Cheaper books but what about our culture?

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.

There are pressing reasons to look at support for the creative industries in Australia, and to strengthen cultural policy. These industries are growing fast and we have an advantage through a knowledgeable and skilled workforce with a capacity to innovate, but they are also high risk ventures.

What the creative industries should offer is a rich mix of competing suppliers with a constant preoccupation with what readers/viewers/students/subscribers want and at what price. Subsidy solely through a government system of grants will reduce this dynamism in the inevitable move to public sector style accountability systems and consequent slower decision making. As Michael Heyward of Text Publishing said in On Line Opinion recently publishing is lively, diverse and inventive. The government is committed to tax credits for small business research and development, and aims to support creativity as an economic as well as cultural good and the mix of small and medium sized business in publishing is a helpful success story.

The Productivity Commission mentions some tantalising possibilities which might help after a long and painstaking gestation period of government review and industry consultation but none are easy. A Canadian $30 million scheme to support publishing on a per book basis for Canadian publishers only (in a country which also retains territorial copyright), and models based on the current public lending right and educational lending right which gave extra income to authors and publishers for books in libraries and photocopied for class use. Interestingly these last two were brought in partially to respond to changes in technology and distribution - they involved creation of a new monetised service (e.g. access to photocopied materials) based on creation of new knowledge and craft. Basically the commission is not interested in allowing authors and publishers to increase their returns on new work by selling it into a variety of markets around the world (higher prices in a local market with intense interest in a story, lower where there is only a niche interest in the material), instead of only once to a single distributor in a global copyright market - although differential pricing is part and parcel of a developing market and innovative product cycles. Its consideration of options was limited because of our trade agreements which would not allow differential treatment for Australian owned publishers and Australian authors.

The Australian government will also have to make separate policies to support the most innovative art making, including creative writing, which needs subsidy to thrive because the audiences are small. Our peers in major English speaking literature markets do the same. Australia Council publishing grants for instance have a bent for small independent groups which pick up new authors and untried genres.

There is also concern about the impact of removing territorial copyright for educational publishing of Australian material, where technological change is already causing major uncertainty and price is of paramount importance for students. Australia Council support for authors and publishing does not extend to education material and the Canadian subsidy model also does not support educational publishing. This must be considered in any discussion about pricing and open access to material since overseas editions can help in some courses, but not in those dealing with Australian material and cases.

The Productivity Commission’s report has stirred a major debate within the humanities, arts and social sciences about the worth of territorial copyright. The President of the Academy of Social Sciences in Australia, Professor Stuart McIntyre, said its removal would harm Australian research. The Australian Library and Information Association told the Commission the protection should go. We have heard from Australian authors and booksellers.

On balance, territorial copyright is not the pivotal policy issue for creative industries compared to the massive impact of technological based changes underway, and the major shifts in how younger generations access and use both creative, educational and non-fiction writing and other information/art. To cut the income of Australia’s major creative writers by a conscious government decision is a serious disincentive to the many thousands of young Australians who see creativity as a career whether in design, writing, music, research and teaching. It is of concern if this issue receives priority; however, it will have to be dealt with as more people access books, research outputs and writing on-line.

The Productivity Commission report recommends the theoretically correct position of direct subsidy over industry protection - but acknowledges that the rule doesn’t help much with culturally driven schemes. If the government takes on the task of updating Australia’s investment in publishing and other creative industries for a new era of global markets and the web, it will have to pick its way through the issues raised by the Productivity commission, but which are not settled. Would a three-year deadline help?