Profs and "fair" dealing

The universities’ campaign to avoid paying for what they use -- by having the copyright act declare educational uses of copyright material “fair dealing” -- got some support last week with the introduction of C-11, the copyright act amendment bill. It contains the educational exemption the education bureaucrats have long sought. While the government may make amendments to C-11, whatever the government wants is now likely to be passed quite soon.

It is striking how much professors and teachers have become involved in supporting the universities’ campaign not to pay for what they use.  When students use other people’s work without credit, the universities call it plagiarism and threaten expulsions.  But when the universities use other people’s work without credit, they call it “fair dealing.”  Even CAUT, the faculty organization, is acting as a company union on this question, defending the employer’s interest in a freebee over its members’ intellectual property rights.

I recently spoke with the British collective ALCS about this problem (among others). They were puzzled by Canadian academics’ apparent eagerness to surrender their intellectual property to their university employers and their lack of interest in having their works collectively licensed. ALCS estimates about 18,000 of its 80,000 creators are teachers and professors. I was told:  

“We have always had a strong following among academics. Our current chair is an academic, and we have always had academics on our board.  Academics are not so well paid here in the UK, so every penny counts for them, so we have had no problem there. The academic community is quite supportive of ALCS and collective licensing.”

British academics understand and support collective licensing because they are among its significant beneficiaries.  When their work is copied by their universities, ALCS sends them cheques based on the universities’ licensing payments.  There is nothing like a steady flow of small cheques to persuade creators, including academic ones, of the tangible benefits of having their works under collective license.  That process works well in Britain. The collective supports academics with money; the academics support the collective licensing principle.

Canadian academics are hostile to collective licensing, but it’s not because they are so rich. It has more to do with the fact that they gain no benefit to it and see mostly its inconveniences.

When educational texts, scholarly articles, and other academic works written by professors and teachers are copied under license to Access Copyright, Access Copyright pays 100% of what it distributes from those revenues to publishers, 0 to the creators.  It’s right there in their distribution rules.

That is, Canadian academics’ opposition to collective licensing arises from the fact that they never see the money. They see their universities and their students paying for reprography licensing, while they, the creators of a notable portion of what is being copied, get nothing.  No wonder they are susceptible to the university administrators’ proposal, “Let’s just take the stuff and call that ‘fair’.”   

To put it simply, Access Copyright has always been more concerned about putting creators’ money in publishers’ bank accounts than it has been about building a fair and comprehensive collective in which all who create value for the collective derive benefit from it.  ALCS = 80,000+ creators; Access Copyright = barely 9000.

Now we see the consequences. As ALCS told me, “Without that friendly creator face, it is hard to sell licences. The licensees want to know that the money actually reaches creators.  Having a strong creator presence and being able to show the money reaching them, that gives us leverage in licensing.”

Access Copyright certainly wants creators to front its promotional and lobbying efforts.  But it has never wanted the other side of that, never wanted to see significant amounts of Access Copyright money actually reaching creators, whether academic or not.  In the end, the money (and its absence) talks.  Since they get none of it, vast numbers of the academic creators who should be beneficiaries and supporters of collective licensing have decided to support their employers’ rights-grab rather than to defend their intellectual property rights through the collective.

It’s sad, but it’s not hard to see why.

I’ve long argued creators deserve much more money from Access Copyright.  But you might say I’m a creator, of course I’d say that.  But what is really striking now is how desperately Access Copyright has damaged itself by its greedy and short-sighted publisher-centred policies, always more concerned with streaming money to publishers than with building a strong, broadly-based, and trusted collective that could withstand the kind of challenge it now faces.

Suggestions for Improving the Canadian Reprography Mechanism - 2011

1. Creator Ombudsman. Transparency. An ombudsman to deal with creator issues. Not on the board. No fiduciary duty. Fully and always responsive to creator wishes. One year position. Problems published on AC website.

2. Transparent Response to Creator Queries. All questions handled within seven days. With a real-time web forum and problem threads. AC needs to grow up a little and receive criticism openly, transparently, and with the intent of solving the issue, not simply defending its turf and saying no.

