Making the statutory licences more flexible

8.88 While the ALRC does not recommend the statutory licences be repealed, the statutory licences should be amended so that they are more flexible and less prescriptive. For example, determining equitable remuneration should not necessarily require surveys to be conducted, particularly considering new electronic monitoring technologies and other less intrusive methods for determining equitable remuneration are available. If surveys are conducted, the methodology need not be set out in the Copyright Act. Other detailed requirements, such as for record keeping and providing notices, should also be removed from the Act. This detail should not be moved to regulations, but rather the terms of the licences should be agreed upon by the parties to the licence, and failing agreement, by the Copyright Tribunal.

8.89 In its draft report on the jurisdiction and procedures of the Copyright Tribunal, the Copyright Law Review Committee recommended repeal of some of ‘the prescriptive nature of aspects of the statutory licences’, including details of terms and conditions of those licences. The CLRC also made a draft recommendation that the detailed requirements for record keeping in pts VA and VB and s 47A be repealed ‘in favour of a provision that those details should be left to the agreement of the parties, or, failing agreement, determination by the Copyright Tribunal’. The CLRC said that:

the Tribunal’s jurisdiction in respect of particular statutory licences could usefully be extended as part of a simplification of aspects of the Act. Greater emphasis should be placed on agreement being reached between the parties, with recourse to the Copyright Tribunal failing that agreement.[96]

8.90 The CLRC also made a draft recommendation that the detailed provisions with respect to remuneration notices, survey notices and related provisions for record keeping should be repealed and substituted with a single provision, which would provide that the parties should agree both on the level of equitable remuneration and the method for assessing it, and failing agreement, these things should be determined by the Copyright Tribunal.[97]

8.91 In its final report, the CLRC said that submissions supported the ‘general approach of seeking to simplify the statutory schemes and encourage broader agreement between the parties through an expansion of the Tribunal’s jurisdiction’.[98] But the Committee decided not to recommend that the detailed requirements for marking, record keeping and inspection of records be removed from pts VA and VB of the Act, noting that the collecting societies and the university peak body did not support the changes. The provisions of the statutory licence were said to be ‘a matter of some sensitivity between the parties that rely on them’ and ‘despite their complexity, the provisions are at least well known to the parties’.[99]

8.92 The ALRC considers that this question should be revisited, and the detail in the Act removed. The statutory licences are clearly too complex and rigid. They should be amended so that more commercial and efficient agreements can be made between the parties. The following section outlines a few of the many criticisms made of the statutory licences. These criticisms may be partly addressed by making the licences considerably less prescriptive.

8.93 In the face of disagreements between the collecting societies and licensees, it is tempting to recommend that the Act resolve the disagreements. If the parties cannot agree on a method of conducting a survey, then the Act should set out a method. If the parties cannot agree on equitable remuneration, then the Act should set out how this should be settled. However, the ALRC does not favour this approach. These are not matters that Parliament should be expected to settle. There does not seem to be a case here for greater regulation.

8.94 Instead, the parties should agree on these matters. They should agree on whether a survey of use needs to be conducted, and if it does, how often and what methodology should be used. The parties should also agree on the amount of equitable remuneration. If the parties cannot agree, then the parties may seek to have the Copyright Tribunal settle the dispute. The ALRC does not recommend that more detail on these matters be set out in the Act.

8.95 The arguments for less prescription in the statutory licences have parallels with the arguments for less prescription in defining the scope of unremunerated exceptions. Less prescriptive statutory licences allows for greater flexibility, as does fair use. The criticism will be that this reduced prescription comes at a cost—namely, uncertainty and litigation. However, as discussed below, the excessive prescription and complexity of the existing statutory licences also come at a cost.

