Canadian Heritage Committee on Dec. 4th, 2018

[The Chair, Liberal, Julie Dabrusin]

We will begin the 135th meeting of the Standing Committee on Canadian Heritage. Today we are continuing our study of remuneration models for artists in creative industries.

Welcome, everyone.

As witnesses today, we have with us Professor Ariel Katz from the University of Toronto, and from the House of Anansi Press we have Matt Williams and author Monia Mazigh.

Thank you all for being here. We will start with Professor Katz, please.

[Professor Ariel Katz, Associate Professor and Innovation Chair, Electronic Commerce, University of Toronto, As an Individual]

Good morning.

My name is Ariel Katz. I'm a law professor at the University of Toronto, where I hold the innovation chair in electronic commerce. I'm very grateful for the opportunity to appear before you today.

In my comments, I would like to focus on some of the ways in which copyright contributes to or perhaps detracts from the ability of artists and creators to be remunerated for their works.

The idea that copyright is necessary for allowing creators to reap financial rewards from their creations runs deep in our current legal thinking and policy-making since copyright arrived on the scene some 310 years ago. Since the first copyright act, the Statute of Anne in 1709, almost every major copyright reform was based on the notion and promise that copyright will guarantee authors the ability to be remunerated for their works.

For 300 years, the benefit to authors has been the banner that publishers and producers have carried in their demands for ever-increasing powers to legally control creative works. Beloved authors and creators would appear before legislators, describe their economic hardship and support the publishers' demands for more rights and stronger tools to enforce them.

This strategy has been enormously successful over the last 300 years. It even accelerated in the last decades. As a result, copyright has expanded in almost every direction. The subject matter has expanded, the term of copyright has been extended and the geographical reach of copyright has been extended. The type of activity that could constitute infringement has increased, and so have the enforcement tools and remedies available.

However, the vast majority of artists and creators seem to be earning very little from their creations. Last Saturday, for example, Michael Enright, on CBC, cited a recent survey by the Writers' Union that found that the average Canadian writer makes only about $9,000 a year, and the incomes are falling fast. Once again, not-strong-enough copyright is to blame, and “make copyright great again” seems to be the proposed remedy.

After 300 years of asking, “Are we there yet?” and finding that we aren't, maybe it's time to reflect back and acknowledge that the weakness of copyright may not necessarily be the problem and that stronger copyright may not be the solution. In fact, we should even start thinking whether the ever-expansion of copyright is part of the problem. That's counterintuitive, but that might be the case.

Don't get me wrong: Copyright is a very effective legal tool for collecting grants from the use of creative works. The stronger, broader and longer copyright becomes, the more effective is the ability to extract even more rents from the users of creative works. Indeed, copyright does make some corporations—or their shareholders or senior executives—and a relatively few superstar artists very rich. That's why they lobby so hard to protect and enhance it. That's why they have the ability to out-lobby almost everyone else in this legislative process.

If our goal is not to further enrich the rich but to ensure adequate remuneration for the average creator, then maybe it's time to acknowledge that a strategy of more copyright has been a spectacular failure.

I note in brackets that from an economic perspective, it's better to think about the marginal creator, not the average creator. It's not that the person is marginal or that the work is unimportant; I mean a person for whom a change would make a difference. If we make a policy change, how would it affect someone that we want to be affected at the margin? Hence, I say “marginal”. I just wanted to clarify that.

If copyright has not been successful in its stated purpose, why? One possible answer is that we are simply not there yet and that copyright is still not strong enough. We have to continuously strengthen it and eventually we'll get there. In some abstract, theoretical way, this is a plausible answer, but I don't think it's very likely that this is the correct one.

Consider, for example, the recent findings from the Writers' Union survey. Access Copyright and the Writers' Union cite these or similar numbers to support their demands for, for example, preventing educational institutions from relying on fair dealing or in their efforts to make tariffs that are approved by the Copyright Board mandatory in educational institutions. They could basically impose these on educational institutions, despite the fact the Supreme Court held that such tariffs are not mandatary for the users.

