Parallel imports (3): From the publishing industry

(The debate over parallel imports is a matter of public interest–it affects readers, writers and the publishing industry. This is why the publishing industry thinks the 2m amendment will be bad for business–copyright lawyers have had a very different perspective. To follow the debate, read back on Divya Dubey’s blog: here, here, here and here. Previous posts on Akhond: here and here–interesting debate in the comments.)

Copyright Amendment & Proviso 2m: A response from the Publishing Industry

Introduction

India is the third largest publishing nation hub in the world today after the US and UK. There are over 17,000 publishers in India and, given the spread of English-medium education, it is estimated that over half of them deal with English language publishing. English is the language of pan-national education, commerce & business, law, official transaction and indeed literature; and plays a significant part in India’s new found global stature. Publishing has two strands—educational and trade (general/consumer). Both have contributed immensely to India’s growth as well as cultural development. While writing and publishing in English have had a century old tradition, it is essentially the last two decades that have seen the industry come into its own. A large reason for this maturity, growth in volumes and revenue has been the environment under which publishing and Indian writing has been allowed to flourish—and the single greatest reason has been a secure territory, upholding the concept of territorial copyright and the prohibition of parallel importation.

The Issue

The proposed amendments (to the Copyright Act of 1957), specifically proviso 2m, which uphold the rights of authors in the music and film industries unfortunately hurt book authors with far reaching consequences to the publishing industry and the state of writing. Proviso 2m has no real benefit to anybody outside a segment of importers who, with parallel importation legalized, will be able to freely import any overseas edition to the detriment of local industry, authors and eventually the consumer. The publishing industry—Indian publishers as well as multi-national groups—and authors are together protesting this proviso.

The reasons for the amendment

The following are the main reasons for the proviso that we could discern—(a) the notion that the customer will benefit from lowered prices; (b) the assumption that publishers price too high; (c) the assumption that publishers mainly transact in old editions; and (d) that this will impact mainly imports and only foreign publishers would be complain and (e) that some sort of intangible disharmony exists if copyright is not equated with patents and trademarks. All of these assumptions are unfounded and in many cases blatantly false.

The writing community’s objections (encompassing authors, publishers of every kind—small, large, Indian and foreign owned—and booksellers) have been outlined in the accompanying paper (note from NSR: not carried in this post), but in a nutshell cover:

