Publishers’ association of south africa

FACTORS INHIBITING ECONOMIC GROWTH

HIGH LEVELS OF ILLEGAL AND UNCOMPENSATED COPYING have a debilitating effect on the health of the industry sector and cause a serious downward drag on expansion and growth.

The Impact of Illegal Copying on Economic Growth

The impact of illegal copying on the economic effectiveness of the publishing industry is compounded by the fact that economies of scale, through longer print runs, have a dramatic effect on price in the print industries. Publishers need to amortise pre-press costs (design, editing and typesetting) incurred before printing can start and printers incur high set-up costs for every print run. As a result, longer print runs have a dramatic effect in reducing price.

The South African book market is predominantly a short-run market, because of a combination of low reading and book purchasing levels and high levels of illegal copying. A US publisher would regard a print run of 10 000 copies as the lower end of financial viability. By comparison, in South Africa, only some widely-prescribed school textbooks are likely to reach this level of annual sales; relatively few books sell more than 5 000 copies a year, while annual sales of under 1 000 are common. This means that books are more expensive than they would be were there higher levels of purchase. As an example, the price of a book that sells under 1 000 copies a year would halve if the publisher could sell between 5 000 and 10 000 copies a year. Moreover, the book price, in these higher print runs, is very often cheaper than the cost of photocopying.
These examples demonstrate that the losses incurred through excessive copying are not just losses to the industry, but that illegal copying has a knock-on effect that can push book prices upwards, impacting negatively on buying patterns and educational budgets.
South African publishers currently feel that deficiencies in provisions for enforcement in South Africa copyright legislation hamper their efforts to enforce the rights of their authors. Also of concern are shortcomings in the criminal justice system, where there seems to be little awareness of the importance of intellectual property protection among police and prosecutors and there is insufficient capacity for the prosecution of criminal cases. Penalties for copyright infringement are regarded as insufficient and the print industries sector would like to see the introduction of statutory damages, both as compensation for plaintiffs and as a deterrent for offenders.
Copyright Observance
The issues that face rights holders in the print industry sector, from authors through to booksellers, include the lack of a reading culture; the lack of respect for copyright; a failure to realise the value of knowledge products; and a sense of entitlement which assumes that information should be available free of charge.
That the provisions of the Copyright Act are often ignored in educational institutions, in administrative offices, in companies and, indeed, throughout society, is not unique to South Africa, or even unusual. The ideal situation, from the point of view of authors and publishers, would be an effective legal system and a mature licensing system operating in all these spheres, such as exist, for example, in the Scandinavian countries, Canada and Australia, where intellectual property is respected and public awareness is high. That situation, however, is a long-term objective. In the meantime, rights owners’ urgent concern is with the education and academic sectors, for that is where their heaviest losses are incurred.
Copyright Infringement in South Africa
Copyright infringement in South Africa is not a matter – at least not yet -- of the mass piracy of trade books, like the pirated editions of Harry Potter titles that have appeared internationally, but of systematic copying of various kinds in the educational sector, public sector and businesses. While piracy of this kind of DVDs being imported into South Africa is causing concern to international rights holders like the IIPA, popular books have not been the targets of similar piracy.

