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Many members who work one way or another in the book trade are deeply concerned about the prospect of the UK market being flooded with cheap editions of books from elsewhere. This arises from the government trying to work out the rather technical question of when, where and how copyright should be "exhausted" - when a copy of a book is sold - after Brexit. Following is the response that the NUJ made to the government. We also worked with the British Copyright Council and the Creators' Rights Alliance.

The UK’s future regime for the exhaustion of IP rights

Response to: UK's future exhaustion of intellectual property rights regime GOV.UK

The National Union of Journalists (NUJ) represents 25,000 journalists working in, or working for outlets in, the UK and Ireland. Its members work across the media, from newspapers, broadcasting and book publishing to magazines, websites, mobile devices, social media and PR agencies.

Many of the NUJ's members are authors of books, or authors of photographs and illustrations that appear in books. They clearly have an interest in receiving fair payment for their work that they do in creating these books that enrich the cultures, the democracies and the economies of the nations.

Many others work, as noted, in the production of books and clearly have an interest in book publishing remaining a vibrant and profitable sector of the economy.

The NUJ supports the broad outline of the response to this consultation from the British Copyright Council, of which the NUJ is a member and to which it is indebted in the preparation of this response.

In 2019, the value of goods exported by the creative industries sector as a whole was: £20.1bn (49.9% higher than 2018; 33.0% higher than 2015). [note 1] That for the Cultural Sector was £17.4bn (63.2% higher than 2018; 41.4% higher than 2015).1 These numbers are driven by music, performing and visual arts, publishing, film, TV, radio, museums, galleries and libraries.

The UK publishing industry has a turnover of £6bn, with export income accounting for almost 60% of revenues. The UK is the largest exporter of books in the world. The industry's exports also generate a £1.1bn trade surplus annually. [note 2]

The publishing sector drives other creative industries, in particular film and TV in the UK and around the world; as well as its 29,000 direct employees UK publishing supports more than 70,000 jobs overall. [note 3]

Any changes that may be made to the regime for the exhaustion of copyright must not undermine the vale of exports from the creative and cultural sectors.

Q1: Is there parallel trade in your sector?

European parallel trade of books into the UK exists; but it has not undermined the UK market for authors and publishers because prices do not differ significantly, and many book publishing projects are developed through foreign language rights deals. The book sector is therefore seriously concerned that a move towards global (non-EEA) parallel trade would be devastating for publishing businesses, authors and illustrators.

Q1a: If so, how do parallel imports from the EEA impact on your organisation in terms of (a) choice, (b) availability of supply and (c) competition in your marketplace?

In the book sector EU parallel trade is limited and so it has minimal impact on choice, availability of competition.

Clear and defined exhaustion rules provide the legal framework for UK publishers to obtain remuneration commensurate for the market. They allow publishers to determine pricing structures appropriate to individual markets.

One risk of ill-thought-out changes to these rules is that they could allow re-importers to benefit from buying books in a market that has lower prices and re-importing them into the UK market at a higher price – one still lower than the price set by the industry to sell the goods in the UK. This practice is currently being used in the sheet music market by big online retailers that buy through subsidiaries in the other markets and then re-import into the UK market. NUJ members working in the book sector report that amazon.com does this for books in general. One notes that "getting Amazon to take down editions sourced from other markets is the bane of my existence. The company drags its feet, and you can't tell me it's beyond the wit of their algorithm to ensure it doesn't happen in the first place."

We would expect any big online retailer to extend this practice as far as it is able under law. We would expect – and its shareholders would expect – it to make things worse for the book sector by using automated purchasing systems that trawl all available stock internationally for the lowest price.

Such ill-thought-out changes would be to the detriment consumers because publishers would no longer be able to offer differentiated pricing that caters for different market structures. This would reduce total sales.

It may be worth recalling explicitly that in traditional book deals authors are paid a percentage of gross receipts – of the price at which a book is sold. Our members who write and illustrate books would therefore be hit twice by ill-thought-out changes: once by a reduction in total sale value and a second time by receiving a percentage of a lower price charged for parallel imports.

