4.109 Fair use explicitly recognises the need to protect rights holders’ markets. When determining whether a particular use is fair, under fair use and fair dealing exceptions, consideration must be given to ‘the effect of the use upon the potential market for, or value of, the copyright material’. Considering this factor will help ensure that the legitimate interests of creators and other rights holders are not harmed by the introduction of fair use. If a licence can be obtained for a particular use of copyright material, then the unlicensed use of that material will often not be fair. This is vital to ensuring copyright law continues to fulfil its primary purpose in providing creators with sufficient incentive to create.
4.110 Many rights holders and others submitted that the introduction of fair use to Australia would harm rights holders’ interests. Fair use was said to reduce the scope of rights, undermine the ability to control how content is used, and undermine licensing arrangements and other revenue streams.
4.111 Particular concerns were expressed with respect to the likely harm to creators such as artists, and book publishers—particularly small and medium-sized publishers. Sporting organisations also submitted that copyright is a crucial source of their funding. Others were concerned that some users would assert ‘an implausible fair use defence in the hope of avoiding liability or at least extracting favourable settlement terms’.
4.112 However, some stakeholders submitted that fair use would not necessarily cause economic harm to rights holders. Many businesses are both owners and users of copyright materials and the experience in the US is that businesses and individuals make use of the fair use exception and such use has not ‘eclipsed or displaced’ the sale or licensing of particular copyright content, for example, educational materials. Google submitted that:
The idea that fair use somehow reduces copyright owners’ rights is belied by the regular practice of large US media companies applying fair use in their every day commercial decisions.
4.113 Similarly, Universities Australia submitted that ‘many of the same publishers who have raised concerns about fair use in Australia are themselves beneficiaries of fair use in their own commercial activities here and in the US’.
4.114 Research in Australia and elsewhere indicates that a fair use model would not ‘open the floodgates’ and encourage disrespect and noncompliance with copyright law. On the contrary, fair use would appeal to consumers who would be more persuaded to pay for content, particularly when coupled with innovative business models.
4.115 Even stakeholders who were opposed to the introduction of fair use in Australia, such as the Motion Picture Association of America, acknowledged the workability of such a regime for businesses which are both content creators and users. It acknowledged that its members depend upon fair use in their business and creative operations and that a fair use system can provide a supportive environment for creators and for legitimate users of copyright material.
4.116 The fair use exception requires a balancing of competing interests with respect to a particular use. In particular, the fourth fairness factor in the ALRC’s recommended fair use exception is designed to protect copyright owners’ markets. If a use will have a significant effect on a rights holder’s market; if it unfairly robs them of licensing revenue to which they should be entitled, then the use will probably not be fair. The introduction of a broad, flexible exception for fair use into Australian law should allow flexible and fair mediation between the interests of owners and users in the digital environment.