Let's assume that our goal is to allow professional writers to make a living off their writing. According to Statistics Canada, the median household income is approximately $70,000 a year. Obviously an income of $9,000, as per the study, is far too low. What would we have to do in terms of copyright if we wanted to quadruple this $9,000 amount to make it half the median income? The writers could earn from copyright not even the median income—just half of the median income. We would need to quadruple the $9,000 figure.

Suppose we go along with Access Copyright's proposal and we abolish fair dealing for education and make tariffs mandatory for educational institutions and so on. We don't need to spend time doing the exact calculation to figure out that if we want this instrument to significantly increase those authors' earnings from copyright, we would need to impose on educational institutions what is effectively an education tax, which would quickly bankrupt them. If that's our goal, if that's the tool we want to use....

Moreover, even if doing that was sustainable, using this copyright mechanism would not only improve payment to low-earning authors whom we might care about, but would simultaneously provide a much greater remuneration to the ones who already make quite a lot of money. That's how copyright works. You don't get it according to your income; you get it according to your ownership. Those who own more, earn more, and tend to get even more.

Here's a simple inconvenient truth: Using copyright to improve the earnings of the average or marginal creators would simultaneously enrich the already rich. Of course, the money would have to come from somewhere. Someone would have to pay for that. It could come from students or taxpayers, or from other expenses that would no longer be available. The money would have to shifted away from other resources. This points to the fact that using copyright to improve the earnings of marginal creators entails a massive transfer of money from the public to the already super-rich, with a tiny portion going to those we might really care about.

I have tried to explain it briefly. I really encourage you to read chapter 2 from a new book by Professor Glynn Lunney, called Copyright's Excess. He makes the point and explains it much better than I did.

I know that he would also be happy to appear before you. He is a U.S. law professor. He would be very happy to appear before you to talk about his new book.

Why has copyright been such a failure for most creators? Why does the great wealth that it creates for some publishers, some producers and some media companies fail to trickle down to creators, even though the creators are the first owners and the supposed beneficiaries of copyright law?

The answer is that while more copyright increases the ability of those who sell content to extract rents from the paying public, how much of those rents trickle down to authors is not a function of the strength of copyright. Rather, it is a function of the competitive structure of the industry and the relative bargaining power of creators vis-à-vis producers.

I'm close to finishing.

Unfortunately, there are some inherent reasons most creators have earned very little from their writings and will likely continue to do so, notwithstanding copyright.

It's also possible that more copyright could make things even worse. Let me explain very briefly. Let's hope we'll have more time later.

Even though copyright makes the creator the first owner of the copyright, most creators cannot really commercialize their works in the market. They need to contract with producers or some other types of intermediaries who have the knowledge, capital and ability to take advantage of economies of scale and scope.

Therefore, they need to enter those contracts, and those contracts primarily determine their remuneration, which would be a function of their relative bargaining power.

There are some reasons that are not fully understood by economists. Creative industries tend to be highly concentrated. At the same time, the market of creative talent tends to be highly competitive.

At the risk of alienating our friends from the Conservative Party, and maybe in the hope of appealing to our friends from the NDP, let me borrow from Karl Marx's concept of a reserve army of labour.

What we have is a reserve army of creative labourers. There is an abundant supply of creative talent. Creative people like to create and are eager to create, and because the market is so competitive among themselves, but much more concentrated among those with whom they have to contract, creators are inherently in an inferior bargaining position with heavy producers. They are often required to sign away their copyright to the producers and to agree to very exploitative terms with publishers.

To make things worse, there are information asymmetries.

I see that I'm—

[The Chair, Liberal, Julie Dabrusin]

Yes. I've let you go a little bit over your time already, so I'm going to ask you to tie that up.

[Prof. Ariel Katz]

There isn't much we can do about this inherent supply. We could do something, but I would not advise to do it this way.

