Repeal of the statutory licences?

8.23 In the Discussion Paper, the ALRC proposed the repeal of the statutory licences for government, educational institutions and institutions assisting people with disability. Australian schools, universities and TAFEs called for the statutory licences to be repealed.[20] Licences should instead be negotiated voluntarily, they submitted.

8.24 The Copyright Advisory Group—Schools (CAG Schools) expressed their objection to the statutory licences in strong terms:

This submission should be read as a strong statement on behalf of every Government school in Australia, and the vast majority of non-Government schools, that the current system for educational copyright use in Australia, based on statutory licensing, is broken beyond repair and must be replaced with a more modern and fair system.[21]

8.25 CAG Schools submitted that the statutory licences are economically inefficient and ‘inherently unsuitable to the digital environment’.[22] They also said the licences ‘put Australian schools and students at a comparative disadvantage internationally and do not represent emerging international consensus regarding copyright in the digital environment’.[23] Various government agencies also made strong criticisms of the statutory licences. Criticisms of the statutory licences are discussed further below.

8.26 However, the ALRC has decided not to recommend the repeal of the statutory licences. The ALRC maintains that voluntary licences would be more efficient and better suited to a digital age. The mere fact that the very institutions the statutory licences were designed to help have called for their repeal, highlights that the licences should be reformed. However, in light of widespread opposition to outright repeal of the statutory licences, particularly by rights holders and collecting societies,[24] the ALRC instead makes recommendations designed to encourage and facilitate voluntary licensing. These recommendations are made later in this chapter.

8.27 Importantly, many of the arguments for repeal of the statutory licences are better and more directly addressed, first, through new exceptions to permit the fair use of copyright material,[25] and second, by clarifying that the statutory licences do not operate to make institutions pay for or otherwise licence these fair uses. This Report recommends new exceptions for certain government uses and the introduction of a fair use or new fair dealing exception. This Report also recommends that the Act be clarified to ensure that payment for these uses are not required under the statutory licences.

Arguments for and against repeal

8.28 Many of the arguments for repeal of the statutory licences are discussed later in this chapter, in the context of specific changes to licences. This section focuses on arguments presented to the ALRC for retaining the statutory licences.

8.29 However, it is important to first note a fundamental criticism of statutory licences—that they compel rights holders to license their material. ‘In general, if copyright owners choose not to allow others to exploit their rights then that is their prerogative.’[26] The Australian Film/TV Bodies submitted that compulsory licences undermine rights holders exclusive right to authorise the reproduction or communication of a copyrighted work.[27]

8.30 For this and other reasons, international standards are said to be ‘generally antipathetic’ to compulsory licences.[28] Ginsburg has written that compulsory licences are ‘administratively cumbersome, unlikely to arrive at a correct rate, and contrary to copyright’s overall free market philosophy’.[29]

8.31 The United States is wary of statutory licences, preferring licences to be negotiated on the free market. A 2011 report of the US Copyright Office about mass digitisation stated:

Congress has enacted statutory licenses sparingly because they conflict with the fundamental principle that authors should enjoy exclusive rights to their creative works, including for the purpose of controlling the terms of public dissemination … Historically, the Office has supported statutory licenses only in circumstances of genuine market failure and only for as long as necessary to achieve a specific goal. In fact, Congress recently asked the Office for recommendations on how to eliminate certain statutory licenses that are no longer necessary now that market transactions can be more easily accomplished using digital tools and platforms.[30]

8.32 The same report also noted the ‘frequent complaint that statutory licenses do not necessarily provide copyright owners with compensation commensurate with the actual use of their works or the value of those uses’.[31]

8.33 Discussing the Australian statutory licence for retransmission of broadcasts, the Motion Picture Association of America submitted:

No matter how fairly or efficiently they are administered, statutory licenses inevitably harm copyright owners by limiting their control over their works and denying them the market level of compensation for their exploitation. As such, even when applicable international norms would permit governments to cut back on exclusive rights and substitute a system of equitable remuneration, sound policy dictates that they be avoided or strictly limited to situations in which there is a demonstrable market failure.[32]

8.34 However many stakeholders submitted that in Australia, rights holders support the statutory licences and do not object to losing some of their rights. Submissions from the Australian Society of Authors, the National Association of the Visual Arts, the Arts Law Centre of Australia and the Australian Directors Guild, among others, all supported the statutory licences. The Australian Copyright Council said the licences were ‘well-established in Australia, and have achieved a high level of acceptance amongst rights holders’.[33] Copyright Agency/Viscopy said Australia has ‘a long tradition of statutory licences, and both content creators and licensees have adjusted their practices accordingly’.[34]

While there are uses allowed by statutory licences that some content owners would like to prevent, or license on their own terms, content creators by and large accept that the statutory licences enable efficient use of content by the education sector on terms that are generally fair.[35]

8.35 The ABC said that, as a rights holder, it was ‘more than satisfied with the way the licences are administered and the remuneration it receives’:

Such licences provide ease, flexibility, economies of scale, certainty, guaranteed repertoire and lower compliance costs. They are an effective way of licensing content which might not otherwise be available to the education and other sectors. Further, the Corporation understands that the independent television production sector is of the same view.[36]

8.36 The Association of Learned and Professional Society Publishers emphasised that ‘the benefits of statutory licensing to small, independent authors, creators, societies and publishers cannot be underestimated’.[37] Income from collective licensing was said to underpin these businesses: ‘taking this away will put those creators and publishers in jeopardy and remove a thriving portion of the digital economy’.[38]

