Meera Nair

with due respect to PricewaterhouseCoopers

In Posts on August 3, 2015 at 7:20 pm

Howard Knopf (a prominent intellectual property lawyer and longstanding advocate for maintaining the limits upon copyright as prescribed by law) has drawn our attention to a new study commissioned by Access Copyright and carried out by PricewaterhouseCoopers (PwC). The study concludes that the end is nigh for educational publishing in Canada. Which in turn shall impose great hardships upon Canadian authors and illustrators, and ultimately mark the end of Canadian culture. The root cause of these troubles, according to PwC’s assessment, is the advent of fair dealing upon the Canadian educational landscape. Because fair dealing is actually practiced now (with guidance from the Association of Universities and Colleges Canada (AUCC) and Colleges and Institutes Canada (CIC)), the publishing industry is denied its time-honoured income gained through blanket-licensing of written materials for education in Canada.

There was a time when I would direct students to PwC reports as exemplars of informed and dispassionate analysis. I am not sure I would do so today. With due respect to PwC, their knowledge of copyright in general (and fair dealing in particular) is scant. But even setting aside any lack of understanding of copyright, the spectacle of being a paid messenger to a biased cause does little credit to PwC.

And the message is this: Canadian educational publishers can maintain their industry only by returning to the level of payments received from schools and post-secondary institutions in the past. Educational institutions must continue spending as before, regardless of: (1) the position of the law, (2) the general decline of funding to education, (3) availability of alternative resources, or (4) better fiscal management on the part of educators and administrators. All of this is set upon a lament about the perils of coping with new technology.

Incidentally, that lament has been heard with every past introduction of a new medium. The script remains unchanged: that existing industries are threatened, they are endeavoring to cope with a strange new world, and if their demands are not met then culture and attendant jobs will go the way of the dodo bird. A modest historical exploration would confirm that the printing press did not end the creation of literature (or the art of calligraphy), musical composition did not stop because of the player piano, the film industry did not collapse with the arrival of the VCR (indeed, studios found new markets in the form of the home-movie-collection), and digital technology has strengthened the music industry today.

Returning to the report, its premise is voiced as a complaint. In describing their mandate, PwC refers to the fair dealing guidelines framed by AUCC and CIC: “which, we understand, were developed without the input of the writing and publishing industry, claim to authorize educational institutions to make copies of portions of published works without permission from, or payment to, the copyright holder (p.13).”

PwC is clearly aware of CCH Canadian (2004) but makes selective use of it. A complete reading of the decision would have alerted PwC that the current guidelines are structured along the terms of the Access Policy of the Great Library which allowed for copying of modest amounts of work (one case, one article etc.) with requests for greater copying to be further examined (2004 SCC 13, para 61.) In declaring such a system as fair dealing, our Supreme Court gave the blueprint for the fair dealing policies now followed across Canada. Moreover, further words from the Supreme Court established the viability of sheltering legitimately, unauthorized copying in educational institutions, as fair dealing (Education v Access, 2012 SCC 37).

It is disappointing to hear that Canadians (individuals or institutions) need to solicit input from others, before choosing to act under the law as it is sanctioned by our highest court.

Of course, Access Copyright may use this report as they see fit; Knopf muses that the report will be presented to the Copyright Board when the Board moves on Access Copyright’s requests for tariffs linked to educational copying. Knopf also reiterates his observation that the Board is taking a more inquisitorial role in its hearings.

For instance, the Board might place close attention to this passage from the executive summary: “With less content purchased for the [K-12] classroom, teachers are increasingly required to fill the void by copying and repurposing published content (p.4).”

No citation is given; there is no effort to indicate how much content is involved or how often these actions occur. In the early pages of a 95-page report, it sets a tone of rampant piracy; the statutory explanation of fair dealing is entirely absent. Granted, it is the interpretation of fair dealing that is being taken to task, but to refrain from even a cursory acknowledgement that Section 29 of the Copyright Act may very well shelter these actions (depending on the facts of each situation) is, at best, an error on the part of PwC. At worst, it is intentionally misleading.

Regarding the thrust of that passage, readers may recall that when a decline of purchasing of educational content in the K-12 sector was brought to the attention of the Supreme Court in 2012, our justices acknowledged:

… as noted by the [educational representatives], there was no evidence that this decline was linked to photocopying done by teachers.  Moreover, [they] noted that there were several other factors that were likely to have contributed to the decline in sales, such as the adoption of semester teaching, a decrease in registrations, the longer lifespan of textbooks, increased use of the Internet and other electronic tools, and more resource-based learning (2012 SCC 37, para.33).

On that same theme, PwC continues:

As the market shifts away from the purchase of traditional paper-bound textbooks to the adoption of digital technology, the revenues of K-12 publishers and related creators have fallen dramatically. Total revenues generated in the K-12 Educational Publishing Market has declined by 40% since 2008 (p.4-5).

It is plausible that the collapse of global economies in 2009 also had some influence here. In any case, the K-12 educational body falls at the bottom of the funding totem pole. Transfers of taxpayer dollars flow from the federal government, through provincial and municipal governments before making their way to school boards and schools. And, unlike post-secondary institutions, tuition dollars are not a reliable component of school budgets. (Interestingly so, PwC observes a much smaller drop in revenues from the post-secondary sector; see p.12). In an era of cost-cutting and belt-tightening, it should come as no surprise that schools are spending less and looking for alternatives with respect to quality educational materials.

