THAT ANNE MICHAELS’ DEBUT NOVEL was a critical success wasn’t surprising. It was lyrical, dense, complex and sophisticated. It won, among others, the Orange Prize, the Chapters/Books in Canada First Novel Award, the Trillium Book Award, the Guardian Fiction Award, and was short-listed for the Giller. The book’s popular success was a surprise for those same reasons. Literary works, especially first novels, rarely find a large international audience. Yet Fugitive Pieces was on best-seller lists for two years: it sold a million copies across 27 countries, including 200,000 in Canada. For every Fugitive Pieces, there are thousands of literary novels that sell 900 copies in North America, receive a handful of kind reviews, then quietly but emphatically die.

Michaels’ editor at McClelland & Stewart was Ellen Seligman, who also edits Michael Ondaatje, Margaret Atwood and Rohinton Mistry. She had read a draft of Fugitive Pieces a year before it was officially submitted and made suggestions. “When I saw it,” Seligman says, “I was bowled over. But I remember feeling a bit wistful, thinking that because it’s great litera­ture, it will be read by only a small readership.”

The year, 1996, was an interesting one for CanLit. Along with Michaels’ extra­ordinary debut, there was Ann-Marie Mac­Donald’s Fall on Your Knees, also an international hit. Yann Martel published Self, a preface of sorts to the Man Booker Prize–winning The Life of Pi six years later. The immensely successful movie adaptation of Michael Ondaatje’s The English Patient was released, four years after the novel made such a splash. It seemed to be the brilliant culmination of an experiment begun in earnest only a few decades earlier: the creation of a national literature that resonated convincingly beyond our borders.

Today, the publishing world looks like a battle zone, with fiction its most prominent casualty. For decades, the industry has stood by two contrary maxims: that it is recession-proof, and that it is, if not dying, then beleaguered. The recession-proof theory is currently being tested. As for the industry dying, it was always thus.

Book publishing is beginning to resemble Hollywood in its winner-take-all sensibility. Publishers want known quantities: either famous authors or blockbuster non-fiction titles. The landscape is slowly conforming to Stephen Harper’s tastes, with books chosen to appeal to what he calls “ordinary Canadians.”

At some foreign publishing houses, fiction writers who are tactfully called “mid-list” are being culled. The new ethos is to publish fewer titles and to promote them more. There’s less interest in developing writers, waiting patiently through low sales for the first few books, hoping for a payoff (as with Yann Martel, for example; the money-losing Self was followed by the best-selling Life of Pi). This is a trend that began a few years ago but is escalating in the midst of the recession. As one agent put it, in the ruthless vernacular of the film business, “Every writer is only one book away from obscurity.”

There are other disturbing trends. In the U.S. and U.K., some publishers are refusing to edit manuscripts, limiting their role to simply publishing and distributing finished books. Authors are now hiring outside editors before submitting manuscripts, and in many cases hiring their own publicists after the book is published—and this ethic is creeping into Canada.

Though book sales haven’t dropped here as they have in the U.S. and the U.K., there is fear among Canadian publishers and agents that we’re next. The reasons for lagging sales abroad are many: the rise in Internet buying (Amazon has had double-digit growth since its inception); a decline in profitability in American bookstores, most notably Borders, which recently replaced its CEO and is struggling to stay afloat; the use of books as loss leaders in chains like Costco; thinner profit margins for publishers; and shorter shelf lives for books. The new mantra: sell big and quickly—or die. “I think we’re going to see savagery here in 2009,” another agent told me.

It is into this savage environment that Anne Michaels’ delicate new novel, The Winter Vault, arrives. (Its title refers to the vaults where corpses are stored during winter, awaiting burial once the ground has thawed.) The current economic climate is not unlike the one that welcomed Fugitive Pieces, which appeared toward the end of the recession of the early ’90s, a period in which, coincidentally, there was massive restructuring and consolidation in the North American book industry. (The first Chapters superstore opened in 1995 and the first Indigo two years later.) Publishers and book­sellers will bank on the assumption that books are a kind of sanctuary in difficult times—when reading becomes an acceptable, and economical, Friday-night pursuit. And Michaels is high in the publishing industry’s pecking order, so the book will be heavily promoted. But will it resonate with readers the way its predecessor did? Thirteen years after Fugitive Pieces, is there still a market for beauty?