Australia: The Productivity Commission’s Attack on Publishing, Writers and Local Content–Something to Learn from Canada?

auscanLast month I wrote about the Australian Productivity Commission’s attack on the copyright industries in Australia, through its report titled Copy(not)right. If adopted, its recommendations would effectively go a long way to killing the golden goose of creativity in Australia, an industry which according to a 2014 PwC Study last year employed just over 1 million people, constituted 8.7 per cent of the Australian workforce, generated economic value of $111.4 billion, which was the equivalent of 7.1 per cent of gross domestic product (GDP), (greater than the manufacturing and health care sectors) and was responsible for just over $4.8 billion in exports, equal to 1.8 per cent of total exports. One wonders what planet the Commission’s researchers live on. Certainly not Planet Copyright. More like the Copyright Death Star.

Repeal of the Parallel Import Regulations?

One of the Commission’s key recommendations is a major revision to Australian law regulating the parallel import of publications. Its draft recommendation 5.2 states “The Australian Government should repeal parallel import restrictions for books in order for the reform to take effect no later than the end of 2017”. This recommendation, based on the premise that the removal of parallel import restrictions will lower the retail cost of books in Australia, has managed to galvanize the usually fractious book business—from publishers to booksellers to literary agents to writers—to unanimously push back. As reported in the Australian media, the book industry believes that abolition of the Parallel Import Regulations on foreign book imports would “cost jobs in all sectors of the publishing industry, irreversibly harm Australia’s cultural identity and impoverish authors with, at best, a marginal reduction in some book prices…”

It is worth looking at how other similar countries have dealt with this issue. New Zealand, a small market, allows parallel imports of many products, including books. Has this been successful? Australian critics of the Commission’s recommendations point out that books are no cheaper in New Zealand than in Australia, while the publishing industry there has declined. Canada, where I live, might be a better example. The “parallels” (pardon the pun) are interesting and relevant.

The Canadian Example

Both Australia and Canada have a rich literary heritage which has managed to survive and thrive in the face of enormous cultural competition from the US and UK. In Canada’s case, the US publication industry is not only powerful, it is literally next door. Most books sold in Canada are printed for the North American market and have on the back cover the cost in US and Canadian dollars. The one I have just pulled off my bookshelf, published by Doubleday in 2007, says US $27.95/$35.95 CAN. The spread varies but there is always a spread. Most Canadians instinctively chalk up the price difference to the difference in the value of the Canadian to the US dollar, although in fact the Canadian Book Importation Regulations allow Canadian publishers a maximum 10 percent markup on the Suggested Retail Price of US books and a 15 percent markup on books from Europe (adjusted for foreign exchange), the justification being that distribution costs in Canada are higher. That margin helps Canadian distributors (who in most cases are also publishers of domestic books) to earn a return on the distribution of popular foreign books for which they have exclusive distribution rights, thus increasing their ability to invest in the publication of works by Canadian writers. There are certain conditions that the distributors must fulfill in order to get the protection of the Copyright Act against parallel imported books, including notifying retailers of their distribution rights and filling orders promptly. (Australia has a similar time limit, known as the “30 day rule”, although in 2012 the Australian Publishers Association and the Australian Booksellers Association entered into an industrywide agreement known as the “Speed to Market Initiative” whereby publishers agreed to allow booksellers to import books if the publisher is unable to dispatch an order within 14 days). These Book Importation Regulations have helped the Canadian publishing industry to survive, although it is not without its challenges, especially in the area of educational publishing owing to expanded interpretations of fair dealing, as I have written about elsewhere.

Currency Factors and Public Perception

While Canadians generally seem to accept that consumer products may cost more in Canada for a variety of reasons (one of which may be to help support Canadian culture in the case of books), currency fluctuations can make things more controversial. The normally weaker Canadian dollar surged against the greenback back in 2007 and again in 2012/2013, and for extended periods was at par with the US dollar, and at times even exceeded it in value. Suddenly it was more difficult for consumers to swallow the cost differential, whether it was to support Canadian publishing or not. Another challenge to the book industry was the shift to online selling and when Amazon pushed to open a distribution centre in Canada, approaches were made by the booksellers association to the then Conservative government of Stephen Harper, arguing for an end to parallel import restrictions in Canada.

Book Importation Regulations (Parallel Import Restrictions) Upheld

In response, the Department of Canadian Heritage commissioned two independent studies (one for English language and one for French language books) to examine the issue. In a report delivered in April 2012, the consultants concluded that elimination of the parallel import restrictions would not lead to a direct lowering of the retail cost of books for consumers, and that there were significant benefits for Canada in retaining the restrictions. To cite the authors of the study that examined the English language book market,

We conclude therefore that the Book Importation Regulations continue to play an important role in strengthening the Canadian supply chain, supporting additional investment in distribution and original-title production in the Canadian book market, and, in so doing, promoting greater access to books for Canadian consumers.”

As a result, while the retailers had to tighten their margins to meet the online business threat, Canadian distributor-publishers continue to have their exclusive distribution arrangements protected by copyright, subject to a regulated markup. The Canadian dollar (the “loonie”) has depreciated again and today a US dollar is worth about $1.30 Canadian. Consequently, the higher cost of books in Canada is no longer a hot public issue. It is worth noting that while the commercial parallel imports of books into Canada is still prohibited, individual consumers are free to import books for their own use, as in Australia, from offshore providers such as Amazon.com.

It Works in Canada; Why not Australia?

The compromise seems to have worked well in Canada and has helped provide support for Canadian publishers and by extension, Canadian authors. Similarly, until now it has been effective in Australia, with exclusive distribution rights being protected by copyright law, as long as the “30 day rule” is met. (Parenthetically, the 30 day time limit rule can lead to some bizarre outcomes whereby, for example, a UK publisher could purchase the Australian rights to a book but before the book is licensed to and released by an Australian publisher, the US edition is released and is imported legally by an Australian bookseller because the UK rights holder wasn’t fast enough off the mark to get an Australian edition published). Yet this industry, which generates $2 billion in revenue annually through the publication of over 7000 titles, and which employs 4000 people, is now under extreme threat. Is there really a burning need to change a system that has generally worked pretty well for all parties? Consumers may pay a little more (the Australian industry concedes that the prices of some books may drop by about 10 percent) but it is a small trade-off to preserve and support an important domestic creative industry.

Fostering Local Culture and Literature

Australians and Canadians want and need to be able to tell and hear their own stories in a competitive world, where publishing is dominated by larger countries. A viable local publishing industry is a pre-requisite for domestic storytelling to continue. If the system isn’t broken, don’t fix it, but that is exactly what the Productivity Commission—building on earlier reviews in Australia that considered the Parallel Import Regulations—intends to do, targeting an essential support mechanism for the creative industries with its anti-copyright wrecking-ball. This has serious implications for creators in Australia, but also potentially for other countries.

Canada has looked at and rejected changes to its parallel import book regulations, and Australia could learn from this example. At the same time, an attack on creativity in one country has the potential to spill over to others and while Canadians do not have to deal with the excesses of the Productivity Commission, there are still persistent attempts by various interest groups to rollback copyright protection. There is one thing that the two countries and cultures particularly have in common. Canadian and Australian literature have both managed to prosper in the face of global competition, supported by great talent but also by measures that have helped a challenged publishing sector to survive. It would be short-sighted in the extreme to dismantle this essential support system for the ephemeral and uncertain reward of a marginal decline in the price of a few books. Canada rejected this nostrum; so should Australia.

© Hugh Stephens 2016 All Rights Reserved

 

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