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?

Instant access, anywhere

Why digital books? Instant access, anywhere Search, annotation, hyperlinking

Why digital books? Instant access, anywhere Search, annotation, hyperlinking Accessibility

Why digital books? Instant access, anywhere Search, annotation, hyperlinking Accessibility Cost and profit

Why digital books? Instant access, anywhere Search, annotation, hyperlinking 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

Google – AAP – AG Settlement 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

Google – AAP – AG Settlement

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

Google – AAP – AG Settlement 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

Google – AAP – AG Settlement 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

Google – AAP – AG Settlement 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

Google – AAP – AG Settlement 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.

What's wrong with all this? Public lending libraries will be marginalised because - patrons will expect Kindle-style access - providing this will be expensive or impossible

What's wrong with all this? 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.

What's wrong with all this? 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. 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

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

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 , 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

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

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

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 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

Digital Lending Right 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

Digital Lending Right 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

Digital Lending Right 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

Digital Lending Right 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?

Digital Lending Right Current printed cost Excluding printing and half of “other” Royalties to authors, artists, editors1.03 Wages to inhouse artists, editors, publishers, typesetters 0.65 Printing Profit0.90 Other (not classifiable from ABS report) TOTAL $ Cost breakdown for an average title published in Australia from ABS Book Publishers Australia Survey

Digital Lending Right Number of copies of books produced by Australian publishers : 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 dollars, or $360m in current dollars)

Digital Lending Right 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?

Digital Lending Right 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

Digital Lending Right 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 $30 each = $45m  some could be recovered from initial rights holder payment

Digital Lending Right Management By library professionals within the Government sector Commercially disinterested, arms length from rights-holders and funding sources

Digital Lending Right Obstacles/Open problems Do digital books really make sense?

Digital Lending Right Obstacles/Open problems Do digital books really make sense? Would voluntary licensing work just as well?

Digital Lending Right Obstacles/Open problems Do digital books really make sense? Would voluntary licensing work just as well? Equity for households without internet access

Digital Lending Right 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

Digital Lending Right 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

Digital Lending Right 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

Digital Lending Right 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 Registration fraud and disputes

Digital Lending Right 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 Registration fraud and disputes Privacy

Digital Lending Right 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 Registration fraud and disputes Privacy Payment profiles

Digital Lending Right 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 Registration fraud and disputes Privacy Payment profiles Advertising

Digital Lending Right 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 Registration fraud and disputes Privacy Payment profiles Advertising· Value Added Services

Digital Lending Right Worth Doing? Initial digitisation cost of $45M (1.5m volumes)

Digital Lending Right 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