8.96 If the Act is less prescriptive about the terms of the statutory licence, then there may indeed be a greater role for the Copyright Tribunal in settling disputes between licensees and collecting societies. The jurisdiction of the Copyright Tribunal to determine equitable remuneration under statutory licensing schemes was referred to approvingly by a number of stakeholders.[100] Michael Green submitted that the fact that voluntary schemes have never flourished in Australia where there are statutory licences in place ‘indicates that the work of the Copyright Tribunal in setting levels of equitable remuneration has been effective and efficient’.[101] APRA/AMCOS also submitted that not only is the Tribunal an effective price regulator, but that the Tribunal can act as a ‘constraint against the setting of unreasonable prices by reason of the expense, time and risk of proceedings’.[102]

8.97 However, others submitted that proceedings before the Tribunal can be unnecessarily protracted, and that statutory provisions should be amended to streamline proceedings.[103] There may also be a case for amending the Copyright Act to provide that mediation must be undertaken before initiating proceedings in the Copyright Tribunal.

Complexity

8.98 The statutory licences, particularly pt VB, have been called complex and prolix.[104] This complexity was criticised by stakeholders. Robin Wright said that the scheme in pt VB of the Copyright Act ‘consists of highly complex media and format specific rules which are increasingly difficult to administer in the digital environment’.

The complex drafting style and structure of the provisions makes the section almost impossible to understand, even for regular users, without an external interpretive layer. The different rules applicable to hard copy works and works in electronic form are increasingly difficult to apply or explain in a convergent world.[105]

8.99 CAG Schools submitted examples of provisions of the Copyright Act that it called ‘overly technically complex’ and that make the statutory licences unsuited to the digital environment.[106]

8.100 However, it was also submitted that copyright licensing is generally complex and that freedom of contract has led to ‘a diverse universe of licensing practices’.[107] The fact that the statutory licences are also complex should not therefore be surprising, considering ‘the legislature’s intent to strike a balance in relation to facilitating lawful use by educational institutions of otherwise foreclosed copyright works’.[108]

8.101 Copyright Agency/Viscopy submitted that it was ‘open to exploring whether some of the detail regarding requirements under statutory licences could be covered in regulations rather than in the legislation’, which would allow for more flexibility to respond to technological and other developments.[109]

What gets counted and paid for under the licences

8.102 Many of the criticisms of statutory licences essentially concern what gets counted and paid for under the licences. One of the main advantages of a statutory licence, namely that it allows licensees considerable freedom to use a large range of copyright material without permission, in practice may also mean that far more of what a licensee does will be counted and paid for.[110]

8.103 The statutory licences may therefore provide a mechanism for educational institutions and governments to pay for uses that no one else pays for. So called ‘technical copies’ and freely available content on the internet are perhaps the two most commonly cited examples of content that gets counted under the statutory licences, but is ignored in most other organisations.

8.104 Digital technologies allow for new, innovative, and efficient uses of copyright material. Many of these uses rely on multiple acts of copying and communication—with copies being stored and effortlessly moved between multiple computers and devices, some local, some stored remotely in the cloud. To the extent that the Copyright Act requires these acts of copying and communication to be strictly accounted for and paid for, then it may prevent licensees from taking full advantage of the efficiencies of new digital technologies.

8.105 Schools and universities submitted that while they are being encouraged to use new digital technologies, there is a ‘direct financial and administrative disincentive to do so’:

The simple act of using more modern teaching methods potentially adds up to four remunerable activities under the statutory licence in addition to the potential costs incurred by more traditional ‘print and distribute’ teaching methods ... The requirements of the statutory licence to record in a survey (and potentially pay for) every technological copy and communication involved in teaching simply do not reflect the realities of modern education in a digital age.[111]

8.106 The statutory licences are not suitable for a digital age, CAG Schools submitted, in part because rates, even when set on a per student basis, are largely derived by reference to the volume of past and anticipated copying and communication. That is, ‘volume is still a critical element of rate negotiations’.[112] Universities Australia likewise submitted:

This ‘per copy’ method of determining remuneration may well have made sense in a print environment, but it has become highly artificial in a digital environment. In a digital environment, copying is ubiquitous. The existence of the statutory licence provides an opportunity for CAL [Copyright Agency] to seek a price hike for every technological advance that results in digital ‘copies’ being made.[113]

8.107 CAG Schools criticised the ‘overly prescriptive and technical requirements of the statutory licence’,[114] and said that voluntary licences have proven ‘more efficient and simpler to negotiate’.[115]

8.108 However, a more direct approach to this problem may be to ensure that the Act provides for suitable unremunerated exceptions, such as fair use, and that those who rely on the statutory licences can also rely on the unremunerated exceptions. Fair uses of copyright material, or uses otherwise covered by an unremunerated exception, such as certain technical copying, should not need to be licensed.