3. Copyright Lawyer for Writers. Writers need a copyright lawyer who is paid by AC, but is completely arms-length from AC, who is hired and fired by us. Law is not about truth. Law is about making your best argument. What we get now is law from a publisher’s, particularly large educational publishers’ point of view. We need our own advice.

4. Redo the Friedland Report. To be delivered to the Ombudsman who will deliver copies to the signatories, undigested to affiliates on AC website, to this blog and AC. AC to respond within one year. Non-redacted.

5. Lawyer’s Opinion on Fiduciary duty. A fund for creators to seek a legal opinion, arms-length from AC. One lawyer has opined that AC does fiduciary duty wrong. This is at the heart of why our reps do not represent us, and there is a lot of money that has been decided, probably in excess of $300 million.

6. New Copyright Act and the Demise of AC. A new version of Bill C-32 has been floated and it will result in the demise of AC. We don’t want our financial statement of $104.2 million frittered away by high-priced help clinging to their jobs.

Do note that a remnant of AC will remain – 15% - and then writers and small cultural publishers can get on with setting it back up 50/50. Introducing the 50% and the UK model are the most important items. There is also education revenue from the current six part test rule that AC has not been upfront and open about with creators.

7. Move to UK-like Program. The long term goal is change to the UK corporate system. One part is that writers receive 50% of the money, and publishers the other 50%. There are four corporations. One licences and collects the money, it is split and then, the second part of the system, sent to the writers or publishers corporation for distribution. Writers have complete control over our money.

We need to find a way to seize the assets in the transition so that the investments and balance sheet amounts, including accounts receivable are split 50/50.

The creator co-chair will oversee the eventual shift to the 50/50 model, and an organization more in line with the UK model of reprography. We will need quick movement when the new Copyright Bill becomes law.

PaidContent.org (ah, there's a concept) has a story from inside the Google deal.  In the United States, the publishers look like settling with Google.  But the authors, represented by the Authors' Guild, find the compromise unsatisfactory and are holding out for better terms.

This is the most natural thing in the world.  Publishers and authors may very well understand their interests differently and ask their organizations to pursue different strategies in complex fields like this one.

But what happens when much of the authors' copyright money is tied up in an organization in which the publishers hold a veto.  If Access Copyright finds itself "neutral," the publishers will have no trouble litigating or settling as serves their interests.  But who's gonna front the money to the authors if their own money is unavailable to them?

Writers - Focus on the Money

The most important thing that writers should focus on in reprography is the money. It makes no sense to be arguing fine points about education this or that, the international writer’s ‘stamp’, or any other small issue, until the money argument is solved.

With Payback, the already low base payment of $612 dropped to $175, a drop of 70%. Eighty percent of writers got less money. But at the same time, the financial papers of AC report a bulging balance sheet of $104 million. It has to be admitted that reprography does not constitute meaningful income. But we can make it so.

I do not think it makes any sense to have the approach that, well, we help AC now and during the period that a new Copyright Bill is passed, and then they will do nice things for us. That has not been true for the past 23 years. I think it is the opposite approach that makes sense: if you want our support, give us 50% of the money. It is precisely when the reprographic mechanism is in need of support that writers have their greatest advantage for a pragmatic solution.

How much? Take the cheque you received and multiply it by 13 and you get roughly the amount of the cheque you will receive. For example, those large number of writers who got the $175 payment would get, when the balance sheet assets and accounts receivable were fairly distributed a cheque for $2275. And for those currently at the $1000 level, that means a cheque of $13,000. As Stats Can says a writer’s average income is $15,000, that means a cheque for $13,000 almost doubles income. Does a writer want this money? Sure. It begins to redress the issues of writers being essentially shoved out of their own organization to the bottom of the pile for more than two decades.

Arguing sensibly, with our own lawyer negotiating, the deal would be inked before writers supported the system. Remember, if a new Bill makes AC collapse under its own administrative costs, it is not a problem for most writers. That is because the high priced help will leave, and 15% of current revenue would still be coming in. And all the new assets added to the current $104 million balance sheet will still be there to be divvied up.