8.37 Although there was support for the existing statutory licences, there was little call for new or extended statutory licences. For example, BSA—The Software Alliance submitted that statutory licensing and Crown use provisions

should not apply to computer programs, because there is no market failure of access and availability to address with respect to software. Commercial licensing and distribution of computer programs is already widely available and accessible. This should continue to be a market-based commercial arrangement between vendors and Government customers.[39]

8.38 ARIA stated that statutory licences should not be expanded: ‘increasingly, as content is moved into the digital environment, innovative licensing models are being used which more and more obviate the need for statutory licences’.[40]

8.39 Perhaps the most common justification for the statutory licences in submissions was the importance of providing fair remuneration to publishers, creators and other rights holders. For example, Screenrights submitted that a recent survey of its members showed that more than half regard the Screenrights royalties as ‘important to the ongoing viability of their business, and close to 20 per cent said this money was essential’.[41]

8.40 Television producers rely on Screenrights revenue to fund program production, it was submitted.[42] If this revenue were reduced, there would be a noticeable effect on the quality and quantity of television programs. The ABC submitted:

A weakening of the independent production sector would reduce the quality and creative diversity of Australian television culture and would affect all broadcasters, including the ABC, as well as potentially undermining the growth of the digital economy.[43]

8.41 Firefly Education said that the ‘strength of the education statutory licence is that it offers authors and publishers fair remuneration for their intellectual property’.[44] Oxford University Press Australia likewise submitted:

The statutory licensing scheme has served the education community, and educational authors and publishers well in the print environment; it has compensated creators of intellectual property adequately so that we have been motivated and supported to continue to invest time, money and energy into the creation of materials that support teaching and learning in educational environments.[45]

8.42 The statutory licences are also considered an important way to ensure educational institutions and governments disclose their use of copyright material. It was submitted that, without the licences, there would be widespread infringement.[46]

8.43 The statutory licences provide a mechanism to monitor usage and so prevent infringement, it was submitted, and repealing the licences would ‘shift the burden of enforcement squarely onto rights holders’.[47] Thomson Reuters submitted that if the statutory licences were repealed, educational users were unlikely to enter into licences voluntarily, and it would then be ‘extremely difficult for owners to identify infringing activity’.[48] Thomson Reuters said this had been their experience in America.[49]

8.44 APRA/AMCOS submitted that educational institutions and governments ‘conduct their activities within relatively closed communities such that it is certainly not open to APRA/AMCOS to observe use of copyright materials’.[50] Without the statutory licences, the collecting society said it might be ‘forced to resort to legal remedies to compel disclosure of the use of copyright materials’.[51]

8.45 However, similar concerns might also be expressed about corporate and personal uses of copyright material. It is not clear to the ALRC why the use of copyright material by educational institutions and governments should be placed under greater scrutiny.

8.46 Some stakeholders also submitted that teachers and other users valued the statutory licences. Educators were said to ‘favour the certainty of the statutory licences over having to examine whether what they want to do is covered by a particular licence or by exceptions such as s 200AB or what would otherwise be considered fair’.[52] The licences were called a ‘safety net’ for users.[53] The ALPSP stated:

Repealing statutory licences will also introduce considerably more uncertainty for teachers as to whether they are now appropriately licensed for a particular use and for using a particularly work.[54]

8.47 Over 400 teachers wrote to the ALRC, many using a form letter prepared by a collecting society. These teachers said that the educational statutory licences make their jobs easy. They said they relied on the licence, they valued it highly, and strongly opposed ‘any change to the current system that will create any further burden on my time’ and create ‘uncertainty about what I can and cannot share with my students’. In these letters, many teachers also said that they found it ‘reassuring to know that the people who create the educational content I use receive payment for their skill, time and effort’.[55]

8.48 Others submitted that the statutory licences were ‘an efficient and cost effective way for instructors and institutions to legally access and reproduce very significant amounts of print and digital content’.[56] It was submitted that complying with the terms of the licences is administratively easy for users, while voluntary licences are more administratively burdensome for both users and rights holders.[57]

8.49 Conversely, the education sector submitted that voluntary licensing and fair use would in fact be ‘easier for teachers’.[58] The sector expressed confidence in the effectiveness of codes and guidelines for teachers and other educators. For example, CAG Schools submitted:

Experience in Australia and internationally suggests that significant certainty can be achieved in practice when principles-based regulation is supported by the development of guidelines and industry codes. … CAG, through the [National Copyright Unit], has a strong history of providing reliable, comprehensive and fair guidance to teachers, to make certain their obligations under the Copyright Act.[59]

8.50 Some also expressed concern about the effect of repealing the statutory licences on government timeframes and administrative costs.[60] The NSW Government submitted that, if the statutory licence for government were repealed, this might ‘limit the ability of governments to carry out important projects, in particular related to providing public access to important information’. It might be difficult or impossible to obtain permission for a government use.[61]

8.51 Another argument was that, without the statutory licences, collecting societies would not have sufficient repertoire to offer a comprehensive blanket licence. Licences would then have to be negotiated with multiple collecting societies and rights holders, which would be administratively less efficient.[62] It was submitted that if such voluntary licences could not be obtained, education and the digital economy would suffer.[63]

8.52 It was particularly stressed that the statutory licence in pt VA was needed to secure the many underlying rights in broadcasts—rights that would otherwise be difficult to secure voluntarily. Screenrights described the current statutory licence for broadcasts in pt VA as ‘simple, flexible, innovative and certainly not broken’.[64]

8.53 As discussed above, the ALRC has decided not to recommend the statutory licences be repealed. Instead, a number of reforms are recommended that are intended to address criticisms of the statutory licences. These criticisms and reforms are discussed below.