8.109 Voluntary contracts for digital services appear to be more flexible and do not require such strict accounting of copies and communications. This is one of the reasons why the ALRC recommends earlier in this chapter that the Act be clarified to ensure educational institutions and governments can obtain alternative voluntary collective licences (that is, licences not under the terms set out in the Act).

8.110 Some stakeholders suggested that the statutory licences facilitate an overly strict accounting of usage that leads to unreasonably high fees. For example, Universities Australia submitted that the ‘statutory licensing model for determining remuneration is firmly based in a “per-copy-per-view-per-payment” paradigm’.[116] This ‘takes no account of the realities of the modern educational environment’.[117] The number of articles a lecturer uploads onto an e-reserve or otherwise makes available to students was called a ‘highly artificial measure’ and a poor proxy for student use:

The dilemma that universities face is: do we take full advantage of digital technology to provide our students with access to the widest possible array of content (knowing that [Copyright Agency/Viscopy] will seek payment based on the number of articles etc made available multiplied by the number of students who could have accessed that article) or do we revert to the old print model of selecting a small range of articles etc for each class because this will inevitably cost less under the statutory licence? The very fact that universities are having to ask these questions underscores the unsuitability of the statutory licence to a digital educational environment.[118]

8.111 Universities Australia would instead prefer that remuneration be determined on a ‘commercial basis’ and ‘without direct reference to the amount of copying and communication that has actually occurred’.[119]

8.112 Screenrights submitted that the statutory licence for broadcasts in pt VA are not based on ‘one-copy-one-view-one-payment’,[120] but rather, ‘Screenrights and the schools have agreed fixed per student amounts every year since the statutory licence was created in 1990’.[121]

8.113 In the ALRC’s view, a good collective licence must allow for some flexibility and should not be a disincentive to the use of new and efficient digital technologies. Nor are licensees likely to be attracted to licensing models that equate the availability of material with the use of the material. Few would wish that the fee for using a new music service like Spotify were set by reference to the amount of music the service makes available to customers (many millions of songs). As Copyright Agency/Viscopy submitted, ‘there is a limit to the total amount of content a student can reasonably consume in the course of their studies’.[122]

8.114 The Copyright Act should not prescribe a method of settling equitable remuneration that results in an overemphasis on the volume of material made available to—as opposed to actually used by—students, educational institutions, and government. As discussed below, this may mean reconsidering the role of surveys in setting the amount of remuneration.

Surveys

8.115 Governments, educational institutions, and some collecting societies reportedly often fail to agree on a methodology for conducting surveys of usage. Such surveys are used to determine the amount of equitable remuneration to be paid and to whom collected funds should be distributed. There are mechanisms in the Act for seeking a ruling from the Copyright Tribunal on the operation of a sampling system,[123] but this is rarely sought by either party. In the ALRC’s view, the solution to this problem is not to set out a survey methodology in the Act.

8.116 A number of state governments submitted that the sampling required by s 183A of the Copyright Act is problematic.[124] The NSW Government submitted that, in practice, ‘the scheme established by s 183A has proved to be cumbersome, burdensome and costly, and insufficiently flexible to adapt to technological advances’.[125] The Queensland Government said that surveys ‘should be as unobtrusive and inexpensive as possible and measure only remunerable copying’.[126] The Tasmanian Government likewise submitted that:

The requirement to develop, negotiate and administer a survey has imposed a substantial burden, created an ongoing source of tension in dealings between governments and declared collecting societies, and increased the cost and resources required by governments to discharge their copyright liabilities.[127]