Illegal Copying in Tertiary Institutions

Course Packs
In the recent history of copyright infringement in South Africa, levels of copying in the universities and technikons have been of particular concern to publishers. Infringement takes two forms. The first is the unlawful (that is, unlicensed) dissemination of supplementary reading material by the institution to the students. This typically takes the form of the ‘course pack’, a compilation of, say, one chapter from each of three or four books, two or three journal articles, and lecturers’ own notes. The course pack may be photocopied in the institution’s ‘print room’, or in the library, or on departmental photocopiers. In some institutions, a few loose-leaf copies will be placed on the reserve shelf in the library’s short-loan collection for on-copying by students. This is a neat arrangement because the students pay the photocopy costs upfront with coins or ‘smart-cards’ (instead of the lecturer or departmental secretary having to collect money from them) and the high levels of use on the leased machines result in a discount to the institution. The drawback to the lecturers is that making the copies is at the students’ discretion and the lecturer cannot ever be sure that they are acquiring the necessary material.
The drawback to the publishers is that they receive no recompense. The argument for legalising course packs (through a statutory amendment permitting compilations) is usually that since only small portions of the books were required, the whole book would not have been bought anyway, so the work has been normally exploited and there has been no unreasonable prejudice to rights owners. This is wrong. A book may be exploited in many ways through the kinds of rights deals mentioned above, and the income publishers expect to receive from licensing is often essential since it is ploughed back into the development of more titles, contributing to the creation of new works.
A decade ago, publishers would have pointed to the proliferation of course packs in higher education institutions as the major problem. This is now coming under control as a result of the negotiation of blanket and transactional licensing through DALRO. There is a much greater awareness in higher education institutions of the need for copyright compliance and the risks of infringement.
Although there are still gaps and there are undoubtedly still institutions and departments who do produce illegal course packs, this is no longer the major problem it once was and the extension of blanket licences to more higher education institutions would improve the situation even further.
Student Copying in Copyshops
If course pack copying is progressively being brought under control, the same cannot be said about the other prevailing form of infringement – the unlawful copying by students of whole books as a substitute for buying them. Most piracy (for this is what it is – the production of counterfeit copies of published works) takes place off-campus, in copyshops usually strategically situated near the gates of the university or technikon. The practice is of course not licensable. It will remain a serious problem, unlikely to improve until the higher education institutions ‘conscientise’ their lecturing and student bodies into re-evaluating the role of the book as against that of the photocopy.
It is almost impossible to quantify the losses to publishers from students photocopying their prescribed textbooks instead of buying them. Even when the number of books sold nowhere matches the number of students in a class it is dangerous to make assumptions, for one has to consider that students often buy their books second hand, or work in a group with one student buying the book and the others sharing it. Nevertheless, reports often reach PASA and DALRO of students lining up at copyshops to purchase photocopies, and there are even copyshops which display notices advertising their cheaper ‘versions’ of the prescribed texts – cheaper, that is, than the genuine articles on sale in bookshops.
Case Studies
One of the authors of this report was contacted by a bookseller serving one of the technikons. She was concerned that although she had ordered sufficient books to supply only half of a certain class, she had still not sold a single copy, and so she asked the lecturer whether he realised that none of his students possessed the required textbook. He undertook to make enquiries, and came back the next day to say that on the contrary, every student in the class had the textbook – it transpired that every student was in possession of a photocopy.
In 2000, it came to the attention of a Kwa-Zulu Natal publisher that a copyshop in Empangeni was copying large volumes of school, college and academic textbooks. It appears that this copyshop was supplying schools and other educational institutions across the province with pirated, photocopied books. An Anton Pillar order was obtained and the multiple copies of pirated books were seized. A group of publishers laid charges of criminal copyright violation and the copyshop owner was successfully prosecuted. The case took a considerable time to get to court and the publishers concerned made a major contribution in assisting the prosecutor in assembling expert evidence to lead the case. In spite of the fact that costs were awarded against the defendant, the publishers concerned nevertheless landed up substantially out of pocket. Although they considered the deterrent effect worthwhile, they nevertheless got no recompense for their losses, nor for the time and effort put into ensuring that the case was effectively prosecuted.
Late in 2002, it was reported to DALRO that a copyshop was operating right outside two higher education institutions in the Western Cape, supplying counterfeit photocopied books to students on a massive scale. Although the police were informed immediately, and took the information seriously, it was not possible to collect evidence and take action as the academic year was drawing to an end. Illegal activities started up again, however, with the opening of the 2003 academic year.

CONTAINER RAID IN THE WESTERN CAPE UNCOVERS ILLEGAL PHOTOCOPY OPERATION On Friday 28 March 2003 the Criminal Investigation Unit based at Bellville Police Station conducted a raid on shipping containers inside which a company, Budget Copy, was carrying out a photocopy operation seemingly offering students at two higher education institutions in Cape Town the opportunity to purchase photocopied textbooks. One set of containers was situated between the Unibell Station and the back entrance to the University of the Western Cape, ostensibly serving students at the University of the Western Cape, and the other was between Pentech Station and the back entrance to Peninsula Technikon, offering a similar service to students at Peninsula Technikon. The raid was carried out by the police at the request of the legal firm of Spoor & Fisher, acting on behalf of their client the Dramatic, Artistic and Literary Rights Organisation (DALRO). The police confiscated 331 photocopied books awaiting collection by students, fast-feed ‘master copies’ from which the counterfeiters could easily run off duplicates and 8 large-capacity photocopy machines. Although some of the photocopied books had been published abroad, the majority of titles copied were from local publishers such as Juta, Butterworths, Heinemann, Van Schaik Publishers, Nasou and Oxford University Press Southern Africa, and there were multiple copies of many titles, especially law textbooks. When the raid was over, and the containers emptied of both the counterfeit goods and the equipment used to produce them, a crowd of students gathered and demanded refunds. They had, after all, paid for the ‘books’. Some had handed in their friends’ books, or library books, to be copied, and now they were not going to get them back. The number of students in the crowd was a clear indication of how pervasive the practice had become, how good business was for the copyshop and how serious are the losses to the copyright owners – the authors and publishers. Bystanders confirmed that these businesses were ‘gold mines’ and had been running for years; at certain times of the year they were so busy that the machines ran into the night. When the owner of Budget Copy turned up, he pretended to be ignorant of copyright law, yet a hand-drawn poster on one of the containers cautioned students that books were copied at students’ own risk. Other posters advertised popular textbooks – actually listed by name – at special quoted prices. There seemed to be some sympathy for the ‘enterprising’ owner of Budget Copy, as if he was trying to make an honest living, and one can only assume that those who expressed sympathy are ignorant of the law and of the damage caused. Annual losses to the South African publishing industry through copyright infringement are estimated at millions of rands, but it would be short-sighted to imagine that the damage stops there. If students choose to photocopy their prescribed texts instead of buying them the end result will be the failure of the local industry; indigenous scholarly writing will no longer have a local outlet and books will become even more expensive.

