A study carried out by PricewaterhouseCoopers on the economic impacts of the Guidelines on fair dealing established by educational institutions in Canada has just been published, and its main outcomes are particularly worrisome since they show that educational publishing is in danger and could eventually disappear if fair compensation is not paid to rightholders.
In 2012, the Canadian Council of Ministers of Education, along with the Association of Universities and Colleges Canada and the Colleges and Institutes Canada, adopted a set of Guidelines on fair dealing that have resulted in provincial governments – with the exception of the province of Quebec, that was not concerned, neither affected by the said Guidelines – cancelling or not renewing their licensing agreements with the Canadian RRO Access Copyright, thereby not paying remuneration for the copying undertaken in K-12 schools, and around half of universities and colleges who followed the same path. IFRRO’s member in Canada, Access Copyright, is mandated by authors and publishers to licence users and distribute royalties to rightholders, and has therefore suffered a major loss of revenues due to this decision, which immediately resulted in authors and publishers being deprived from the royalties that they used to receive from the licencing of educational institutions.
The PwC study is assessing the impact of the Guidelines on the educational content market in Canada and on the Canadian economy. Here are some of the key findings of the study:
· The Canadian educational publishing industry is engaged in the process of transition from print to digital, which obliges publishers to invest a lot of efforts and money into the development of new products and technologies, a costly process, especially for SME publishers. At the same time, the government has reduced its spending on educational content while the sale of print content has declined, making the current situation particularly challenging for publishers.
· With the implementation of the Guidelines, the annual loss of revenues to authors, including visual artists, and publishers is expected to amount to $30 million. For many SME publishers, “licencing revenues represent the difference between profit and loss”; losing these revenues may force some of them to simply exit the educational publishing market, and some have of them have already indicated that the decrease of income from licencing will hamper investment in the production of digital products and content.
· Fewer works tailored for the Canadian market will be created: imports of foreign materials are expected to increase whilst educational publishers in Canada have already started exiting the market: Oxford University Press has exited the K-12 market as a consequence of the adoption of the Guidelines and subsequent loss of licencing income, and Nelson Education had to file bankruptcy protection because of the decline in the market of educational materials.
· Further decline in sales in the educational publishing market are expected, and have already been witnessed, as the Guidelines encourage teachers to create their own royalty-free course packs instead of buying textbooks: as a result, “the rate of annual decline in K-12 sales has accelerated, on average, by about 0.7 percentage points per annum”.
· Less and less works will be created since authors will lose an incentive to create content for the educational publishing market; as shown in the study, licencing represents 20% of the income of creators affiliated to Access Copyright, and some of them have already indicated that they will reduce the number of works created and their focus on creating content for the education if licencing revenues were to decrease.
Additionally, the diversity of content created is expected to decrease given that publishers, facing a loss of revenues, will have to decide on which subject areas they want to focus on, leading to “fewer titles per course subjects, and fewer courses subjects served”.
· Another natural consequence stemming from the implementation of the Guidelines is that jobs in the educational publishing sector will be at risk; a 16% reduction of the economic footprint of this industry, both in terms of jobs and GDP, has already been recorded between 2011 and 2013.
· Finally, students and teachers are those that will eventually have to bear the weight of the deteriorating situation: with less competition between publishers, less content produced and sold, and a new responsibility for teachers to prepare course packs, students will pay a higher price to have access to quality materials and will study outdated copied materials, while teachers will spend more time compiling and creating their own teaching materials, all of this leading to a “greater disparity in the quality of learning sources”.
The conclusion of the study seems therefore to be that the small gains made by provincial governments through the non-payment of royalties to rightholders will turn out to be a great loss for everyone: rightholders, students and teachers, and the society at large.
In a comment to the findings of the PwC study, IFRRO’s CEO Olav Stokkmo said that this clearly shows that access to educational material through agreements with RROs and authors and publishers is what best meets dynamic user needs to legally access high quality teaching material inconstantly changing environments, in a way that also benefits, in the long run, users and society. It offers a safer, simpler, faster, innovative, convenient and cost efficient way to seamless access to content from multiple rightholders. Flourishing local cultural industries and a healthy educational system with broad access also to local resources contributes significantly to the nation’s economy and employment. Educational institutions, students, teachers, researchers ‐ society needs good local educational resources. Local educational publishing needs care. RROs contribute to that.
Find here the full PwC report, an executive summary, an infographic and a one-page overview.