8.117 Governments and collecting societies have not been able to agree on a method for conducting surveys, and therefore a survey has not been conducted since 2002– 03.[128] Neither side has asked the Copyright Tribunal to determine a method of conducting a survey. Instead, payments are made based on survey results from 2002–03. However, governments point out that, since that time, there has been increased use of direct licences, for example for subscriptions to online journals.[129] Because the material that is now directly licensed was included in the 2002–03 survey, governments say that it is likely that they are now paying twice for a range of materials.[130]

Because of the difficulty of designing a practicable sampling survey for copyright works, the fees paid by NSW in recent years have not been based on estimates of the number of Government copies made. It is likely that some of the amounts Governments have paid under s 183A are attributable to licensed material for which they have already paid under direct licence agreements with the publishers.[131]

8.118 Copyright Agency/Viscopy agreed that sampling for the government statutory licence ‘has not operated as intended’ and suggested that the Copyright Act specify a method to be used where no method has been agreed upon or determined. Copyright Agency/Viscopy proposed that the method should be the same as that for the education statutory licence.[132]

8.119 Universities Australia submitted that one shortcoming of the statutory licence is that ‘there is no option for educational institutions to operate under a record-keeping scheme with respect to electronic copying and communication’:[133]

This significantly limits the opportunity for universities to seek to ensure that they are not paying under the statutory licence for content that is not strictly remunerable. It also deprives universities of an administratively simple solution to measuring the amount of copying and communication that must be paid for under the statutory licence.[134]

8.120 However, surveys of educational use, collecting societies submitted, were not overly burdensome. Copyright Agency/Viscopy submitted that, except for ‘the small number of teachers involved in surveys of usage from time to time, compliance requirements are negligible’.[135]

For most teachers and students, the statutory licence is practically invisible. A very small proportion of teachers participate in annual surveys of usage, for a limited period of time.[136]

8.121 Schools provide information about their usage and the collecting society processes the data according to agreed protocols.[137] Copyright Agency/Viscopy acknowledged that the current mechanism for measuring digital usage (electronic use surveys) is imprecise, but ‘technological advances are enabling new methods of measuring usage’:

Two important initiatives are automated data capture from multi-function devices (machines that print, scan, photocopy, fax and email), and tools for reporting content made available from learning management systems. As with current measurement methods, the objective is to estimate the extent to which content is consumed by students.[138]

8.122 Screenrights submitted that data management under its licence is ‘exceptionally simple’. Many educational institutions have zero reporting requirements, while others are only surveyed for a short time.

Universities conduct a very easy online survey where they simply record details of the program and whether it was copied, put online or emailed. Schools take part in a similar survey to universities, only it is paper-based. Each sector pays on a per-head basis. The system is efficient for both licensees and for Screenrights’ distribution purposes. The sample system means that universities are surveyed every three to four years and schools are surveyed on average once every 100 years. Moreover, Screenrights has moved in recent years to obtaining records of usage from intermediary bodies and this is increasingly replacing the need for surveys.[139]

8.123 The ALRC considers that, while surveys can be a useful method of measuring usage for the purpose of setting the rate of equitable remuneration and for distributing royalties to rights holders, such surveys may not always be necessary. To make the statutory licences less prescriptive and more flexible, the Copyright Act should not provide that surveys must be conducted, although this may in practice often be necessary. The ALRC considers that methods of conducting surveys should not be set out in the Copyright Act or in regulations.

Recommendation 8–4 The statutory licences in pts VA, VB and VII div 2 of the Copyright Act should be made less prescriptive. Detailed provisions concerning the setting of equitable remuneration, remuneration notices, records notices, sampling notices, and record keeping should be removed. The Act should not require sampling surveys to be conducted. Instead, the Act should simply provide that the amount of equitable remuneration and other terms of the licences should be agreed between the relevant parties, or failing agreement, determined by the Copyright Tribunal.

[96] Copyright Law Review Committee, Jurisdiction and Procedures of the Copyright Tribunal—Draft Report (2000), [11.17].