Although it has been argued that books are already too expensive and that students, many of whom are financially disadvantaged, cannot afford them, it is surprising that there has been so little condemnation of the copyshop owners who were, after all, making a handsome profit out of the students while supplying them with inferior counterfeit goods at the expense of the legitimate copyright owners. In effect, buying an illegally photocopied book instead of the real thing can be compared to receiving stolen goods.

It is well-known that copyshops operate near almost all the South African higher education institutions and that many students have no compunctions about saving a few rands by buying an unlawful photocopy rather than the book itself. Students and copyshop operators should be warned. They can be certain that the ‘container raid’ was only the beginning and flagrant disregard for copyright will result in further action to root out offenders.
If found guilty, the copyshop owner in the Western Cape ‘container raid’ faces severe penalties, but the students who contributed to his profits will not necessarily be penalised. Students everywhere should realise that the long-term effects of photocopying textbooks will harm them, for it will drive prices up even further. Higher Education institutions should no longer tolerate large-scale copyright infringement operations on their doorsteps and it is hoped they will take note of this incident before they too suffer the embarrassment of a raid on a copyshop serving their students.
The owner of Budget Copy is liable to be charged with criminal activity under either the Counterfeit Goods Act or the Copyright Act. In terms of both these statutes a first conviction will lead to a fine not exceeding R5000 or to imprisonment for a period not exceeding three years, or both, for each article to which the offence relates. In theory, the owner of Budget Copy could face a fine of over a million and a half rands.
The Causes of Student Copying
The causes of students’ failure to buy books have been laid at many doors. One of them is said to be the lack, in many cases, of adequate bookshops on or close to university and technikon campuses for while campuses in urban areas are usually well-served, those outside major urban centres are usually not. However, although it would seem obvious that when students cannot easily buy their prescribed textbooks the first obstacle has been placed in their paths, the results of an informal survey conducted among librarians in nine higher education institutions contradicted the prevailing view that if only books were more easily accessible students would settle for photocopies less often.
More, better-stocked bookshops are therefore not the only answer. University and technikon authorities ascribe the photocopying of textbooks to their high cost and claim that if publishers reduced their prices students would buy more books. But, in researching book-buying for this report, we have found no evidence that cheaper books are bought more often than more expensive ones. Cheaper books are therefore not the only answer either. The call for cheaper books usually goes hand in hand with the cry that ‘students are poor’. However, financially disadvantaged students are by no means the only ones who photocopy books instead of buying them. On the contrary, copyshops in the vicinity of institutions whose student body is substantially middle-class seem to be doing even more healthy business.
Curbing Illegal Copying
The most obvious route for publishers faced with illegal copying is to take offenders to court. However, especially where the offenders are institutions that are important customers of the industry, court action is not always the most effective way of attaining respect for and compliance with copyright.
Pilot studies undertaken in Norway to examine the relationship between blanket licensing, copyright consciousness and book-buying have not as yet thrown up conclusive evidence, but what came out of the studies was that awareness campaigns and licensing together have served to curb piracy and to encourage the sale of more books.
The burning question is whether the balance between the conflicting needs and interests of creators and users should be accommodated in the law or by voluntary contractual arrangements between the parties. This Report takes the view that exceptions to the exclusive right in the law itself should be confined to the minimum and that the balance should be provided by voluntary contractual arrangements. This is what has worked in other countries and there is no reason to believe that South Africa is different. The voluntary system is entrenched in our law and is in line with the constitutional right to property whereas compulsory exceptions in the law usurp personal rights and are thus arguably unconstitutional.
The publishing industry, while recognising the importance of the availability of information in a society such as South Africa’s, does not believe that it is the role of a private sector industry group to subsidise the education of poorer students by effectively offering them free study material. Nor can it take responsibility for shortcomings in university library budgets. It therefore suggests exploration of the provision of textbooks to disadvantaged students, including ring-fencing bursary funds for books.
RECOMMENDATION