But there is even more money than this. I know mentioning Michael Geist is heresy to most writers, but when you are thinking pragmatically, you have to consider at least one thing that he has said. He points out that currently - and this would remain so even after new legislation - there is a six point test for determining fair dealing and that means some of the education return of about 75% of annual revenue will still come in. This is extra money in excess of the cheque of 1300% above your current cheque. I say show writers the money. And until that issue is resolved writers should not get distracted by dinky issues.

Writers Not So Happy with Reprographic Payment

Copy and paste this weblink and read the article in the Globe and Mail on education payments for copied material: http://www.theglobeandmail.com/news/opinions/opinion/heading-back-to-school-hope-youve-memorized-the-copyright-act/article2131989/.


I am a writer like John Degen, but my take is different.

About 75% of the money made from schools, colleges and universities goes to the large educational publishers. These eliminate royalties at the first step for writers, and substitute fee for service, so the publishers get 100% of the royalties when they sell their books to students. Over the years, this fee for service payment goes down because of inflation. Then they come at the end and pick up the entire royalties paid for copying.

Writers get a small payment from the repertoire class. Last year the baseline was $175. That's all. This does not comprise meaningful income. 80% of writers got less than the previous year's baseline of $612, also a figure that does not comprise meaningful income.

The point is that schools, colleges and universities think they are paying money to writers, but they are not. Writers get virtually nothing. Writers don't like this but the reprographic corporation primarily reflects the interests of large educational publishers even though the copying payment was introduced for writers.

I would say that any university that pays this money will be pretty unhappy to learn that the money does not go to writers, artists, creators and so on. But that is what happens with writers receiving about 10% of revenue - in a system that was designed to give us a financial lift for our copyrighted material.

Many universities and other educational institutions have refused to pay the new tariff and have instead chosen to appeal to the court. Most of Access Copyright's Statement of Financial Activities, has a large asset of over $100 million, most is these 'accounts receivable' that it so far can't bring in, and part is part of the $63 million in cash and cash equivalents. If writers were to get only 50% of this asset, then we could begin to say that writers get some financial benefit from our copyrighted work. That base payment of a very small $175 becomes about $2275 - not meaningful income for the lowest paid writers, but enough to make a mortgage payment with a little left over.

This is the writer's reality. Don't think that reprographic money gets to writers. It is less than 10%.

Don Meredith on what not to do

Don Meredith, blogger and Outdoor Writers of Canada active member, is not keen on the idea of creators seeking a better deal at Access Copyright -- not at this time anyway, and seemingly not as long as copyright matters are being debated or Professor Geist has opinions.  His recent thoughts on the question are here.  I'm sure we will take up his points before long, but meanwhile take a look. Comments are open.

Access Copyright and the Robertson v. Thomson case

Writers can now begin to claim payments from the second settlement in the group of class action lawsuits widely known as Robertson v. Thomson. This one involves a settlement with the Toronto Star, ProQuest, and other publishers. The deadline for applications to share in the payments is October 31, 2011.  Information on the process is available here.  Claims forms can be downloaded here.   

Payments in the first Robertson v. Thomson settlement went out to eligible writers last winter.  I have met writers who say they received more money in that one payment than they have in a couple of decades of Access Copyright payments.

What was Access Copyright’s role in Robertson v. Thomson?

On the face of it, minimal.  Access Copyright always declared itself neutral in Robertson v Thomson.  It was a civil suit between independent parties, the collective declared, and Access Copyright had no role.

That’s odd when you think of it.  Access Copyright is a copyright organization. It has some of Canada’s best copyright lawyers on staff or on retainer.  It always stands up for copyright and against copyright abusers. It is one of the most active copyright litigators in Canada.

Furthermore, the defendants in RvT used many of the classic anti-copyright argument to justify their appropriation of other people’s work.  (See an analysis of the case here.). RvT was settled after the defendants agreed to make handsome payments to the plaintiffs but, had the trial continued, the decision would surely have been among the most important copyright precedents in recent Canadian history.  How could Access Copyright stand idly by as vital decisions in copyright law were being adjudicated?

There is one crucial difference between RvT and all the copyright case AC litigates constantly.  The alleged abusers of copyright here were not copy shops, universities, Departments of Education, or online free copiers like Pirate Bay.  Here the abuses of copyright were charged to publishers.