1. No real drop in prices: India is already the lowest priced market in the world in each publishing segment with price mark-downs ranging from 30% to as much as 90% for educational textbook pricing. These pricing structures have evolved keeping in mind the socio-economic realities of our country. Low as these prices are, they are still vulnerable to remainders and targeted exports which undermine local industry’s ability to compete.
2. Infringing imports will still be cheaper: One rationale for this amendment is that books from overseas are more expensive and therefore incapable of hurting local lower priced editions. This is completely untrue if one studies the dynamics of publishing. Given that the west is a ‘frontlist’ market (over 85% of shelf space is new books), books on an average have a shelf life of just 3-4 months. India by contrast is still largely a ‘backlist’ market (where established books run on longer) and it is every publisher’s endeavour to create books that backlist. Publishing is a passion and hunch-based business that already functions on a cycle of swings and roundabouts where the successes also cross- subsidize the smaller, niche interest books. Even without remainders, books from the west will inevitably be sent in here at targeted ‘undercut’ price levels that will undermine local Indian publishing investments and therefore writing (with no justifiable long term consumer gains).
3. Notional consumer gain: There will be absolutely no consumer gains in the long run. While parallel importation might result in marginal spoiler pricing in the early stages, it will be seen that after this short phase of undercutting, pricing will eventually stabilize back to the price points that currently exist. But the damage done in the medium and long terms will be immense.
4. Remainders and dumping will kill the market: This is an inevitable process that will result, and will hit authors, publishers and consumers alike. Authors will be hit by loss of royalties and future opportunity; publishing will lose margins and investment power; and booksellers will (due to the indiscriminate flowing in of imports) be forced to change stocking patterns, actually reducing choice; and pricing will be a constantly fluctuating mechanism offering no certainty of best buy.
5. Unjust position for the author: Worldwide wherever full-fledged publishing exists there is territorial copyright that respects the author as copyright holder. 2m will in effect disregard the copyright owner’s wishes by denying them their economic rights and actually putting them in a position of disadvantaged competition with a third party (wholesaler/importer of infringing editions)—which imagines an unjust intellectual property system.
6. Author royalties hit: Remainders will give authors no royalties, and targeted export sales from overseas—now legalized—will result in authors losing royalties by as much as 50%.
7. Local writing hit: It must be emphasized that it is not just authors with international editions but local Indian authors too who will bear the brunt of this as rights potential dwindles, publishing programmes shrink and publishers reduce investments in building authors.
8. Current editions: It can easily be verified that every textbook or trade book has the most current edition released here at the same time and much cheaper than the international price.
9. No scarcity: Any book anybody wants is available either locally or by procurement, and always at a special price.
10. Not about protectionism: Competition does not exist the same way in publishing. Unlike the consumer industries, where a Coke sold is a Pepsi not sold, a Vikram Seth sold is not an Amitav Ghosh unsold.
11. Unanimous opposition from every stakeholder: Publishers—Indian and foreign owned, large and small, educational and trade; booksellers—large chains and small independents; authors—international and Indian; literary agents, and overseas publishing companies are all opposing 2m. The other main stakeholder, the reader or end consumer, as we have shown will be adversely hit in the long run.
12. No reciprocity and mature market: The amendment would remove the level playing field. Indian publishers would not be able to sell their editions abroad, but every overseas English language market would be able to freely sell competing editions into India. India is fast approaching being a mature market with a thriving local Indian industry but would soon lose this. Every mature market that is not just a trading market has territorial copyright—India will soon become the sole exception.
13. Cultural development impacted: Writing and its dissemination (whether educational or trade) plays a major part in the creative and cultural development of any nation; and the ever growing stature of Indian writing (awards, festivals, a burgeoning literary tradition, cutting-edge education) will be severely hit.
14. Cultural sensitivities: Local publishers are bound by local laws and keep in mind cultural sensitivities, religious sentiments and Indian laws while publishing or importing a book; indiscriminate ‘dumpers’ are not.
15. Forex outflows: The standing committee report cites possible savings with reduced royalties outflow whereas the opposite would happen. Much more will flow out with payment for the massively increased imports.
16. Ancillary industry hit: Publishing supports a whole host of small scale businesses like typesetting, printing, proof-reading, copy editing, designing, etc—all of which will be impacted over time.
17. Re-export a huge issue: Currently low priced editions are created by local rights licences and reprint rights. These are granted under the sole condition that these editions stay confined to India and do not flow out to damage parent markets. The amendment leaves this window also open, and should this happen, original rights holders will be reluctant to grant rights and thereby prices will actually go up for educational editions, eventually fostering piracy.
18. Books are significantly different from patented products. Because authors are different from consumer goods inventors who register patents. A cellphone is a cellphone is a cellphone. Yes there will be patented technology differentiators but certainly not the same as each book being a unique creative object, where the creator has ‘enshrined rights’, or at least so the other part of this amendment (films/music) would lead us believe. So why the discrimination against book authors in terms of a complete disregard as to their interest.
19. Not enough consultation with stakeholders or engagement with detail; no substantiation of the assumptions that are driving the lawmaking process. Conversely, legal precedents exist here that have upheld territorial copyright; it is not clear what major lapses have been observed that necessitate proviso 2m, which far from benefitting any of the constituents involved will actually have a hugely adverse impact.

With no credible evidence for any of the assumptions, no clear and irrefutable benefit and looking at the severely damaging repercussions, it is the Industry’s demand that proviso 2m be deleted from the proposed amendments.

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