Two reports recently released by the Australian Digital Alliance (ADA) aim to quantify:
- the current contribution to the Australian economy of Australia’s ‘exceptions industries’ (‘Exceptional Industries’)
- the economic benefit of ‘more flexible copyright exceptions’ (‘Excepting the Future’)
The first report is intended, in part, as a counter to reports, such as the one recently published by the Australian Copyright Council, that quantify the contribution of ‘copyright-based’ industries to the Australian economy. In this respect, it adopts a similar approach to reports published in the US by the Computer and Communications Industry Association entitled ‘The Fair Use in the US Economy: Economic Contribution of Industries Relying on Fair Use’. For some responses to those reports see here and here. and here.
The ADA’s media release for the reports is headed ‘Potential $600M annual economic boost from copyright reform’.
There are many issues raised by the reports that invite debate, but here are three:
- the premise underpinning the claim that ‘more flexible’ exceptions would deliver economic benefits
- the costs of licensing
- the role of licensing solutions in the ‘exceptions industries’
Economic benefits from ‘flexible’ exceptions
The premise underlying the estimate of economic benefit is that there is an unacceptably high level of litigation about copyright exceptions because they are ‘too narrow’, and that adopting ‘more flexible’ exceptions would, ‘over time’, result in a boost to the economy. ‘Over time’ is 10 years.
‘Excepting the Future’ provides an estimate of the total number of cases involving copyright in the Federal Court. In very few of them, however, is a court interpretation of a copyright exception the decisive issue.
The fair dealing exceptions in the Australian Copyright Act are similar to those in the UK. Research conducted by law firm TaylorWessing for the British Copyright Council indicated that, since 1978, there have been, on average, two cases a year in the UK on fair dealing. (See British Copyright Council submission to the Hargreaves Inquiry, at Annex I, here.) By contrast, the report estimates that there have been, on average, about eight cases a year in the US on fair use.
In ‘Excepting the Future’, the recent Optus TV Now case is given as an example of a recent case that could have been avoided with a more flexible exception. Apart from the legal issues, and that the exception was never intended to create the basis for a business like TV Now, there has been fierce debate about what the right policy is. To what extent should corporations be entitled to develop businesses based on unlicensed use of other people’s content?
The idea that we could create a risk-free environment for online businesses by ‘flexible’ exceptions in the Australian Copyright Act is fanciful. Apart from all the other risks (legal, technological, political and otherwise), online businesses are global businesses, and effectively subject to the copyright law in each country in the world.
Similar arguments in favour of ‘flexible exceptions’ have been made by Google and others elsewhere. The response to these views in the 2011 Hargreaves report in the UK (Digital Opportunity: A review of Intellectual Property and Growth) was:
Does this mean, as is sometimes implied, that if only the UK could adopt Fair Use, East London would quickly become a rival to Silicon Valley? The answer to this is: certainly not. We were told repeatedly in our American interviews, that the success of high technology companies in Silicon Valley owes more to attitudes to business risk and investor culture, not to mention other complex issues of economic geography, than it does to the shape of IP law. In practice, it is difficult to distinguish between the importance of different elements in successful industrial clusters of the Silicon Valley type. This does not mean that IP issues are unimportant for the success of innovative, high technology businesses.
Costs of licensing
The question here should be: which solutions maximise efficiency and equity for access to, and use of, content?
The discussion of licensing in ‘Excepting the Future’ indicates a limited view about how licensing, including collective licensing, works in practice.
Much licensing is done on a blanket basis, not case by case. For businesses, blanket licences are an efficient way of minimising risk, as well as contributing to the production of the content they use. Copyright is just one of the many risk and compliance issues they need to assess and address.
There are, of course, discussions about what constitutes ‘equitable remuneration’ for content that is instantly available with minimal compliance: how to properly assess both the value to the user and the value to rightsholders. For blanket licences, this is approached on an overall basis, not case by case: what is the value of the licence to the licensee having regard to all the content and uses covered, and the ease of access and compliance.
Copyright Agency’s blanket licence for media monitoring organisations enables the licensing of 12 million digital press clippings a year with minimal transaction costs. The statutory licence for educational use enables the use of an estimated one billion pages of content a year by Australian schools.
The costs of ‘free’ exceptions must also be acknowledged. Because they are ‘free’, these exceptions will necessarily entail more conditions, and higher risks, than licensing solutions. Many colleges, for example, choose a blanket licence to cover their use of copyright content as an alternative to a copyright officer making case by case assessments of whether a use is covered by an exception or requires an individual licence.
The report indicates a misunderstanding of the way that schools’ use of internet content is managed in practice, including through processes agreed between schools’ representatives and rightsholders. More here.
‘Exceptions industries’ are those that consume copyright content in reliance on special exceptions and statutory licences in the Copyright Act.
The report gives three examples: educational and research institutions, internet search and webhosting services, and producers of devices allowing individual copying of copyrighted content, like mp3 players.
Interestingly, most use of copyright material by educational institutions is under statutory licences. They can use pretty much all text and images, with minimal compliance, provided fair payment is made. They can use broadcast content on the same basis. Similarly, research institutions are using licensed content, for example under blanket licences and subscriptions.
Nobody is seriously denying that the internet provides benefits to society, and that one of those benefits is the capacity to discover content through search facilities.
The issue is how to promote an environment for the use and creation of content that which is both efficient and equitable. There is broad agreement that it must be an environment that allows for rapid technological change, and consequent changes in business models and practices, and that it foster innovation and new content.