Special Bulletin
21 December 2016

Productivity Commission releases final report; reiterates call for PIR repeal, adoption of ‘fair use’

The Productivity Commission released its final report into Intellectual Property Arrangements on 20 December, reiterating the previous recommendations from its draft report to repeal parallel import restrictions (PIRs) on books and adopt a US-style ‘fair use’ exception in the Copyright Act.

PIRs

The commission recommended that ‘the Australian Government should proceed to repeal parallel import restrictions for books to take effect no later than the end of 2017’, adding that ‘additional transitional arrangements [in phasing out PIRs] are not needed given the positive confluence of efficiencies made by the Australian publishing industry and broader economic circumstances’.

The commission’s final report includes a comparison of book prices in Australia, the UK and the US in 2015-16. ‘This updated analysis finds substantially similar results to the Commission’s previous work. Namely, that at any given time, a significant proportion of book titles available in Australia could be purchased at a lower cost in the UK or the US,’ said the report.

The commission rejected the price comparison studies submitted by the Australian Publishers Association (APA) and Australian Booksellers Association (ABA), which found that ‘books are not, on average, more expensive in Australia, and in many cases are cheaper’. The commission argued that these studies ‘suffer from methodological problems’, including the use of limited sample sizes, comparisons between paperback and hardbacks, and the use of RRPs rather than average sale prices.

‘Fair use’

As in the draft report, the final report recommends replacing the ‘fair dealing’ exceptions in the Copyright Act with a broad and open-ended ‘fair use’ exception.

The commission states that improved access to copyright works through a broad exception will increase economic activity, community welfare and new uses of copyright material ‘without compromising incentives to create’.

Specific gains include new economic activity ‘worth between $10 million and $20 million per year’; better access to archived or otherwise hard-to-access works; and ending the practice of education and government users paying statutory license fees for freely available online material.

The final report also includes a new recommendation calling for improved transparency and governance of collective licensing and collecting societies, which includes the Copyright Agency.

The commission expressed concern over the lack of transparency and detailed information around the distribution of collected funds, and advocated for a ‘comprehensive review’ by the Australian Competition and Consumer Commission (ACCC) into of the voluntary codes of conduct to which Australian collecting agencies subscribe.

In the view of the commission, the existing code ‘establishes minimum principles of transparency, consultation, governance, accountability and dispute handling’.

The proposed review would assess whether the current voluntary code ‘represents best practice, contains sufficient monitoring and review mechanisms’, and whether it should be mandatory for all collecting societies.

Industry responds

The ‘Books Create Australia’ campaign, which has the backing of the APA, ABA, Australian Society of Authors, Australian Literary Agents Association and the Print Industry Association of Australia, has released a statement calling on the government to reject the commission’s recommendations to repeal PIRs and introduce a ‘fair use’ exception to the Copyright Act.

APA president Louise Adler said the commission ‘has ignored more than 400 expert submissions in response to a draft report that was widely criticised as biased, based on narrow analysis and out-of-date data’.

ABA president Tim White also criticised the commission’s lack of consultation with booksellers. ‘We feared a shallow, self-serving report that perpetuates a number of fundamental misunderstandings about how the book industry operates, how booksellers can source books, the relative purchasing power of bookstores and the costs of doing retail business in Australia generally,’ said White. ‘Despite a number of offers from the ABA to provide evidence or information to the [Productivity Commission]—the [PC] deliberately sought no input from booksellers other than those that met with their pre-determined view.’

The Copyright Agency has also released a statement condemning the commission’s recommendations. CEO Adam Suckling said that ‘of the 380 detailed submissions to the Commission’s enquiry, that covered copyright issues, only 38 supported “fair use” and more than 75% of submissions opposed the Commission’s recommendations’. ‘The Productivity Commission’s recommendations seem to be straight out of the US Big Tech playbook, ignoring the views of the vast majority of submissions which oppose these far-reaching recommendations that will wreak havoc on Australia’s creative community,’ said Suckling.

Suckling added: ‘Of course we must continue to evolve our copyright systems so that we can make the best use of new technologies to create, distribute and consume new content. This includes practical solutions that increase access to content, and sensible, consensus-driven legislative changes such as those contained in a Bill that is already drafted that would simplify the statutory licence for education and assist libraries and people with disabilities.’

The Copyright Agency said it would respond in greater detail to the commission’s final report in early 2017.

As previously reported by Books+Publishing, earlier this month federal Labor Party leader Bill Shorten confirmed the Labor Party would not support the government’s proposal to repeal PIRs. It joins the Greens, Nick Xenophon Team and senator Jackie Lambie in opposing the repeal of PIRs, making it unlikely the government’s proposed changes would pass the Senate.

 

 

 

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