Online09 - The case for a Digital Lending Right

The case for a Digital Lending Right Kent Fitch ALIA Information Online 2009, Sydney

The current copyright regime

is about to fail

The current copyright regime

is about to fail

Bad news for creators

Bad news for society

Failure reason #1

Books are moving from

the physical

to

the digital

“ Our vision for Kindle is every book ever printed in any language, all available in less than 60 seconds” Jeff Bezos, Amazon This photo : ptufts Flickr Prev photo: JohnPastor Flickr Next photo: LenEdgerly Flickr

Screenshots: sigalakos Flickr

Screenshots: srharris Flickr

Shortcovers Preview and buy chapters or sections of books (99 cents)

ScrollMotion's Iceberg

Books packaged as iPhone apps with rich navigation

Why digital books?

Why digital books?

Instant access, anywhere

Why digital books?

Search, annotation, hyperlinking

Why digital books?

Accessibility

Why digital books?

Accessibility

Cost and profit

Why digital books?

Accessibility

Cost and profit

Control

Control ?!

"We have a very serious issue with librarians."

Pat Schroeder, the then and current president of the Association of American Publishers (AAP), 2001

“ Fair use” and “First sale” are a nuisance

But contracts and EULA are “flexible”

Failure reason #2

The internet is a copy machine

“ ...the internet is a copy machine... …when copies are super abundant, they become worthless” Kevin Kelly photo: thatshs Flickr

“ Bit by bit, everything that can be digitized will be digitized, making intellectual property ever easier to copy and ever harder to sell for more than a nominal price.” And we’ll have to find business and economic models that take this reality into account.” Paul Krugman

“ Bit by bit, everything that can be digitized will be digitized, making intellectual property ever easier to copy and ever harder to sell for more than a nominal price. And we’ll have to find business and economic models that take this reality into account . ” Paul Krugman photo: Taekwonweirdo Flickr

DRM does not help

photo: akseabird Flickr

Google – AAP – AG Settlement

AAP - Association of American Publishers

AG - Authors Guild

AAP - Association of American Publishers

AG - Authors Guild

Establish a Book Rights Registry (BRR)

Revenue from

Per-book licensing fees

Institutional subscriptions

Advertisements

Split revenue 63% rights-holders, 37% Google

For “In copyright BUT NOT commercially available”

General Free Service to all (US) users:

Show 20% of text, no more than 5 adjacent pages

Exceptions:

Fiction: Show min of 15 adj pages/5%, block final 15 pages/5%

Anthologies, collections of poems, short stories: Show nothing

Dictionaries, study guides, …: Fixed preview

No printing, no copy & paste

Individual fee-per-book access

50% of books <= $5.99

Perpetual online access to entire book from anywhere

Copy & paste or print entire book (watermarked)

Share annotations with 25 nominated other owners

Individual fee-per-book access

50% of books <= $5.99

Perpetual online access to entire book from anywhere

Copy & paste or print entire book (watermarked)

Share annotations with 25 nominated other owners

Free public access service for public libraries & Unis

Access to all books, but only on-site

Print for a per-page fee (watermarked)

No copy & paste

1 access terminal per library, or per 4K - 10K FTE students

Institutional subscription access

Access for the period of the subscription (not perpetual)

Remote access only for defined higher-education institutions

Copy & paste or print entire book

Complicated rules for sharing annotations

Fee based on FTE users

For public libraries

Remote access by patrons seems unlikely

Offline access by patrons seems very unlikely

Those who can afford it will opt for individual per-book licensing

What's wrong with all this?

Whilst information in books has never been more accessible ...

… and more useful …

… it's increasingly restricted to those willing and able to pay

… or those willing to pirate.

Public lending libraries will be marginalised because

- patrons will expect Kindle-style access

- providing this will be expensive or impossible

Commercial interests will increasingly control access to knowledge.

Commercial interests will increasingly control access to knowledge.

Piracy will reduce incentives to create and deny rights-holders fair compensation.

But Pat Schroeder has a point...