However, there are certain things we could do to reduce the concentration on the producer side. I'd be happy to talk about that more. We could also improve some things in relation to the bargaining power by expanding or improving the models that we have under the status of the artist legislation, both the federal one and the one that exists in Quebec.

There are some organizations, such as Authors Alliance, of which I am one of the founding members, that spend resources on educating creators about their rights and helping them to negotiate better deals.

I'll stop here. I'm happy to talk about any of those options.

Thank you. I look forward to your questions.

[The Chair, Liberal, Julie Dabrusin]

Thank you very much.

We will now go to the House of Anansi Press. I understand the time will be shared between Matt Williams and Monia Mazigh.

[Matt Williams, Vice-President, Publishing Operations, House of Anansi Press / Groundwood Books]

Yes. Thank you, Madame Chair.

Good morning, everyone. Thank you for having us here.

I'm Matt Williams, vice-president at House of Anansi Press/Groundwood Books in Toronto. We are an independent trade publisher, and we publish books for readers of all ages.

Anansi is now over 50 years old, which is venerable for a Canadian publishing house. Since the beginning, we have been known for publishing new Canadian writers and helping those writers establish, build and sustain their careers. We publish Canadian poetry, short stories, novels, drama and non-fiction, with particular attention to the work of indigenous writers and the work of writers from French Canada, whom we publish in translation. We publish the novelist Monia Mazigh, who is also present here today. As you said, we'll split our allotted time.

At Anansi and Groundwood, we work with some 500 different authors, illustrators and translators. Author remuneration is central to our thinking and our activities.

Here's our model. We pay authors royalty advances as a way of financing their new work, and we pay ongoing royalties on sales. We sell our authors' work into many different markets—bookstores, libraries, K to 12, post-secondary, and export. We publish books in multiple formats—print, audio, and digital. On every sale we make, we pay part of the revenue to the author as a royalty.

Since the 2012 changes to the Copyright Act and the widespread adoption of the self-declared fair dealing guidelines by Canadian educators, we have seen a steady decline in revenue from Canadian educational sources. From 2013 through this year, the drop in revenue has been close to $200,000. That amounts to a drop of around $100,000 in author royalties. Over that same period, our income from educational sources outside of Canada has held steady. There has been no drop in author royalties there.

We are fully digital. We make and sell e-books and audiobooks. These are discrete digital products, each with a set retail price and a defined marketplace, and we pay royalties to our authors on all those sales. However, selling in digital form into Canadian classrooms is not so much about selling discrete products with price tags: We are licensing parts of books or stand-alone artistic works. We are licensing content.

Educational institutions used to pay for the use of a poem, a short story or an excerpt from a book through a system of collective licensing, an efficient model to manage payment for use, but that system has now been largely replaced by the educators' fair dealing guidelines, which have effectively removed the payment obligation. Our material is still being taught in classrooms across the country, but the payments have dried up.

Much of the material that is delivered to students, especially in a post-secondary setting, is in digital form—for example, via scanned excerpts distributed through a university's learning management system. I would like to emphasize strongly that this is just fine with us. We contract with our authors to publish their work widely and to find as many readers for it as we can. Canadian teachers and Canadian students are, to us, highly valued readers. Classroom use of our content for successive years and even generations of Canadian students is our goal.

The other part of the deal with our authors is an undertaking to earn them royalties and contribute to their livelihood, and that is where developments since 2012 have let us down. The post-2012 demise of the collective licensing model has removed what we might call the “cash register moment” from the Canadian educational licensing market. We no longer have an agreed mechanism whereby use and reuse of material in a form that is convenient in the modern classroom—and I particularly have in mind material in digital form—will generate royalties for those who worked to create it. I think that if we agree that Canadian content has value, then we should stand by a model that allows that value to be realized not only by the users but also by the creators.

We made three recommendations to this committee as part of our written submission. For time reasons, I will reiterate only the first one. It is that this committee work with the Standing Committee on Industry, Science and Technology to clarify fair dealing provisions to help restore our ability to realize a return on the ongoing use of our work. We believe that a return to a system of collective licensing will go a long way towards achieving that end.