Perhaps one of the most startling aspects of PwC’s report is the disdain for efforts among educational communities to develop and circulate materials of their own. Section 7.1.1.1 Emerging models for K-12 materials (p. 49-51) describes some of these initiatives; notably characterized as “disruptive business models” as they shift money away from the past structures of the Educational Publishing sector. The efforts by provincial governments to promote collaboration among stakeholders in the pursuit of less-expensive, suitable material for K-12 students are mentioned without praise, even though taxpayers might see such steps as productive. The report also indicates that schools are: “… increasing use of content sources from the Internet; and making more use of open-source educational content …  [content that can be copied and shared for free] (p.51).” Again, this is laudable but not to PwC:

Open Educational Resources (OER) are a threat to traditional publishers as they provide textbook and course materials for free. Some school boards have access to digital content developed by the Ministry and/or teachers free of charge. … For now, exchanges of content between provinces remain limited however this is expected to increase in the future (p.51)”

In PwC’s hands, good educational content has very narrow boundaries; such content is deemed as only those materials that are legitimate to use via a paid license fee to a member of Canada’s “Educational Publishing Industry.” But even when speaking of the decline of licensing fees in Canada, the emphasis is upon the decline of blanket license fees, meaning a set fee per student, for all students, paid to Access Copyright. (PwC seems oblivious to its patron’s own role in this decline.)

PwC acknowledges that some institutions are dealing directly with publishers for transactional licenses but observes (albeit upon incomplete data) that the transactional licensing income does not match the decline of the revenue received via Access Copyright (p.62). However, PwC neglects to point out that some publishers did not wish to do business with educational institutions. Writing in September 2013, Stephen Toope (then president of UBC) gave details of the $25 million spent at UBC in direct transactions with copyright holders and indicated that, in connection to coursepacks, some publishers/authors refused to enter into contract for a transactional license to use works.

It has come to our attention over the last year or two that some publishers and authors have decided not to grant any transactional clearances. This is unfortunate, as this restricts faculty and students from utilizing the materials produced by the affected publishers and authors and, it would seem, unnecessarily cuts-off a source of revenue for them. Nonetheless, this is the right of publishers and authors and, if they are not prepared to grant a transactional clearance, the material will not be used.

It should be noted that, perhaps in some effort to show neutrality, PwC offers its lens of assessment as clarifying its scope:

[We have] considered this issue in light of the economic theory of copyright protection and its counterbalance, the fair dealing exception… The theory is that, without proper regulation, prospective users could consume certain goods without paying for them (in other words, they could “free ride”), resulting in “market failure”. This failure is signified by a reduction in the economic incentives to develop new creative content (p.6).

However, this invocation of loaded vocabulary invites two comments. First, the pejorative emphasis upon free ride and market failure conceals the reality that good public policy will aid and abet free-riders, because it is better for society as a whole. (Health care, education and public parks all come to mind—each of these is sustained through taxpayers, with varying degrees of contributions, including the option of a zero contribution.) And second, PwC seems unaware that markets themselves are of variety and will not necessarily transact in dollars and cents. Exceptions to copyright have existed for as long as copyright itself. The “market” in which creativity thrives is one which acknowledges that some goods/services will be transacted, without awareness, and without conventional payment. This is not a failure of the market; quite the reverse. Payment is in kind. Creators of today were users of yesterday, and pay their debt to the future.

PwC has lent its voice to Access Copyright’s ongoing complaint that educational institutions now may enjoy for free, the modest discretionary copying that they once paid a license for. However, the real grievance for Canadian students, teachers and parents is that until now, educational institutions endorsed a system whereby fair dealing, a right given to Canadians by Parliament, was treated as a consumer item to be bought and paid for.

To PwC’s credit, it is upfront in stating the limitations of the report; that PwC does not verify the accuracy of the information provided to them. Readers may wish to pay close attention to the sources from which the report was compiled (p.96); there is a distinct lack of diversity in perspective.

If this report is offered to the Copyright Board, it will be of interest to hear the Board’s impressions.

  1. Touché

  2. Another report by consulting firm PWC (about the economics of fair use (Feb 2016), once again criticized by IP academics (the latter of which are not paid to support their clients’ best interests) : http://infojustice.org/archives/35919

    From the PWC report:

    Disclaimer
    This Report was prepared for APRA AMCOS, PPCA, Copyright Agency│Viscopy, Foxtel,
    News Corp Australia and Screenrights. In preparing this Report we have only considered the
    requirements of these organisations. Our Report is not appropriate for use by persons other
    than these organisations, and we do not accept or assume responsibility to anyone other than these organisations in respect of our Report.

    The information, statements, statistics and commentary (together the ‘Information’)
    contained in the Report have been prepared by PricewaterhouseCoopers Australia (PwC)
    from material provided the organisations named above, and from public sources. PwC may at its absolute discretion, but without being under any obligation to do so, update, amend or
    supplement this document.

    The Information contained in this document has not been subjected to an audit or any form
    of independent verification. PwC does not express an opinion as to the accuracy or
    completeness of the information provided. PwC disclaims any and all liability arising from
    actions taken in response to this Report.

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