Rights-holders deserve to be fairly compensated

So, Australia, NZ, Great Britain, Canada, Germany, (15 countries in all) have a Public Lending Right

So, Australia, NZ, Great Britain, Canada, Germany, (15 countries in all) have a Public Lending Right

2006-7, Australian PLR and ELR distributed $17.5M

~10000 creators

~ 400 publishers

Extending the PLR to digital books

Limited scope compulsory licensing of books published in Australia

Voluntary licensing of other books

Books available in digital format to Australians

Online

And as downloads

Private (non commercial) use only

Online

And as downloads

Compensation to rights-holders based on how and how often their works are accessed

Online

And as downloads

Compensation to rights-holders based on how and how often their works are accessed

Funded from general taxation

Digital Lending Right

Coverage

Must have a critical mass

Must avoid conflict with international copyright agreements

Coverage

Must have a critical mass

Must avoid conflict with international copyright agreements

Limit scope to books published in Australia

Limit scope to private educational and entertainment usage

Compensate rights-holders regardless of nationality

Non-exclusive

Strong economic incentive for rights-holders of books published outside Australia to join

Form

A digital repository

Rights holders will be encourage to supply new books in digital format

Old books will be scanned and OCR'ed

All books will be fully searchable

Access

Only from within Australia and for private use

Anonymous but tracked to detect fraudulent usage

Books viewable by the page

Books downloadable by chapter or in entirety

No cost to search, view or download

No DRM but user must agree not to redistribute

Discourage redistribution by making online view / download the most efficient option

Payments

Based on usage (views and downloads)

Rights-holders must register to receive payments (like BRR)

Rights-holders of currently orphaned works will be compensated when identified

But how much?

$ Cost breakdown for an average title published in Australia from ABS Book Publishers Australia 2003-2004 Survey 1363.0

Current printed cost Excluding printing and half of “other” Royalties to authors, artists, editors 1.03 1.03 Wages to inhouse artists, editors, publishers, typesetters 0.65 0.65 Printing 3.75 - Profit 0.90 0.90 Other (not classifiable from ABS report) 2.56 1.28 TOTAL 8.78 3.86

Number of copies of books produced by Australian publishers 2003-04:

84.4 million (Not all sold in Australia)

To compensate publishers and authors for their rights for these books:

84.4 m books x $3.86 / book = $325m

(in 2004-05 dollars, or $360m in current dollars)

Would consumption increase if the cost of a book to a consumer was $0?

Yes!

(although current $0 cost books are supplied by libraries, Project Gutenberg, Million Book project etc)

If usage of books doubled, and current PLR/ELR usage was included in DLR:

Would $700m be fair compensation?

Funding

From general taxation as a public good

~$700m roughly doubles the current “reward” to rights-holders

Roughly neutral from average tax-payers point of view

Assuming retail costs and markup of 50% hence an average retail price of ~$12, sales of 84m books costs around $1000m

But an unknown number of these 84m would continue to be purchased for private use, and for commercial/government use

But GST loss of approximately $100m

Funding

Ongoing operation

PLR/ELR costs $0.375m pa

Assume DLR registry is ten times larger: $4M or <1% of payments

Initial and annual rights holder registration fees could recover some of this (and discourage frivolous registration)

Initial Digitisation

~1.5m titles @ $30 each = $45m

some could be recovered from initial rights holder payment

Management

By library professionals within the Government sector

Commercially disinterested, arms length from rights-holders and funding sources

Obstacles/Open problems

Do digital books really make sense?

Would voluntary licensing work just as well?

Equity for households without internet access

Perceived unfair protection for Australian book titles

The interests of book sellers and printers

Usage fraud

Usage fraud

Registration fraud and disputes

Usage fraud

Privacy

Usage fraud

Privacy

Payment profiles

Usage fraud

Privacy

Payment profiles

Advertising

Usage fraud

Privacy

Payment profiles

Advertising · Value Added Services

Worth Doing?

Initial digitisation cost of $45M (1.5m volumes)

Worth Doing?

Initial digitisation cost of $45M (1.5m volumes)

Photo: Abigroup Recently completed major upgrade of the Pacific Highway near Bonville. Construction costs of highway such as this typically varies between $12m and $20m per km.

“ We need to put the best we have to offer within reach of our children. Universal access to all knowledge is within our grasp.” “ Books – it’s who we are, it’s our literature, it’s what we've built up over millennia” “The idea of having only one company control the library of human knowledge is a nightmare” photo: davidsilver Flickr Brewster Kahle

photo: VCGeist Flickr

Freedom, Prosperity and the Development of society and individuals are fundamental human values. They will only be attained through the ability of well-informed citizens to exercise their democratic rights and to play an active role in society. Constructive participation and the development of democracy depend on satisfactory education as well as on free and unlimited access to knowledge, thought, culture and information. UNESCO public library manifesto

“ The advancement and diffusion of knowledge is the only guardian of true liberty.” James Madison, 1825

photo: expatriotact Flickr