7. 
   If there is to be progress in dealing with the legislative and other policy issues causing conflict between rights holders and users in the tertiary sector, and spilling over damagingly into other sectors, there is a need for government involvement in creating a conducive environment for an understanding to be reached on the desirable balance in South African legislation and practice. This can readily be achieved by:
   

1. 
   The promotion of collective licensing priced to offer affordability and access to rights users as the most effective mechanism for addressing the problems faced by the Higher Education sector.
   

2. 
   Attention to the proposed regulations, along the lines of those gazetted for the music industry, which will define the government’s approach to the accountability of collecting societies and will introduce and clearly delineate a regulatory mechanism by which the collecting society’s activities will be transparently exposed and at the same time legitimised.
   

3. 
   Urgent attention to the legislative amendments needed to remove ambiguity on the limits of photocopying for personal use and in the educational context; the strengthening of enforcement measures; the provision of a stable basis for policy-making on copyright for digital media. These would constitute a necessary first step preceding any of the issues listed below.
   

4. 
   Better communications between the DTI and industry stakeholders to ensure a balanced response to the submissions of the different sectors of society.
   

5. 
   Support for ANFASA to ensure balance in proposed legislation and policy, as probably the majority of authors writing non-fiction in South Africa are active in higher education. It is recommended that academic authors become more active in protecting their rights as authors and that educational campaigns on copyright and contract be provided for authors.
   

6. 
   Education and awareness programmes among students and lecturers on the value of intellectual property.
   

7. 
   High-level discussions between industry associations and SAUVCA on the most desirable policy environment for the development of academic publishing in South Africa and the creation of the best possible environment for access to knowledge and research information.
   

