Earlier this month, Digital Book World posted an article chronicling the discussion of a conference copyright panel featuring Access Copyright counsel Erin Finlay (the article was promoted by Access Copyright). The article caught my attention due to Finlay’s comments about the impact of Canadian copyright on education publishers:

“Another example Finlay used was the case of Broadview Press, which is an independent Canadian publisher that cannot publish anymore.“

The comment prompted me to contact Don LePan, the Broadview Press owner, who has been outspoken critic of the copyright term extension in the TPP. LePan was shocked by the claim which he said was completely inaccurate. He posted a long response on the Digital Book World site, which responded by amending the piece. Kristine Hoang, the journalist who wrote the article, noted that “what I had written was a reference to Erin Finlay’s direct quotes in my recorded transcript where she said ‘Broadview Press cannot publish anymore.'”

The erroneous claim about the state of a Canadian publisher would be surprising if it did not happen so frequently. In fact, inaccurate claims about Canadian publishing have become a staple at conferences and in reports in an apparent effort to escalate concerns about the impact of Canada’s balanced fair dealing approach.

For example, late last year Cambridge University Press told the Australian government the following:

Since the introduction of the ‘fair dealing’ guidelines in Canada, Oxford University Press withdrew from the market, Nelson, the largest pre-2012 publisher, declared a form of bankruptcy, local publishers such as Emond have ceased publishing and McGraw Hill and Pearson have scaled back. Protection of IP and adequate and fair compensation for copying are a significant factor in making local publishing for local school curriculums a viable proposition.

Let’s take a closer look at each of those publishers. The claim that Emond has ceased publishing is simply false. Much like the Broadview Press case, I actually called the company and they were shocked to hear the claim, asking for further information so that they could correct the record.

Ariel Katz has previously debunked claims regarding Oxford University Press. In fact, more recent annual reports from companies such as OUP acknowledge changing market conditions around the world, with the company noting:

“the Higher Education textbook market shrank in important markets such as the UK, Canada, and the US, illustrating the contrasting array of market conditions to which OUP needed to adapt in 2014.”

OUP sales declined in Canada, leading the company to invest more in the country with greater spending on sales and marketing. The Pearson annual report tells a similar story with declines in textbook sales but increases in revenues for digital products and services.

The Nelson Education story is particularly noteworthy. The financial press provide the real story behind the restructuring: a failed 2007 acquisition that saddled the company with enormous debt. The economic challenges were about a bad investment, not about copyright. Indeed, the affidavit from Geoff Nordal, the company’s President and CEO, identifies the primary economic challenges:

In Canada, each province and territory has authority over curriculum development and education funding for the K-12 Market. Following a historic high in Canada in 2006 with respect to new curriculum development and spending, the K-12 Market contracted. The K-12 Market has been negatively affected by reduced spending on new curriculum by Canadian schools over the last five years, and in particular the spending decline in Ontario which represents the largest proportion of educational spending in Canada.

In the higher education market, Nordal identifies the following issues:

The Higher Education Market has been negatively affected by, among other things: a lack of clarity at universities with respect to ‘ancillary fees’; with certain institutions banning digital homework solutions with added fees; increased traction in the open textbook movement due in part to government funding in a number of provinces; and the use of used books, rental books and peer-to-peer sharing, impacting the demand for new textbooks at universities and colleges in Canada. The impact caused by used books and rental books is mitigated by revisions cycles and new textbook editions, the adoption of digital materials and increased use of custom and indigenous products. In addition, the Higher Education Market is in transition from traditional books to digital products, which is having a transformative effect on the business.

Nordal’s emphasis on reduced provincial spending (for K-12) and the digital shift (for higher education) is consistent with the data from other sources. The 2010 report on K-12 publishing commissioned by Canadian Heritage also pointed to the long pilot periods delaying purchasing decisions and the increased use of alternative and digital resources.

For example, consider the budgetary shift for acquisitions at Ryerson University, which posts its annual expenditures. In 2008-09, it spent $1.1 million on books, $414,000 on serials, and $2.47 million on electronic resources. By 2014-15, base spending on print books had dropped to only $140,000. Even with firm orders for another $245,000 in print books, the expenditures were a small percentage of spending from a few years earlier.  The money has clearly shifted toward digital products: $97,000 in e-books with $384,000 in firm orders, $295,000 in serials, and $2.8 million on databases. Assuming Ryerson is typical, the shift to digital is well underway with an obvious economic impact on print book sales.

The economic impact of the shift to digital is particularly pronounced for Canadian publishers, since many of the databases and resources come from U.S. vendors. Indeed, recent reports have focused on the enormous impact of the declining Canadian dollar on Canadian acquisition budgets with cuts across the country.

What of copyright and the declining use of Access Copyright licenses by educational institutions?

Nordal references the issue:

There is also some uncertainty surrounding recent amendments to Canada’s Copyright Act, which is having an impact on the industry. These amendments may have an impact on copyright protection for creators and publishers and have led school boards and Ministries of Education to advise Access Copyright (a cooperative of Canadian media publishers, including Nelson Education, with a mandate to administer and provide access to copyrighted materials) that they will no longer be paying royalties in accordance with their historical practices.

According to the most recent Access Copyright annual report, Canadian publishers received $6.67 million in distributions out of a total of $18.6 million. That represents 55% of the total domestic distribution and 36% of total Access Copyright distributions. It is worth noting that foreign rights holders received an almost identical amount ($6.56 million) and Canadian creators received the smallest share at $5.4 million.

In 2011, before the copyright reforms and Supreme Court of Canada decisions, Access Copyright distributed $23.5 million. In other words, there has been a decline of a little under $5 million in distributions over the past few years (of which Canadian publishers presumably would have received about $2 million). That is not insignificant, but considering that Canadian book publishing is a nearly $2 billion industry and that the Canadian Book Fund alone distributes over $30 million in taxpayer support to Canadian publishers, it surely is not the end of the industry.

The more accurate picture is that Canadian publishers – like many sectors – are facing a myriad of challenges as the Internet and digital distribution fundamentally changes the market with new forms of access and competition. The data suggests that copyright changes are a small part of the story, yet that has not stopped groups from raising false alarms about the state of Canadian publishing and the impact of copyright law.