Access Copyright's 2010 Financial Statments

I was asked to give a talk to writers about Access Copyright's 2010 financial report sometime ago. You may find their report at: http://www.accesscopyright.ca/media/6371/2010_annual_report.pdf.

Here are some of the comments that I made.

1. The auditors stated in their Basis for Qualified Opinion that the copying records had the issue that 'the completeness of which is not susceptible to satisfactory audit verification.' Acknowledging that other reprographic mechanisms have similar problems, the auditors went on to say: 'we were unable to determine whether any increase might be necessary to licence fee revenue, provision for royalties for distribution, excess of revenues over expenses for the year, accounts receivable, undistributed royalties and net assets." Hmm.

2. AC spends money on mentoring other RROs in the Caribbean/China and so on. Perhaps writers would rather the money for these junkets be sent to writers instead.

3. Operating budget expenditures include: professional fees of $851K, and $730K in Copyright Board applications. One might ask, who are these paid to? Are they paid to staff members? or to businesses in which staff members might have a financial interest?

4. Expenses are $8.7 million and this is the figure that is used to calculate many others. If one adds the amount sent to the Cultural Foundation, $491K, it brings expenses up to $9.19 mil, or 27.2%. Pretty high.

5. If a writer wants to know what the board members are responsible for, look at 2(f) Undistributed Revenues. This clause means that, among other things, the $63.5 million in Money Market Funds were left there, and base payment Payback authors received $176 each due to their own representatives on the board.

6. 2(h) Tariff under appeal. Basic education providers have appealed the tariff the Copyright Board thought was reasonable. As education may win on appeal, should AC be treating the possible money as 'deferred revenue'?

7. 2(k) Revenue Recognition takes the novel approach in 'deferring' what it has not received and 'accruing' what it may never get in the same clause. That's interesting, and perhaps a bit unfair. I mentioned that I have a friend who spent his career at the federal Auditor General. I will be asking him his thoughts on the financial statements. I will let you know what he says in due course. This and most of the rest are examples of why writers who are AC members should have basic accounting and legal advice, paid by AC, but at arms-length from it, so that we can receive advice from professionals hired to tell us what our best position is.

8. Cash and Cash Equivalents are held in Money Market Funds of $63.6 million. The latter are usually thought of as too risky an investment for money that has to be invested at low risk. The other thing is most writers would rather have the money. Those funds represent 1673.7% of what writers received under Payback. Do remember that board members make the decisions on how much money goes to writers.

9. Nowhere in the financial statements, nor in the annual report itself, does AC mention that writers received a small $3.8 million. The balance sheet, on the other hand, notes that AC has assets of $104.2 million. This amount is 2742.1% more than what writers received. Having made the calculation myself, I now find it hard to believe how disproportionate it is. I think most other writers will think the same.

10. Footnote 7 is where the figures on the Cultural Foundation may be found. I have had numerous specific requests to find these figures. There is $4.3 million in these funds. Had the board distributed these amounts, writer payments would have more than doubled.

11. Let me show you a comparison of Total Revenue versus Total Expenses.

2007 2008 2009 2010

Total Revenue 37.3Mil 36.8 34.8 33.8
Total Expenses 7.1 Mil 6.7 8.2 8.7

Percentage 19.0 18.2 23.6 25.7

Here is the point: revenue is dropping and expenses are rising. And expenses have risen 22.5% in four years. And, as I mentioned above, if we add the $491K sent to the Foundation rather than distributed to writers, expenses were $9.19 million. or 27.2% of total revenue.

These are big figures and illustrate once more that writers could use some advice from a lawyer and an accountant telling them what is in their best interests.

Worth reading: John Degen on Access Copyright

John Degen's widely read blog includes his thoughts on Access Copyright -- and a slew of comments

In a Time of Copyright Reform Writers Need to Talk

Don Meredith’s point of when is the right time to address issues with AC makes sense. If the new bill that replaces Bill C-32 is essentially the same bill as before then it will have big consequences for AC. My read on this is that AC as we know it will simply collapse if such a bill goes through, and that’s one of the scenarios for which writers need to prepare. Now, as never before, writers need information they can trust, they need to share that information and then they need to come to a conclusion. These are very good reasons for signatories coming together at this time in a joint committee. This should have happened years ago when writers agitated for the Friedland Report.