[97] Ibid, 71.

[98] Copyright Law Review Committee, Jurisdiction and Procedures of the Copyright Tribunal—Final Report (2000), [11.25].

[99] Ibid, [11.27].

[100] Copyright Agency, Submission 727; Macmillan Education, Submission 711; Arts Law Centre of Australia, Submission 706; Australian Copyright Council, Submission 654; Association of Consulting Surveyors Victoria, Submission 643; M Green, Submission 618; SIBA, Submission 612; Allen & Unwin, Submission 582; RIC Publications Pty Ltd, Submission 456; Nightlife, Submission 657; Australian Publishers Association, Submission 225; Federation Press Pty Ltd, Submission 177; PPCA, Submission 240.

[101] M Green, Submission 618.

[102] APRA/AMCOS, Submission 247.

[103] For example, Pandora Media Inc, Submission 329; Commercial Radio Australia, Submission 132; Tasmanian Government, Submission 196.

[104] Thomson Reuters, The Law of Intellectual Property: Copyright, Designs and Confidential Information, [12.280].

[105] R Wright, Submission 167.

[106] Some examples, including Copyright Act 1968 (Cth) ss 135ZMD, 135KA and 135ZXA, are set out in the ALRC Discussion Paper and in Copyright Advisory Group—Schools, Submission 231.

[107] M Green, Submission 618.

[108] Ibid.

[109] Copyright Agency/Viscopy, Submission 249.

[110] The objection that some uses are ‘zero-rated’ and that institutions pay a flat fee per student or per employee does not seem to undermine the key objections, that the uses are nevertheless counted and that payment for the uses can be sought and negotiated and may go to the final per person flat rate.

[111] Copyright Advisory Group—Schools, Submission 231.

[112] Ibid: ‘While a ‘cost per use’ model may have made sense in the age of the photocopier and the VHS recorder, it makes much less sense in an internet age. It is a reality of modern technology that many copies and transmissions are made during the use of distributed technologies.’

[113] Universities Australia, Submission 246. See also ADA and ALCC, Submission 213.

[114] Copyright Advisory Group—Schools, Submission 231.

[115] Ibid. For example, in the voluntary agreements between schools and music collecting societies, ‘it was possible to negotiate a commercial rate for a licence that allows schools to store musical works and sound recordings on a school intranet server, without entering into technical discussions and survey/record keeping requirements about the number of copies and communications that might entail on a practical basis when a variety of technologies are used to access that stored music by teachers and students. This is in stark contrast to the highly complex and burdensome administrative and technical issues required to be taken into account in similar negotiations under statutory licences’: Copyright Advisory Group—Schools, Submission 231.

[116] Universities Australia, Submission 246.

[117] Ibid.

[118] Ibid.

[119] Ibid.

[120] Screenrights, Submission 646.

[121] Ibid.

[122] Copyright Agency/Viscopy, Submission 249.

[123] For example, Copyright Act 1968 (Cth) s 135ZW(3).

[124] DSITIA (Qld), Submission 277; State Records South Australia, Submission 255; Tasmanian Government, Submission 196.

[125] NSW Government, Submission 294.

[126] DSITIA (Qld), Submission 277.

[127] Tasmanian Government, Submission 196.

[128] DSITIA (Qld), Submission 277.

[129] Victorian Government, Submission 282; DSITIA (Qld), Submission 277; State Records South Australia, Submission 255 (who suggest remunerable copying is about 3% of all government copying); Tasmanian Government, Submission 196.

[130] Victorian Government, Submission 282; DSITIA (Qld), Submission 277; State Records South Australia, Submission 255; Tasmanian Government, Submission 196.

[131] NSW Government, Submission 294.

[132] Copyright Agency/Viscopy, Submission 249.

[133] Universities Australia, Submission 246.

[134] Ibid.

[135] Copyright Agency/Viscopy, Submission 287.

[136] Ibid.

[137] Ibid.

[138] Ibid. See also Copyright Agency, Submission 727.

[139] Screenrights, Submission 646.