Bans on the parallel import of books

You note (Annex B, p 5 of your Dis­cus­sion Draft) that the Copy­right Act per­mits the par­al­lel import of elec­tron­ic ver­sion of a book and you note in pass­ing that the avail­abil­i­ty of elec­tron­ic edi­tions may lessen the con­sumer-price impact of the PIRs on print­ed books (with­out, how­ev­er, offer­ing any data to sup­port this claim —- I accept that you say the data is not avail­able).

A: You have not considered all of the costs of the PIRs for consumers of electronic books

You must have noticed that, notwith­stand­ing the facil­i­ty in the Copy­right Act, pub­lish­ers restrict the dis­tri­b­u­tion of elec­tron­ic ver­sions of works that are pub­lished in Aus­tralia.

The most obvi­ous instance of this is the refusal of AMAZON to sell doc­u­ments for the very pop­u­lar Kin­dle read­er to Aus­tralian con­sumers, among oth­ers, appar­ent­ly because the (glob­al) pub­lish­ers refuse to license elec­tron­ic ver­sions of their books for this mar­ket.

The costs of this restric­tion to con­sumers in Aus­tralia include:

  • high­er prices (Kin­dle books are sold at a dis­count to even the dis­count­ed print ver­sions on AMAZON);
  • lack of ameni­ty (the rea­son con­sumers want a Kin­dle at all is that it offers them a more con­ve­nient way to access books and a dif­fer­ent set of ‘book’ ser­vices not avail­able in the print­ed for­mat);
  • high­er acqui­si­tion costs (the con­ve­nience, speed of ful­fill­ment is greater in the case of Kin­dle books than in the case of print­ed books).

B: The restriction on sale is due to the PIRs

What incen­tive would the pub­lish­ers have for this restric­tion except that it threat­ens to can­ni­bal­ize the rents secured to them in Aus­tralia by the PIRs in addi­tion to the rents secured to them by Copy­right? Car­tel rents? They may be act­ing as an ‘infor­mal’ car­tel (as the pub­lish­ers of DVDs do when they attempt to enforce their ‘region­al’ replay restric­tions). But if that were the case, you and I would pre­dict that one or oth­er publisher—-with the con­nivance of AMAZON—-would defect (‘cheat’) just as EMI defect­ed from the copy­right and DRM restric­tions imposed by oth­er labels sell­ing through the iTunes store.

Alas, after more than a cen­tu­ry of the inter­na­tion­al book-pub­lish­ing cartel—and despite the appar­ent end (in the 1970s) of for­mal restric­tions such as the ‘British Tra­di­tion­al Mar­ket’ scam—the incen­tive pro­vid­ed by the PIRs (in Aus­tralia, the UK and else­where) still seems to pro­vides suf­fi­cient incen­tive for the pub­lish­ers to cartelize the mar­ket by restrict­ing access to high qual­i­ty elec­tron­ic ver­sions of books pub­lished in Aus­tralia.

Two fur­ther rea­son for think­ing that this restric­tion is moti­vat­ed by the rents in the PIRs:

  • AMAZON does in fact sell some elec­tron­ic books that are avail­able in Aus­tralia (www.mobipocket.com). But these are ‘dis­count’, remain­der-list and ‘spe­cial inter­est’ books. They prob­a­bly nev­er fig­ured on the ‘front list’ that is espe­cial­ly pro­tect­ed by the PIRs, as your Dis­cus­sion Draft con­cludes.
  • Sim­i­lar restric­tions apply to the sale of Kin­dle books in the UK where oth­er mar­ket con­di­tions are dif­fer­ent but, as your draft notes, there are anal­o­gous laws restrict­ing par­al­lel imports.

C: Are electronic books and printed books competitive products?

