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There is no real connection between the statement that Canadian writers can't make a living from book sales due to the size of the market and Baen making more money on eBooks than they do from Canada. What Baen is saying is that Arnold Bailey who runs Webscriptions for them writes them a bigger check each year than Distican (their Canadian distributor) does. Writers like Margaret Atwood write for a small segment of the Canadian Market, what's called CanLit. A writer who wants to make sufficient sales to live on in Canada basically has to write for the US publishers because they are the only ones who sell enough copies of their books in Canada to produce a living wage.
The impression I'm getting from your posts is that you think Canadian writers start by submitting to Canadian publishers and once they reach a certain degree of success they move into the US market with US publishers. That's not how it works there. People who write a certain kind of literary fiction (what's generally called CanLit) go to Canadian publishers. Just about everyone else starts with the US publishers, and there is very little crossover between the two groups. If a Canadian writer wants to sell to the mass market (in Canada) they go to the US publishers. The structure of the market is such that a Canadian writer looks at the US and Canada as essentially one market. So does the industry, that's why all the mass market paperbacks display both prices.
As a codicil, I managed a bookstore in Canada for a few years.
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