I think the chances of a new bill going through are pretty high. But saying that collapse of the current reprographic mechanism is likely does not mean that it will disappear entirely. (And in case you did not know there are other reprographic mechanisms out there for collective licensing). I am just being practical here, and for the moment, thinking through what it would mean for writers if AC did not survive in its present formulation. We all believe in collective licensing, but we need collective licensing that meets a writer’s needs.

In the likely collapse outcome, AC will not cease to exist. But what will happen is that a remnant of revenue will remain, but it will be so low that the highly paid staff will leave because their salaries – likely in the $150,000 to $300,000 range – as well as benefits, pension contributions and severance can no longer be supported. (If I had been working there when Bill C-32 came out, I would have immediately begun looking for another job - that’s what bureaucrats do).

How much revenue will remain? Well, if we accept, for the moment, AC’s estimate of what it gets from education – it says 85% - that means that 15% of revenue, or $5.06 million will still be coming in. My historical perspective on this is that education revenue is more like 75% of total revenue. So the upper boundary on revenue remaining could be higher, more like $8.4 million. This top level is 221% of what writers received this year under Payback – and so a writer may actually get a higher cheque under the new copyright bill, perhaps even double what you got this year. In this scenario, writers will have to pick up the pieces and re-establish the original purpose of AC, so the promise it held for us may actually occur for the first time.

In the beginning, the reprography bylaws were drafted in the belief that only writers would be part of the program – visit Flora MacDonald’s speeches in Hansard and make your own judgement. A decision was made early by writers that the cultural publishers, essentially the regional presses that publish our non-fiction, fiction and poetry, would be let into the system to share with us. But now, when our baseline payment of $175 is less than a copyright lawyer makes in an hour, we creators need to come together, talk over what will be done to resolve the situation and make it happen.

You should know that there is quite a lot of off operating budget money that has not been distributed. The balance sheet shows $104.2 million in assets – we would like this protected. Then there is the invested money - between $24 and $63.7 million - that we would like distributed. And there is the Tariff under appeal that AC has billed and thus counts as an asset, under Accounts Receivable in its financial statement as $56.9 million (Footnote 4). In addition, there is the Cultural Fund of $4.5 million. I was not interested in such a fund, and I would like that money returned. It represents more than doubling the payment you received last year.

So, there are many subjects that writers need to talk over, and to do this we need some specialized advice. We have always needed legal and financial advice because we are volunteers who work late nights to figure reprography things out after our day jobs have ended. What is required is a pot of money created for us at AC so that we can seek arms-length, independent advice regarding the many questions that will come out of our joint committee of signatories. Writers need to think through many questions: do we want the publishers in with us? Or do we want our money separate, as is done in the UK, and is included as so in the TWUC motion? There are many other subjects that writers need to talk about a great deal to establish where we will go.

Regarding the invested money between $24 million and $63.7 million, I will be asking an accountant to give me his best estimate of that money. When I have it, then I will let writers know. This is another example that suggests writers need advice, so it will inform the talks we have with one another. Writers have always needed some independent advice: we need a lawyer and an accountant. People who work for us and give advice from the perspective of a writer.

We tend to forget that law is not about truth. Law is about making your best argument. What we have had in AC is lawyers who give advice mainly for the interests of the large educational publishers. Writers don’t need money spent on this, as many writers have been reduced to fee for service, and thus lost their copyright due to the disparity of power between an educational publisher and a writer. We need the advice of some technical people and should have had it from the beginning in 1988.

One of the scenarios to be talked over, when writers are properly informed, is to consider what we want in return for our support for AC. As mentioned in the TWUC motion, writers want: more money, more control and lower administrative costs. We want to move toward 50% of revenue. It makes a lot of sense to move right now, and to offer our support to the present reprographic mechanism in return for moving from the very small 11.3% of revenue we currently receive. The new bill represents a big change. And now is the best time to secure 50%, when AC needs our support. We can all support that kind of collective licensing.