It might be argued that the rents due to the PIRs could not be affect­ed by the sale of elec­tron­ic books because they are not direct­ly com­pet­i­tive prod­ucts. My alle­ga­tion that con­cern for these rents explains the refusal to sell Kin­dle ver­sions of ‘front list’ books in Aus­tralia could not be true if the elec­tron­ic and print­ed prod­ucts are not com­pet­i­tive. The sale of the Kin­dle ver­sions would not, in that case, under­mine the val­ue of the PIRs on the print­ed books.

But I con­tend that the Kin­dle prod­uct is strong­ly com­pet­i­tive with the print­ed ver­sion of the books. Indeed, this is the design objec­tive of the Kin­dle device and it has been appar­ent­ly very suc­cess­ful in meet­ing that objec­tive (the first ver­sion of the Kin­dle sold its entire pro­duc­tion run very quick­ly).

Non-com­pe­ti­tion’ is not a suc­cess­ful objec­tion to my con­tention that the PIRs explain the restrict­ed access to Kin­dle books.

D: Remedies

You sug­gest that the PIRs should be lim­it­ed to 12 months in order to bal­ance the rights of con­sumers and the ‘cul­tur­al’ ben­e­fits of the PIRs. I do not agree. Your report acknowl­edges a pub­lic ben­e­fit (‘cul­tur­al ben­e­fit’) due to the PIRs. But you under­es­ti­mate, for rea­sons out­lined above, both the costs to the con­sumer and the rents accru­ing to the pub­lish­ers from the PIRs.

The pub­lish­ers already receive an exces­sive copy­right ben­e­fit (espe­cial­ly since the absurd ‘life of author plus 70 years’ copy­right term was adopt­ed to com­ply with the Aus­tralia-US FTA). This ben­e­fit, too, has been jus­ti­fied on ‘cul­tur­al’ grounds. Why is there a need for any PIRs to sup­ple­ment the rents avail­able from copy­right?

E: Recommendations

(1) I urge you, in your final report, to con­sid­er the pos­si­bil­i­ty that the restric­tion on access to elec­tron­ic edi­tions of books (specif­i­cal­ly, the ‘front list’ books that are avail­able in the US as Kin­dle books) is a cost imposed on Aus­tralian con­sumers by the PIRs.

(2) I urge you to rec­om­mend that the PIRs be abol­ished and that, if use­ful (I doubt it), the Gov­ern­ment should increase the sub­si­dies to ‘cul­ture’ by direct­ly com­pen­sat­ing Aus­tralian authors of ‘cul­tur­al’ works for the loss of the PIRs. They should not sub­si­dize the pub­lish­ers. Nor need they sub­si­dize for­eign authors now ben­e­fit­ing from our PIRs (there’s noth­ing in the nation­al treat­ment oblig­a­tions of the AUSFTA that requires us to sub­si­dize US authors).

Thank you.

One Comment

  • Chil­drens books are the cul­tur­al books Im wor­ried about. The over­heads involved in sup­port­ing a new author are already sig­nif­i­cant that local pub­lish­ers are already wary of tak­ing any risks. With the chance that pro­duc­ing a ‘hit’ will just encour­age an over­seas pub­lish­er to print cheap­er ver­sions- with a low­er (some­times to nil if they’re ‘remain­ders’) roy­al­ties per­cent­age to local authors- express­ly to send to aus­tralia (not even ever real­ly intend­ed for for­eign sale, but just a token local run) fol­low­ing the propsed 12 months (the time it nor­mal­ly takes for a chil­drens book to find its mar­ket any­way) the already slim like­ly­hood that new chidlrsn authors will find a pub­lish­er dem­i­nish­es fur­ther. And by what emans of implem­ta­tion would your pro­pose these ‘nev­er rans’ recieve their com­pen­sa­tion if no encour­age­ment or assur­ances are giv­en to local pub­lish­ers? (a US or UK pub­lish­er is not going to be inter­est­ed in pub­lish­ing a sto­ry of pure aus­tralian con­tent). ‘Books’ doesn’t just mean ‘books I buy per­son­al­ly’ and ‘cul­ture’ doesn’t just mean ‘elite’ it means every­thing unique­ly Aus­tralian.

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