Q2: If you are able to, please provide the current volume or value of total imports to your organisation in the UK. If possible, please estimate the percentage of the total imports accounted for by parallel imports?

The UK is the largest exporter of books globally. As mentioned above EU parallel trade is limited.

Q3: In your business, how do you exert control over supply chains?

Copyright, together with a robust regional exhaustion framework, gives authors and their licensees exclusive rights to distribute their works and enables authors and publishers to uphold territorial rights.

Q4: For your business or organisation, how do right holders become aware and seek to stop their products being parallel imported from outside the EEA without permission?

Illegal parallel imports already appear in legitimate retail channels, in particular digital marketplaces. Individual retail customers will inform publishers about the availability of reimported goods. In the book sector these are often identified by publishers and by authors, who generally use takedown processes similar to those they use for pirated content and issue takedown notices identifying themselves as the UK rights owner and requesting removal of the illegal parallel import.

In the book sector foreign editions listed for sale in the UK can take primacy in search results, diverting sales from UK publishers. Serious damage can occur when titles are released in one territory ahead of others, as consumers grab early sales from overseas rather than waiting for the UK edition.

Q5: Do you have any views on the government's assessment of UK legislation and international treaties that are relevant to the UK's choice and implementation of an exhaustion regime?

Bilateral Free Trade Agreements (such as the UK and Japan Economic Partnership Agreement) and multilateral agreements (the TRIPS agreement) leave the decision on an exhaustion regime to individual countries. International exhaustion generally benefits countries that are net importers of cultural goods, such as Australia; it discriminates against countries that are net exporters of cultural goods, such as the United Kingdom with its internationally-successful publishing industry.

Q6: Are there international price differentials for goods in your sector?

If yes, what are the factors that influence differences in prices between countries?

As noted above, in the book sector prices differ significantly between countries based on what is appropriate in each market. International pricing strategies benefit global consumers, ensuring parity based on local purchasing power. International pricing strategies underpin exporting strategies for UK authors and publishers; they ensure that British books and music reach international markets. Beyond economic gains these exports also strengthen the UK's soft power by sharing our culture and creativity globally.

Q7: Are you or your business/organisation aware of the change to the UK's exhaustion regime that came into effect on 1 January 2021 following the end of the transition period?

Yes.

Q8: What are the costs and benefits of the current regime to your organisation? For example, in terms of choice and availability of suppliers, prices paid and regulatory standards.

The current regime works well for the book publishing sector.

Q9: If possible, please provide examples if your business:

a) has prohibited or has considered prohibiting parallel exports or

b) has been prevented from parallel exporting from the UK to the EEA since 1 January 2021.

The NUJ has no data to report on this.

Q10: Do you have any views on the government's assessment that the Northern Ireland Protocol will mean that the regime ultimately selected by the UK government will need to allow parallel imports into Northern Ireland from the Republic of Ireland and other EEA countries?

It seems to us that given the government's stated intention to revise the Northern Ireland Protocol the issues around this are not insuperable. Further, there is no reason that everything that is bundled together as "intellectual property" should be treated in the same way: patents, trademarks, copyright and design rights have different economic dynamics. In last resort, a carve-out specifically for books cannot be ruled out.

Q11: If the government was able to change from the current unilateral regional regime (UK+ regime), would your business or organisation prefer a model which either allowed parallel imports from anywhere in the world (without the rights holder's permission) or prohibited parallel imports into the UK (unless the rights holder's permission is obtained)? Please outline the regime your business or organisation would prefer and explain the benefits, costs of change and risks of that change.

An international exhaustion regime would have devastating consequences for the book sector. It would significantly weaken copyright protection for the distribution of goods globally. Authors and publishers rely heavily on global exports under a territorial rights system. Export sales are worth £3.5bn per annum and account for 60 per cent of UK publishers' book sales. A functioning exhaustion regime underpins the viability of the publishing industry and supports UK authors who rely on global sales.