Illegal Copying In Schools
The levels of copying taking place in schools in South Africa are giving increasing cause for concern. Publishers are aware of schools in which entire textbooks are being copied and sold by teachers and the KwaZulu-Natal case mentioned above revealed wholesale production of pirated, photocopied textbooks being supplied to state schools.
Members of the publishing industry who are parents of children in public schools have reported that classes are supplied with ‘textbooks’ that are compilations of extracts from different published textbooks. Illegal anthologies of poems, short stories and extracts form novels have long been a feature of South African classrooms.
Publishers in the Western Cape, reviewing textbook buying patterns, have come across instances where very low book purchasing budgets are accompanied by very high photocopying budgets. Similar patterns have been identified by the Gauteng Department of Education.
The overwhelming majority of school textbooks are locally produced. Textbooks are purchased by provincial government departments, leading to a situation in which the government is in fact the major book purchaser. In this arena, therefore, the purchaser is not the end-user.
Schoolbooks are the staple of the South African publishing industry. When the schoolbook market falters, as it did in 1997, the ripple effect – downsizing, job losses and demoralisation – affects the whole industry. The growth and development of publishing, writing and reading in South Africa thus depend very critically on viable markets in school textbooks.
Problems in the schools sector include high levels of classroom copying of compilations, anthologies and even of whole books. It should be noted that in those cases where educators are copying published books and selling them to learners, whether at cost or for profit, they could be found guilty of criminal copyright violation in a court of law and, if found guilty, would have a criminal record.
In a successful prosecution of a copyshop in KwaZulu-Natal conducted by a group of publishers, large volumes of pirated books were seized, apparently intended for sale to schools throughout the province.
Although some teachers compile and distribute compilations of their own learning materials together with extracts from published sources (school versions of course packs)²⁸, this was not in the past the primary source of publishers’ losses because the majority of teachers especially in rural schools are ill-prepared to devise their own teaching materials and have preferred to rely on textbooks.
However, now educational publishers fear, with some justification, that in many schools books are not being bought because they are photocopied instead, purportedly to save money. When a school orders one or two copies of a title for a whole class, or when its paper spend exceeds its book spend,²⁹ suspicions are justifiably aroused. Publishers’ sales representatives and parents are increasingly reporting that schools are using the promotional copies supplied to them and then photocopying and selling these pirated copies of books to parents. These products are likely to be inferior in quality to the published books and also more expensive.
Educational specialists in the publishing sector also complain at the pedagogical problems created, and the undermining of the intentions of the new curriculum, by teachers who misguidedly copy extracts from various textbooks, carefully conceptualised by their authors to provide coherence in approach, assuming that these are the ‘resources’ needed by the new system. Instead, this illegal copying not only undermines the viability and the cost-effectiveness of the publishing industry, but also undermines the integrity of published works and detracts from the appreciation of books as a source of enrichment.
The publishing industry has not yet been able to quantify the levels of such alleged infringements or of losses to the industry, and this report is unable to provide statistics either, for none exist. The best the authors of this report could do was try to gain insights about the extent to which publishers are being cheated and what the attitudes are of the leading education departments.
The Effects of Illegal Copying in Schools
Ironically, high levels of copying, often carried out with the aim of reducing costs, has the opposite effect. Low prices for textbooks depend primarily on the length the publishers’ print runs – the higher the print run the lower the cost. In general, photocopying a school textbook is likely to be more expensive than buying the book in cases where substantial print runs have led to economies of scale and low prices.
It is therefore not only in the interests of school authors and publishers, but also of the provincial education departments to cut back on excessive copying in schools.
Copyright Awareness Campaigns in Schools
In the Gauteng Department of Education (GDE), the Copyright Forum, an informal grouping of teachers, librarians and officials of the Library and Information Services (LIS) and Learning Support Materials (LSM) drafted a policy document for its schools on the Copyright Act, which is distributed as a manual for use by school principals. The basis of GDE policy is that excessive photocopying inhibits creativity whereas teachers should be encouraged to develop their own, original materials where feasible; a further motive is the fear of legal action against a school, for which the Department would be ultimately liable.³⁰
The development of this policy is admirable; however, implementation is altogether more difficult. To stimulate copyright awareness is important, but to control infringement is difficult, and the GDE admits that the means of control in its schools are lacking. The Department has no hard facts and no statistics. It has, however, noticed bloated stationary allocations in some schools and is already investigating.³¹
As far as the schools are concerned, therefore, publishers do not believe that the short- or medium-term solution to the problem of copyright infringement lies with the law (although they would vigorously oppose any initiative to relax the current legal provisions).
The best solution would seem to be campaigns on copyright awareness, with the print industries and the National Department of Education working together to promote an understanding of the value of relevant locally-produced textbooks. The ultimate goal would be the negotiation of licensing agreements, with statutory backing.
The print industries sector is concerned that such practices not only undermine the most important book market in South Africa and contribute to higher costs for school textbooks, but also that a pattern which undermines respect for the value of books in education is being established very early on in the education system.
Collective Licensing in the Schools Sector
In other countries (the United States, the United Kingdom, Europe, Australia and New Zealand, for example) schools hold blanket licences, negotiated through departments of education, and far more is collected from them for disbursement to rights owners than from higher education institutions.
DALRO has reported that two provincial education departments in South Africa³², having investigated the principles of blanket licensing, are in favour of it. South African publishers, however, are wary of extending blanket licensing to schools right now because they fear that in the current situation, with very low levels of copyright understanding in schools and little respect for copyright, the system could be abused. Moreover, none of the provincial education departments has the infrastructure, at present, to administer licensing.
Nevertheless, the door should not be closed on the extension of blanket licensing to schools, as international experience, in countries like Australia, Canada and Norway, suggests that this is the most effective way of providing for classroom needs for supplementary materials while ensuring protection for the rights of authors and publishers.
There is cause for concern at the levels of illegal copying in schools, the losses this is incurring for publishers and the negative impact that this has on book prices.
Rising levels of illegal copying in schools can and should be addressed, in the first instance, through awareness and educational campaigns in schools. The positive levels of communication and understanding that now exist between the Department of Education and the publishing industry is encouraging and should help address the situation.
RECOMMENDATIONS

8. 
   Rising levels of illegal copying in schools can and should be addressed, in the first instance, through awareness and educational campaigns in schools. The positive levels of communication and understanding that now exist between the Department of Education and the publishing industry are encouraging and should help address the situation.
   

9. 
   Factors in the educational system aggravating the trend towards copying should be addressed with the national and provincial departments of education and departmental cooperation sought in combating illegal copying.
   

10. 
    Education departments and educators should be made aware of the risks attached to gross copyright violation.
    

11. 
    Following on policy initiatives on the ownership and accountability of collecting societies in South Africa, and in the wake of copyright awareness campaigns in schools, there needs to be an investigation, with the print industries sector, DALRO and the DoE of the desirability of introducing blanket licensing in schools for print and digital copying of resource materials.
    

3SOUTH AFRICA –

THE LEGISLATIVE ENVIRONMENT