Statutory licensing in the digital economy

3.69 Questions about the benefits of statutory licensing are explicitly raised by the Terms of Reference. Australia’s statutory licensing schemes for education, government and persons with disabilities were established to facilitate access to copyright material in circumstances where market failure would otherwise occur.

3.70 The benefits and detriments of the current system are heavily contested as between licensees and licensors. The TAFE sector submitted that statutory licensing for TAFE is not economically efficient or streamlined, and does not provide easy access to copyright material.^[88] Other educational licensees have been more blunt, suggesting that ‘Australia’s statutory licences are unsuitable for a digital age and must be repealed’.^[89]

3.71 The ACCC considered that relevant factors in reviewing statutory licences include the transaction costs associated with the licences—said to be considerable by education and government stakeholders—and the potential for the extent and use of the rights conferred by copyright to restrict competition and create market power.^[90]

3.72 Some stakeholders submitted that there are ways in which the statutory licensing system could work better, both in terms of the legislative framework and the way the rights are managed in practice.^[91]

3.73 The Australian Society of Authors, while stating that pt VB of the Copyright Act ‘works well for educational institutions and creators’^[92] also noted that ‘there could be more transparency in the process—particularly how much money is paid to which publishers and authors’.^[93] The Society also submitted that:

The central reasons for some statutory licence schemes should be revisited and reassessed … these schemes are paying massive amounts of money to foreign publishers of educational materials, with only a small amount trickling to Australian creators. This goes against the original intent.^[94]

3.74 The Australian Writers’ Guild pointed to the inflexibility of audiovisual statutory licensing and some ‘conflation’ of rights streams and lack of transparency in use of data.^[95] Even many of those advocating retention of statutory licensing in its current form often commented on the small returns^[96] and lack of transparency in current collective licensing arrangements.

3.75 The digital environment provides an opportunity for greater licensing as markets develop to satisfy consumer needs. Furthermore, markets can be seen as being about ‘fairness and opportunity’ as negotiated between parties, along with a ‘reasonable level of regulation’.^[97]

3.76 Statements that introducing fair use would lead to ‘no licensing’^[98] of educational material are grossly over-stated; on the contrary, the education sector is adamant that ‘fair use is not free use’.^[99] Universities Australia has provided evidence of the important continuing role for collective licensing.^[100]

3.77 The ALRC was provided with evidence of the large amounts of money spent on educational and library resources by the university sector alone, expenditure which would be unaffected by changes to statutory licensing.^[101]

3.78 Universities Australia submitted that ‘a competitive commercial licensing model’^[102] makes it appropriate that copyright legislation should operate to create markets based on the rights given under copyright legislation and determined by agreement between parties, rather than a statutory licence.

3.79 Recommendations in this Report support a continuing role for statutory licences, provided they incorporate more flexibility and be made less prescriptive.