Increasingly the Productivity Commission is confronting hard issues where tried and true rules of micro economic reform are only the start of discussions about community costs and benefits. The issue of book prices is one of these.
Without territorial copyright giving some limits to market entry, authors will be disadvantaged and lose income; investment in Australian publishing, and the infrastructure for editing, design, marketing and distribution will be cut. Without territorial copyright limiting market entry, book prices are likely to come down, at least for overseas sourced titles.
The thorny issue for the Productivity Commission is that it is very hard to work out by how much prices or income might actually fall in any of these categories. That is the nature of hidden industry protection like territorial copyright compared to a measurable direct subsidy program. However, back in the 1980s when it faced the trade off between cheaper clothes and Australian textiles jobs, the benefits of lower prices for the community were clear cut and irresistible, and the government hammered out compromises and industry redevelopment packages as it reduced protection.
Now we are in the middle of a debate about Australia’s cultural life and the importance of access to Australian stories told by Australian story tellers. Protection in the creative industries is inextricably mixed with issues of our national identity and pride in our creativity. Pity the poor economists trying to sort out the cultural value of a Booker Prize listed novel or an academic text about history, let alone the value of an Australian cook book or the tale of a cricketing hero.
The Commission’s report reveals a leaning to subsidy of the high brow to replace territorial copyright, perhaps reflecting an abstemious and high minded mind-set among those with a rigorous economic training and commitment to public service. But do we ignore the publishers who combine Australian history and literature with comedy, crime fiction and cook books (some of them from overseas) - and sell lots of copies to their appreciative fellow Australians? If book prices come down, will the populace start reading post modern texts and bone up on sociology?
No wonder the Productivity Commission has opted for recommending another inquiry, into how and by how much the Australian government should increase its direct investment and subsidy in writing and publishing, with a three-year deadline for the end of territorial copyright. Its recommendations reflect the desire for more accurately informed policy - and maybe a hope that some arts experts over at the Australia Council might sort out the cultural issues.
The Productivity Commission’s report also comes as the government considers how best to encourage growth in the creative industries, which include book publishing. This report is not making the task easier for them. It challenges Australia to re-examine the base of both its innovation and cultural policies and suggests it spends a lot more money.
The real environment for Australian creative industries is a fast changing, risky place. There are major changes sweeping through publishing because of the internet and digital book and serial production. Clarifying the side effects of territorial copyright is just one of the issues needing both commercial and government attention. Exchange rates have a major impact on publishing; on-line and in-store sales are in competition; augmentation of text books with web based updates and tuition changes definitions of what is a book; e books and on-line distribution may threaten current business models. Over the next few years more information will be available free, and governments will make data available for use and reuse by researchers - in Australia there’s a new Government 2.0 Taskforce looking at how this will happen.
In music there was a long debate about copyright protection for Australian made CDs versus lower prices and a possible lift in sales. This debate took a lot of time and energy before the advent of peer to peer sharing and iTunes swept aside the existing business model and demand for CDs plummeted, despite reductions in protection.
The Productivity Commission rightly recognises the need to keep downward pressure on book prices for Australian readers, students and libraries and to balance the cultural and creative benefits of copyright restrictions against affordable access to cultural, educational, and entertainment materials. The last changes to territorial copyright gave new rights to individuals seeking to buy in the international market, usually online, but bulk buyers still have to deal with the local distributors. If an international supplier can give a lower price, it is no wonder that they ask why shouldn’t they be able to take it even if there are costs in lower royalties to authors and local publishers are by passed?
Until independent Australian publishers got going, overseas publishers did look at Australia as an eager market of book buyers prepared to pay more for anything the publishers cared to offer - an easy mark. Australian publishers had to compete, first, by finding new technologies and systems in printing, distribution and typesetting to get prices down and establish a following for their locally based authors. Education and popular titles were a source of income while Australian creative writers developed their audience. Then overseas publishers began investing in local authors and took Australian readers more seriously.
The Commission worries that complacency might stop further innovation.
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