that the end of protectionism hurt the paid circulation of leading EC magazines compared with that of FC magazines (i.e., compared with what would likely have happened had Bill C-55 not been enacted). Average circulation per million Canadians for these domestic market leaders has declined 18% after Bill C-55. Although circulation dropped for most (72.3%) EC magazines, this did not necessarily translate into lower ad rates overall. Although circulation adjusted for population was strongly correlated with ad rates in constant dollars, only half of the EC magazines lowered their ad rates. Notably, EC magazines that lowered their ad rates after Bill C-55’s passage were more likely to have large circulations. Study 2 found that the market share of EC magazines also declined after Bill C-55. In comparison, the circulation and market share of leading U.S. magazines sold in Canada remained steady. The strong market position of U.S. imports before Bill C-55 may have made significant circulation or market share gains difficult. However, SC maga-


Table 7.

85

Bill C-55’s Effect on the Number of Advertisements, Ad Size, and Cost-Increasing Formats for Leading U.S. Magazines Sold in Canada, with Leading FC Magazines as a Counterfactual




Standardized b

t-Value

ADPAGES = β11998 + β21999 + β32000 + β42001 + β52002 + β62003 + β7US + β8US × PREPOST Adjusted R2 = .747, Mean-Square (8, 40) = 29749.150, F = 18.754, p < .001 1998 53.792 19.066 .277 1999 59.542 19.066 .307 2000 69.292 16.760 .357 2001 55.167 16.760 .284 2002 71.417 16.760 .368 2003 58.792 16.760 .303 US 18.533 20.567 .185 US × PREPOST –7.400 25.189 –.060

2.821* 3.123* 4.134** 3.292* 4.261** 3.508* .901 –.294

ADSIZE = β11998 + β21999 + β32000 + β42001 + β52002 + β62003 + β7US + β8US × PREPOST Adjusted R2 = .776, Mean-Square (8, 3368) = 503.600, F = 1460.110, p < .001 1998 1.148 .036 .364 1999 1.102 .037 .365 2000 1.140 .029 .390 2001 1.093 .031 .347 2002 1.092 .029 .379 2003 1.154 .031 .367 US –.014 .038 –.009 US × PREPOST –.044 .046 –.024

31.728** 29.932** 38.770** 35.038** 37.544** 37.371** –.358 –.941

COSTMORE = β11998 + β21999 + β32000 + β42001 + β52002 + β62003 + β7US + β8US × PREPOST Adjusted R2 = .925, Mean-Square (8, 3368) = 1417.362, F = 5182.553, p < .001 1998 1.854 .032 .383 1999 1.864 .033 .402 2000 1.885 .026 .420 2001 1.915 .028 .396 2002 1.913 .026 .432 2003 1.963 .027 .407 US –.093 .034 –.040 US × PREPOST –.009 .041 –.003

57.519** 56.890** 72.025** 68.943** 73.830** 71.426** –2.731* –.216

*p < .01. **p < .001.

zines have gained market share (and, thus, circulation) apparently at the expense of leading EC magazines. Study 2 also found that the number of competitors (i.e., magazine titles) increased for SC magazines but remained the same for EC and U.S. magazines sold in Canada. Study 3 found no impact of Bill C-55 on the number of ad pages, the size of advertisements, or the use of cost-increasing formats for EC or U.S. magazines sold in Canada. Thus, it appears that Bill C-55 has negatively affected larger EC magazines somewhat but has benefited SC magazines and has allowed U.S. magazines sold in Canada to maintain their market position. The use of FC magazines as the counterfactual assumes that (1) Bill C-55 did not affect FC magazines but that (2) changes in factors other than Bill C-55 affected FC, EC, and U.S. magazines sold in Canada identically. As we previously discussed, the first assumption holds because FC magazines target a different audience than U.S. and EC magazines. The second assumption should also hold because all the magazines are subject to the same economic,

social, and other changes within Canada, but to verify this assumption’s validity and to negate the possibility that the EC magazine decline might reflect a larger time trend of declining general-audience magazines or an ongoing decline compared with FC magazines, we conducted alternative analyses using leading U.S. magazines in the United Sates as the counterfactual. The assumptions for the alternative counterfactual were that magazines in the United States would not be affected by Bill C-55, which is reasonable, and that larger North American magazine industry trends would similarly affect all magazines studied. The alternative analyses changed only one result (the number of leading U.S. magazines in Canada increased compared with leading U.S. magazines in the United States but not with FC magazines). The similar results suggest that the second assumption is likely valid and that the EC magazine decline is attributable to Bill C-55, not just compared with FC magazines or reflective of an overall decline in general-audience magazines. Furthermore, employing alternative counterfactuals increases our confidence in the results.

