Rethinking Parallel Importation

As many of you would be aware, on Tuesday Australia’s Productivity Commission recommended lifting the existing restrictions upon the parallel importation of books into Australia. Those interested in reading the full text of the Report can find it on the Commission’s website, but essentially it makes three recommendations. Firstly that the existing restrictions on parallel importation be lifted after a three year period to allow the industry to prepare for the change. Secondly that the Government review the current subsidies aimed at encouraging Australian writing and publishing, with a view to better targeting of what are rather opaquely described as “cultural externalities”. And finally that the new regime be monitored and assessed five years after implementation.

There’s already been a lot of commentary on the recommendations, most of which falls into two fairly predictable camps. On one side Bob Carr and his mates at Dymocks and the Murdoch Press are characterizing it as a win for consumers and literacy. On the other, publishers, authors and most of Australia’s booksellers are appalled by the decision, describing it variously as cultural vandalism, economic rationalism gone mad and free-market lunacy.

I won’t point you to the articles in the papers, though if you’d like to get a sense of the anger and despair amongst writers it’s worth checking out Spike. Likewise Henry Rosenbloom at Scribe always makes perfect sense on this issue and is worth a look, as does Jeff Sparrow at Overland. Or for a rather different take, check out Michael Duffy or Crikey’s Bernard Keane.

For my part I’m in furious agreement with the ASA, the APA, the ABA and everybody else lined up against the Productivity Commission on this issue. If implemented the recommendations would be catastrophic for the Australian book industry and for our literary culture. But at the same time I do worry whether we – the writing and publishing community – aren’t getting this one wrong at some level.

For obvious reasons writers and publishers are trying to frame this as an issue about our capacity to sustain a literary and publishing culture in this country. If one wanted to be crude about it, what we’re really arguing for is a form of cultural nationalism. Certainly it’s no accident the writers who are being rallied to speak are all ones who are identifiably and iconically Australian.

This is the same argument we run every time changes to public policy threaten to make life harder for the already pretty marginal lives of Australian creators. And while I think it’s correct, I’m not sure it necessarily plays the way we think it does anymore, if only because appeals to Australian nationalism seem outdated in the global world of 2009. And – to be perfectly frank – demanding protection in a globalized economy is a bad, bad look.

Part of the problem is we’re being shoehorned into an argument about book prices. As people keep pointing out, it’s extremely difficult to compare book prices, and there’s some pretty selective data doing the rounds.

But this isn’t about book prices and it never was. It’s about Australia’s capacity to compete in a global knowledge economy, and, more importantly, the right of Australian creators to commercialize their work. Nor is it about open or protected markets. It’s about ensuring we have a policy framework in place which will foster creativity and maximize the benefit of that creativity to the Australian economy.

Let me explain. At present, when I finish a book I set about trying to sell it. Since the copyright belongs to me, I sell licenses to publishers to print the English-language version of the book. These licenses are geographically defined. In the best of all possible worlds I will sell the Australian and New Zealand rights to an Australian publisher, the UK and Eire rights to a UK publisher (these usually allow the UK publisher to distribute the English-language version of the book through Europe and a number of small countries like Bermuda and the Falkland Islands as well) and and the rights to sell the book in the US and various small countries like Guam to an American publisher. Canada will usually end up parcelled off with the US or the UK rights.

The license I grant my various publishers is exclusive. That means the American publisher can’t try and sell the book into Australia or the UK, and the British and Australian publishers are similarly precluded from trying to sell their editions into the other English language markets. This exclusivity is defined contractually, but is made possible by the copyright provisions of the relevant countries, which create frameworks within which the right of creators to dispose of their work as they see fit is enshrined.

The reason for this is obvious. Imagine I take my book to an Australian publisher and ask them if they’d like to publish it. They say they would, but then I tell them I’ve already sold the rights to an American and a British publisher, and because the restrictions on parallel importation have been lifted, those publishers are likely to be importing books into Australia as well. Odds are the Australian publisher would laugh in my face, but even if they didn’t, my capacity to commercialize my work has obviously been severely diminished.

As the example above demonstrates, the exclusivity created by territorial copyright (or, to describe it as the Productivity Commission does, the restriction on parallel importation) is not trivial, it’s the basis of the market. Without exclusivity the rights are, if not quite worthless, then certainly much less valuable. And, commensurately, the capacity of Australian creators to commercialize their work is severely constrained.

For a writer such as myself, who publishes overseas, the abolition of territorial copyright will mean I lose not only that portion of my income I derive from selling Australian rights, but that the economic benefit of my work will end up offshore, in the hands of a foreign publisher, as will the economic benefit of every single Australian writer with even the smallest amount of international success.

More importantly though, the example above demonstrates why this isn’t an argument about protectionism, despite all the talk about “opening markets”. Territorial copyright would only be protectionist if it didn’t exist elsewhere. But at present the only English language market which allows parallel importation is New Zealand, a country which is of such minimal importance that Australian writers routinely dispose of New Zealand rights in a job lot with our Australian rights. Abolishing it here won’t open our markets in any meaningful sense, all it will do is create a situation where American and British publishers have access to our markets without Australian publishers having access to theirs, which would be a bizarre outcome.

It would also decimate the local industry, which, like the British and American industries, derives much of its income from managing rights to books written elsewhere. Independent publishers would either go under, or shift their focus to publishing work with absolutely no international potential, while the larger multinationals would become little more than clearing houses for books written elsewhere.

One obvious response to the arguments above is to point to the coming revolution in publishing (something I’ve done myself from time to time). As national barriers fall, one might think, so too will seemingly outdated provisions such as territorial copyright. But as anyone who’s gazed longingly at a movie or TV episode for sale on the US iTunes Store knows to their cost, territoriality is alive and well in the digital world, and while that may change, it’s not going to happen soon.

I don’t want to waste my time engaging with the Commission’s risible suggestion that greater public assistance would produce better outcomes for Australian creators. I don’t want a handout and I don’t know any writer who does. But I do think it would be useful if we stopped talking about this issue as a contest between economic rationalism and cultural nationalism. Because for as long as we do we’re missing the real point, which is about the capacity of Australia and Australian creators to succeed in a global knowledge economy, and about ensuring we harmonize our policy settings with those of our major competitors overseas.