Thank you for your attention.

[Monia Mazigh, Author, House of Anansi Press / Groundwood Books]

Thanks. Good morning. Bonjour.

Thank you for inviting me to this committee.

My name is Monia Mazigh. In a previous life I was a finance professor; today I am a Canadian author. I published my first book in 2008, and I have since published two novels. I write in French, and I consider myself one of the lucky Canadian authors to be published in both French and English. My English publisher is House of Anansi, and I am very grateful to be published by this talented and dedicated Canadian house. Their trust in me and their strong support have been crucial in building and developing my writing career.

Today I am a full-time writer. I write columns, blogs and books. I have been invited to several salons du livre across Quebec and to many literary festivals, as well as to other book events across Canada. I also participated in salons du livre in Geneva, Switzerland, and in Paris, France. Last summer I spent three months at the Historic Joy Kogawa House as a writer in residence to work on my third novel.

When I started my writing career, I kept a day job, mainly part time, so I could write while benefiting from the financial security and receiving a paycheque at the end of the month. However, three years ago I took the radical decision to dedicate all my effort to writing. That came with a cost: the loss of my income. Added to this, with the drop of the royalties, even what used to be a cheque for a couple of hundred dollars is now almost non-existent.

I don't have the absolute certainty to link the drop of my income to the changes in the 2012 Copyright Act and the widespread adoption of the self-declared fair dealing guidelines; nevertheless, I personally think it is very likely related to it.

Today, if it was not for the grant that I receive from the Council for the Arts, which my author friend refers to as social welfare for the writers, and the cheque from the public lending right program, my income from writing would be a white noise like what we used to describe in finance models: all the factors that cannot be predicted, and mostly negligible.

I came to writing with a tremendous passion for education. I still believe that books, poems and novels are tools that can help students to complete their education and improve it. When I wrote my first novel, Mirrors and Mirages, about Muslim women in Canada, it had a huge educational component. I corresponded with grade 12 students from a French immersion high school in Vancouver who had been assigned to read my novel and write their French final assignment about it. What a great achievement it is for an author to be read, discussed and reflected on by students. It would be even better if, at the end of the year, that achievement were reflected in some additional royalties paid by the educational institutions to my publisher and thus to me.

Unfortunately, with these changes in laws, those royalties are being denied to us. Our creative work is being used for free. In the meantime, Canadian authors are seeing holes in their incomes getting bigger and bigger. This should be reversed.

Canadian writers are ambassadors around the world. In 2017, I joined a delegation of Canadian authors to visit Senegal in West Africa. We went to schools to speak to youth. We had round tables with Senegalese authors. We told them about our creative work, and through it they imagine our country, our people and the colour of our sky, but how can we keep our creative work going if, in counterpart, we don't receive our financial due through royalties?

History is filled with famous classic authors who died in poverty, despised and abandoned by their societies, but later recognized and adulated for their genius, creativity and artistic merit. Why do we want to perpetuate these human tragedies?

Creativity is an added value for a country. It is part of our common wealth. It should be cherished, shared and recognized. The Government of Canada should protect the users as well as the creators of such creativity.

I strongly support a re-examination of the 2012 Copyright Act so that authors can earn back royalties from their books being used by Canadian educational institutions.

Thank you.

[The Chair, Liberal, Julie Dabrusin]

Thank you.

Now we will begin the question and answer period.

Ms. Dhillon, you have seven minutes.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you. I'm going to start with Ms. Mazigh.

As a fiction and non-fiction writer, can you explain the primary issues affecting both categories of fiction and non-fiction writers, please?

[Monia Mazigh]

Can you clarify? What is the difference you mean?

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Yes, what is the primary issue affecting fiction versus non-fiction writers?

[Monia Mazigh]

Do you mean in terms of royalties?

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Yes.

[Monia Mazigh]

I wrote, as you said, fiction and non-fiction. I find personally that it depends. Some people prefer to read biographies; others are more into novels. I think that when I started writing novels, it opened other sorts of readership to me, and this also developed into more visits to festivals. I think non-fiction is sometimes restricted to personal stories.