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The presence of some adverse effects of trade liberalization on EC magazines is consistent with the economic literature. Although economic studies of trade liberalization have found that the net effect on the economy of a country that removes its protectionist public policies is positive, there is typically a redistribution of resources away from previously protected sectors into other sectors of the economy (e.g., Eastman and Stykolt 1967; Feenstra and Hanson 2003; Harris and Lemieux 2005). In other words, resources in a market are often shifted from organizations and products that most enjoyed the benefits of protectionism, which were clearly the EC magazines with respect to Canada’s public policies of cultural protectionism in the magazine industry because their main foreign competitors, leading U.S. magazines, were barred from the profitable advertising market. The growth of SC magazines appears to be further evidence of redistribution; however, it is impossible to test this because the Canadian government instituted subsidies to the Canadian publishing industry (i.e., Canada Magazine Fund and Publications Assistance Program) immediately upon opening the magazine advertising market to foreign competition. These subsidies appear to have reduced the risk of starting new magazines aimed at smaller, special-interest target markets and language minorities. Since the inception of both government subsidies, the Minister of Canadian Heritage has taken steps to increase funding for languageminority publications by reserving an additional allocation of $4 million for them (St. Julien 2003). Furthermore, part of the Canada Magazine Fund is earmarked as business development funds for small magazine publishers. In 2004– 2005, for example, 64 requests for small magazine publisher business development funds were granted. These ranged from $5,381 to increase the promotion and distribution of a new children’s science magazine, La Culbute, to 12 separate requests, each funded at a $40,000 level. The Canada Magazine Fund has also supported a multiyear National Circulation and Promotions Project in collaboration with a trade organization, the Canadian Magazine Publishers Association. This $4.7 million national multimedia campaign’s objective was to help Canadians distinguish between Canadian and U.S. magazines and to make patriotic appeals to support Canadian magazines. Television advertisements asked consumers to look for stickers that read “Genuine Canadian Magazine” before purchasing a magazine. The Canadian Magazine Publishers Association found that stickers were needed because 40% of Canadians could not identify which magazines were published in Canada or the United States (Wentz 2003). As part of the print ad campaign, approximately 185 magazines published by Canadian Magazine Publishers Association members ran a series of advertisements between January and November 2002 to alert readers, “It’s not the same if it’s not Canadian. Get the genuine article. Read a Canadian magazine. For hundreds of titles visit genuine-article.ca.” Overall, ad spending in Canadian magazines has been increasing. According to the Television Bureau of Canada (2005), the share of advertising dollars dedicated to Canadian magazines has increased from 6.05% of major media spending (or 3.91% of total Canadian ad spending) in 1996 (i.e., three years before the passage of Bill C-55) to 8.36%

of major media spending (or 5.39% of total Canadian ad spending) in 2004 (i.e., more than five years after the passage of Bill C-55). From Studies 1 and 3, we conclude that the bulk of this increased ad spending is not going to EC magazines; nor does it appear to be flowing into split-run U.S. magazines. Instead, a good portion of increased ad spending appears to be supporting the growing number of SC magazines.

Limitations and Further Research Further research should investigate the effect of lifting public policies of cultural protectionism as other cultural industries are opened to foreign competition to determine the generalizability of the findings. Research should also determine the effect of introducing protectionist policies into previously unfettered cultural industries; the Minister of Canadian Heritage asserted that the introduction of policies protecting the Canadian magazine industry in the 1960s led to a proliferation of Canadian magazines (Thirty-Sixth Parliament, 1st Session 1998). However, it is unclear whether the cultural protectionist policies are responsible; the number of magazine titles in the United States has also proliferated since the 1960s as audience interests have fragmented. Further research will need to document whether the Canadian magazine industry will continue to be competitive within its own domestic circulation and advertising markets and whether magazines targeting niche interest groups and language minorities will continue their success if the level of government support decreases. An additional limitation of the current research is the possible anticipatory reactions of Canadian publishers to the end of cultural protection policies for the Canadian magazine industry. Their reactions certainly could have affected circulation or ad revenues and might have obscured changes to the dependent variables studied. Canadian publishers reacted following the passage of Bill C-55 by starting the National Circulation and Promotions Project campaign. Perhaps, the awareness and Canadian magazine loyalty goals of this campaign were successful in staving off a more precipitous decline for EC magazines than that documented in the current studies. This campaign may also be responsible for preventing leading U.S. magazines sold in Canada from improving their market position. Another limitation of the current studies is the inability to test the impact of the National Circulation and Promotions Project because its genesis was concomitant with the end of cultural protectionist public policies.

Conclusions Unlike many studies of protectionist public policy changes in the economics literature that have focused on economic variables (e.g., returns to scale, dollar volume of imports/ exports, numbers of jobs lost/gained), the three studies we present here focused on variables of interest to marketers (i.e., ad rates, advertising volume, circulation/sales, and market share). These studies also examined an industry of interest to marketers (i.e., the magazine advertising industry). As such, this article is one step in addressing Young’s (2001) call for studies of trade liberalization and protection-


ist public policy from a marketing viewpoint to supplement studies from economics, law, and political science. Three studies document the effect of eliminating protectionist public policies on a cultural industry that serves as an important medium for advertisers to communicate with their target markets. Advertiser-supported cultural industries are also sources of information for consumers about trends, news, products, and services related to their interests. Eliminating the public policies protecting a cultural industry (i.e., the Canadian magazine industry) has had mixed results for publishers, advertisers, and consumers. Although U.S. publishers have not experienced increased market share or circulation, their strong market position before Bill C-55 may have made significant gains unrealistic. However, the number of leading U.S. magazine competitors in the Canadian market has increased compared with the number of leading U.S. magazines in the United States. Unlike imported U.S. magazines, Canadian publishers have experienced declines in the circulation/market share of and stagnant growth in the number of leading EC magazine brands, but there has been an increase in the number of niche magazines. Thus, for domestic advertisers, the end of cultural protectionism has led to more vehicles available for better precision in reaching niche target markets and the freedom to reach national target markets through advertisements run in split-run editions of leading U.S. magazines. Although Canadian consumers may slowly lose a valuable source of broader domestic product and availability information as the number of leading EC magazines titles declines, Canadian consumers have benefited through greater numbers of information sources tailored to specialized interests and language minorities as more niche competitors have begun publication. The more homogeneous sources of national cultural identity (i.e., leading EC magazines) are being replaced by more fragmented voices as Canadian public policies shift from cultural protectionism to subsidizing new start-up magazines and promotional campaigns for the industry as a whole and individual publications. The long-term impact of public policies that encourage fragmentation of the magazine industry at the expense of unified, mass-market sources of cultural identity on Canadian identity and Canadian unity has yet to be determined.

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