13.44 Many vital educational resources might not be created without the protection of copyright laws. The incentive to write or publish a textbook, for example, might be undermined if the authors and publishers were not paid for the use of their books by students and educators. The public interest in education could be undermined by ‘weak’ copyright laws. As noted earlier, education is said to be ‘one of the clearest examples of a strong public interest in limiting copyright protection’. However, the authors of this authoritative textbook go on to write that
just because education is a worthy cause does not mean that some form of blanket exception to copyright should be allowed. It must be remembered that it is works made for educational purposes that will often be copied in educational establishments. A wide exception would therefore undermine the market for such works, so that a publisher would be unlikely to invest in their production.
13.45 The importance of education does not mean creators should subsidise education in Australia. Although this Inquiry is about exceptions to copyright, the ALRC appreciates the need for copyright laws to help ensure authors, publishers, film makers and other creators have an incentive to create.
13.46 A number of stakeholders opposed any new or extended free-use exception for educational institutions on the grounds that this would reduce the incomes of creators and publishers. Many stressed that this would be particularly damaging in an environment in which creators and rights holders are already struggling to fight piracy and maintain successful business models in a new digital age.
13.47 One publisher warned that allowing more free uses for education ‘would result in drying up of income streams for writers’. A reasonably secure source of income was considered particularly important for creators in an industry ‘where sales and therefore royalties tend to decline after a year or so’. Secondary licence fees can ‘give much-needed stability to a creator’.
13.48 One publisher said it ‘strongly disagrees’ with the proposition that any uses of copyright material now covered by the statutory licences for education should instead be free.
Quality education materials, especially those tailored for a specific Australian curriculum, take significant time, resources and skill to develop and the efforts and rights of the creators and copyright holders should be recognised.
13.49 The Australian Publishers Association (APA) submitted that:
except in relation to the existing free de minimus uses such as copying material onto whiteboards and so on (section 200) or uses that fall within section 200AB, there are no compelling grounds on which educational sectors should be entitled to use copyright material without payment.
Publishers rely on royalties from the statutory licences, the APA submitted, including to produce ‘new resources and platforms’ which are important for the digital economy.
13.50 Publishers warned that expanding the free-use exceptions for educational institutions will discourage investment in and the development of educational content. John Wiley and Sons submitted that:
the primary market of many texts and resources are for their express use in schools and educational institutions, so to allow any extended right of free use (particularly in the digital arena) would significantly reduce the ability of, and incentives for, publishers to produce the kinds of innovative and educational materials which are relied on by teachers, lecturers and educators.
13.51 The APA also considered that it is only fair that publishers share in the value that educational institutions have in accessing copyright material, rather than have to subsidise educational institutions. Different uses have different value, but the APA submitted that this can be considered when determining the equitable remuneration the education sector should pay—it should not simply be made free.
13.52 Music publishing was said to have been ‘severely affected by the distribution of unauthorised copies on the internet’, and any ‘further undercutting of the financial viability of these specialist publishers by the broadening of statutory licences or free-use exceptions may see the unintended consequence of closing this market down entirely’.
13.53 Under a fair use exception, if a use of copyright material can be licensed, this will generally weigh against a finding of fair use. The availability of a licence is a relevant consideration in determining whether a use is fair. It would be considered under the fourth fairness factor, ‘the effect of the use upon the potential market for, or value of, the copyright material’. This is a very important factor to consider, and should ensure that a fair use exception does not unreasonably damage educational publishing and other markets for educational resources.
13.54 However, the availability of a licence does not settle the question of fairness; it is not determinative. All of the fairness factors must be considered under the ALRC model.
13.55 Some argue that any exceptions to copyright should be specific and confined, to avoid harming rights holders’ interests. Exceptions can also be crafted to explicitly exclude the use of material when that use may be licensed. Currently, the free-use exception in s 200AB of the Copyright Act does not apply to uses of copyright material that may be purchased under a statutory licence. These licences are very broad, and so this may mean educational institutions can rarely rely on s 200AB.
13.56 One argument in support of this policy is that if users can licence copyright material, they should not be able to make use of it for free. Free-use exemptions should only be available when there is market failure, some argue. This argument appears to be inconsistent with the purpose of Australian copyright law. International copyright agreements also do not mandate such a principle. The three-step test provides that free-use exceptions should not ‘unreasonably prejudice the legitimate interests of the author’. It does not say an exception must never prejudice any interest of an author.
13.57 In the ALRC’s view, the Copyright Act should not provide that free-use exceptions do not apply to copyright material that can be licensed. Instead, the availability of a licence should be an important consideration in determining whether a particular use is fair.
13.58 Justice Nelson of the US District Court discussed this question in Princeton University Press v Michigan Document Services Inc. The judge stated that ‘Congress has implicitly suggested that licensing fees should be recognized in appropriate cases as part of the potential market for or value of the copyrighted work’:
It is true … that ‘a copyright holder can always assert some degree of adverse [e]ffect on its potential licensing revenues as a consequence of [the defendant’s use] … simply because the copyright holder has not been paid a fee to permit that particular use’…. But such an assertion will not carry much weight if the defendant has ‘filled a market niche that the [copyright owner] simply had no interest in occupying’ …. Where, on the other hand, the copyright holder clearly does have an interest in exploiting a licensing market—and especially where the copyright holder has actually succeeded in doing so—‘it is appropriate that potential licensing revenues for photocopying be considered in a fair use analysis’… Only ‘traditional, reasonable, or likely to be developed markets’ are to be considered in this connection, and even the availability of an existing system for collecting licensing fees will not be conclusive.
13.59 The availability of a licence should be a relevant, but not determinative, consideration when determining whether a use of copyright material infringes copyright.
 K Garnett, G Davies and G Harbottle, Copinger and Skone James on Copyright (16th ed, 2011), [9–96].
 Spinifex Press, Submission 125.
 Walker Books Australia, Submission 144.
 John Wiley & Sons, Submission 239.
 Australian Publishers Association, Submission 225.
 John Wiley & Sons, Submission 239.
 Australian Publishers Association, Submission 225.
 AMPAL, Submission 189.
 See Copyright Act 1968 (Cth) s 200AB(6).
 D Browne, ‘Educational Use and the Internet – Does Australian Copyright Law Work in the Web Environment?’ (2009) 6(2) SCRIPT-ed 450, 454.
 Berne Convention for the Protection of Literary and Artistic Works (Paris Act), opened for signature 24 July 1971,  ATS 5 (entered into force on 15 December 1972) art 9(2) (emphasis added).
 Princeton University Press v Michigan Document Services, Inc 99 F.3d 1381 (6th Cir. 1996), (citations omitted).