We also observe that authors' earnings were in steady decline, even before the effects of the pandemic. The All-Party Parliamentary Writers' Group has held an inquiry into writers' earnings, which reported in 2019 that "Despite the continued growth of the creative industries, now valued at £101.5 billion, studies show that writers' earnings have fallen by 42% in real terms since 2005." [note 4]

If the government is seriously considering an international exhaustion regime, it must also consider specific arrangements for the book sector to protect the UK book market.

The NUJ's view is that these concerns would be best addressed by returning to the long-standing exclusion of international copyright exhaustion in UK legislation.

While the UK was part of the European Union Single Market it made sense to apply a European-Union-wide exhaustion regime to facilitate free movement of goods. Since the UK has left the European Union there is no reason to retain such as regional exhaustion – and even less reason if the European Union does not reciprocate.

Despite the UK's exit from the EU creating an imbalance in the current regime, however, the consequences have so far been manageable: the government may therefore prefer to maintain the status quo.

Q12: Of the 4 options that the government is assessing, which exhaustion regime would you be most opposed to for your business or organisation? Please explain the reasons and set out the costs to your business or organisation and risks of that change.

The NUJ opposes the introduction of an international exhaustion regime as it would:

  • destroy the contribution that the book sector brings to UK exports;
  • impact authors' livelihoods; and
  • reduce publishers' appetite to invest in new voices.

Such a move would place even greater pressure on UK high streets and booksellers as major global online marketplaces would benefit from facilitating and promoting parallel trade.

Q13: Is there clear and verifiable evidence in favour of different treatment for specific sectors, goods or IP rights to the UK economy?

The NUJ cannot now comment on, for example, the market in pharmaceuticals. The NUJ believes that it has made a clear case against any move to or toward international exhaustion of copyright, or at least that this should not apply to books.

Q14: What new activities would your business have to undertake if the government changed the current exhaustion regime? What would be the costs and benefits of such activities?

The NUJ would have to do more work supporting impoverished authors.

Q15: Please outline any other issues that the government should consider when deciding on what exhaustion regime to implement, including economic, trade, consumer or societal impacts.

An international regime would result in a perverse incentive for book publishers to limit exporting to low-price markets to avoid these books undermining the UK book market through parallel trade. Simply granting unreciprocated parallel export rights internationally will not benefit the UK book sector or the thousands of authors and illustrators it supports in the UK.

Q16: If the government were to change its exhaustion regime, what factors would affect the amount of time your business or organisation would need to implement a change? This may include but is not limited to changes to supply chains, contracts, product development, manufacturing processes or investment decisions. Please provide information to support your comments.

This is not applicable to the NUJ.

Q17: If the government were to change its exhaustion regime, what length of time would your business or organisation need to implement the change (for example, 1 year or 3 years)? Please provide information to support your answer.

This would depend on the change being proposed. If the government were to decide on implementing an international regime then the book sector in particular would need to maximum possible amount of time to implement those changes.

The NUJ notes that the government currently "does not consider a national regime to be reconcilable with the Northern Ireland Protocol which preserves the position that parallel goods may move from the Republic of Ireland and other EU member states into Northern Ireland without restriction". Given the government's parallel statements seeking re-negotiation of the Northern Ireland Protocol to the EU Withdrawal Agreement, this objection may not be insuperable.

By far the best and simplest option, however, would be to leave things as they are.


Notes

note 1: www.gov.uk/government/statistics/dcms-economic-estimates-2019-trade-report/dcms-sectors-economic-estimates-2019-trade accessed 23 August 2021

note 2: www.publishers.org.uk/about-publishing accessed 23 August 2021

note 3: www.nibusinessinfo.co.uk/content/overview-uks-publishing-sector accessed 23 August 2021

note 4: https://allpartywritersgroup.co.uk/wp-content/uploads/2019/06/Authors_Earnings_Inquiry_Booklet.pdf accessed 23 August 2021