In turn, that should have been more beneficial for me in terms of royalties. Unfortunately, I don't think that.... With these changes, our cheques are very small and our benefits are diminishing.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Perfect.

My next question is for Mr. Williams.

We've had testimony in previous panels that Canadian publishers are taking fewer risks in terms of titles. Has Anansi Press faced a similar challenge?

[Matt Williams]

I would hazard that it's not to the same extent as some educational publishers who might have come to speak with you. We are a general trade publisher. We're present in many different markets. We're not heavily present in the educational market. Our exposure financially is less than it would be if we were a specialized educational publisher.

That's not to say that the effects are not present. Certainly, from the point of view of the authors that we publish, this touches pretty much all of them. Because we don't publish specialized textbooks, let's say, we don't see the higher numbers of loss.

I can certainly say that for authors whose work is in use in the schools at any level, the effects have been present for them, either with reduced income through the Access Copyright income or through direct permissions that we used to grant into the educator, into the system, when a school would check with us directly for permission to reproduce material. Those have dwindled.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Okay.

My next question is for all three of you. We can start with Mr. Katz.

From the artist and creator perspective, what changes do you recommend to improve your remuneration models, and do you have any jurisdictions in mind that are doing a good job of at least helping artists to have fair remuneration?

Let's start with you.

[Prof. Ariel Katz]

As I said, I think we have to be very modest in our belief that copyright is the tool to ensure adequate remuneration for artists. We have tried it for 300 years. We keep trying again and again, and still we're not there yet. When you start thinking about it systematically, maybe there are reasons we are not there yet and reasons that copyright makes things even worse for the creators while benefiting other sides of the industry.

There is no silver bullet here. There are certain things. Part of it for creators is that when industry is more competitive and publishers have to compete in order to attract authors, they tend to pay more for authors. When the industry on the publisher or producer side is less competitive, they have much more market power vis-à-vis the authors. We have seen a huge increase in concentration in a lot of creative industries to a really high level. That's something that, again, if you're serious about that, we might be able to do.

There's also a great book by economist Joel Waldfogel that just came out. He's an economist from Minnesota. He describes how we actually are experiencing a golden age of creativity. There is much more production going on all across all areas of creative output. We are seeing more work and better work. In his explanation, that's first the result of how digitization reduced the cost of creation in many areas, but it also opened up new markets and created many more avenues to distribute and to exploit works, which also created many more entrants in the market. There's more competition. It affects the established content producers, the established big media companies. More competition is not good for them, but it actually tends to be very good for authors and writers and screenwriters, because they have many more opportunities to contract than they had before.

We see a lot of lobbying against that from the incumbent telcos and so on, because they want to preserve their existing hold on the market, but that's not necessarily helping creators—quite the contrary.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Mr. Williams, would you comment?

[Matt Williams]

I think as a model for artist remuneration, collective licensing is a very good one. It's an efficient way, I think, of supplying the educational marketplace with material that is useful and that will be used and reused. The principle of payment for use comes back via that collective licensing model to artists and to publishers.

You asked about other jurisdictions. I know that Australia and the U.K. have systems of collective licensing that have also more narrowly defined exceptions for educational use, and I'm not here to argue that there should be no exceptions for educational use; I think there probably should be. I think the situation we have now is that there is a lack of clarity about these exceptions and there is widespread use that is not delivering back.

[The Chair, Liberal, Julie Dabrusin]

Thank you very much.

We will now go to Mr. Shields.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Madam Chair. I will be splitting my time with Mr. Blaney.

Mr. Williams, pre-2012, were you involved in CANCOPY, the collective with regard to education? Did you work through CANCOPY?

[Matt Williams]

CANCOPY is what Access Copyright used to be called.

[Martin Shields, Conservative, Bow River, AB]

Right. You worked with that collective pre-2012.

[Matt Williams]

Yes, that's right. Our company had a licence with them.