Excellent. Thank you for the opportunity to appear before the committee. We certainly appreciate the opportunity to add our perspective to what is a very critical area of concern for us and for all of our stakeholders.
As mentioned, my name is David Swail, and I'm president of the Canadian Publishers' Council. Our organization represents 16 of Canada's largest publishers operating across all segments of our industry, including trade publishing, higher education, K-12, and professional markets. Our members are a mix of Canadian-owned firms and the Canadian subsidiaries of global publishers such as Penguin Random House, HarperCollins, Pearson, Scholastic, and Nelson, among many others.
Our members' aggregate revenue in 2017 was $853 million, $384 million of which was with our customers in K-12 and higher education. Collectively, we directly employ more than 3,000 highly skilled, knowledge-based workers and many thousands more in freelance and contract capacities, such as writers, editors, subject-matter experts, designers, illustrators, researchers, printers, and the list goes on, as you would imagine.
In 2017, we spent $40 million in advances and royalties with Canadian authors, and our members sell over 90% of the books that are purchased by Canadians each and every year. All of our members are for-profit, taxpaying companies in Canada, and the majority of our members receive no government grants.
I would like to focus my remarks on three main areas that have been affected by copyright modernization, and in particular by the fair dealing exception for education. Those three areas are jobs, investment, and innovation.
Before that, I would first like to make clear to the committee that the Canadian Publishers' Council members count the education sector among its most important customers. During consultations on CMA pre-2012, we were clearly in support of the concept of fair dealing, including fair dealing for education. Our only ask at that time was for language in the act that would clarify the intent of the education exception and, in particular, definitions that would safeguard the commercial market for the resources that our members develop on behalf of education sector customers. Our understanding then was that this was a shared goal with our education customers.
Much of what has transpired since 2012 has confirmed our deepest concerns with the vagueness of definitions in the act. Therefore, our ask of this committee and this review process is that some clarity and balance be brought back to our marketplace.
Let me now return to the three themes of jobs, investment, and innovation.
As mentioned, we employ more than 3,000 Canadians directly but many times that number more in the important ecosystem that develops educational content for Canadian students and educators. These are predominantly highly skilled jobs that rely on an expert understanding of key subject areas, such as math and science, and the ways in which our education sector teaches those subjects to Canadian students from province to province.
Canadian publishing professionals are recognized widely for their expertise by the global firms that employ them, and they are regularly called in to help with international projects where our skills at understanding instructional design and learning outcomes are highly respected. We pride ourselves in developing content that is matched to provincial curricula, has the highest level of quality and relevance, and importantly, is a strong reflection of the key elements that constitute Canadian identity and culture. This cultural relevance is a core requirement of our customer base, and it is what differentiates our products from foreign-sourced materials that were previously predominant in Canadian classrooms.
The lost income that has resulted from collective licences being abandoned has had a significant impact on Canadian publishers' margins. You heard a figure of $30 million, which is roughly 16% of industry profit, according to some measures. That makes Canadian publishing firms inherently less profitable and therefore less able to support employment levels. Over the past five years, our members have reduced their workforce by 5% each and every year, a number that equates to close to 200 jobs, year in and year out, for many years running. At the same time, we have increased our technology-based jobs and introduced roles like developers, programmers, webmasters, etc., and related skill sets to our workforce. We've retrained our customer support people to handle technology support. We send experts to Canadian schools and campuses to help educators learn how to use digital resources in their classrooms effectively. However, we are still down 5% per year in employment even after those add-backs.
Turning now to investment, a critical strategy for Canadian publishers continues to be the development of digital platforms and products to serve the education sector. We do this in response to demand for these kinds of innovations from educators. Canadian publishers have been world leaders in the development and adoption of these key technologies, building Canadian solutions and adapting global platforms for Canadian use.
This effort has led to significant redirect of publishing investment away from print and towards technology that is often adaptive to student needs, and therefore, more efficient, more current, and often less expensive for customers. That investment is inherently at risk when the return on investment is reduced. The result is that global publishers increasingly see Canada as a less viable and more risky market than it was pre-2012, and investment levels in our sector continue to be at risk and to drop.
Three of our members, Oxford University Press, Emond Publishing, and McGraw-Hill Education, have exited the K-12 sector since 2012, which has led to a reduction in resources and diversity for K-12 classrooms in particular. Employment has decreased, but as you would expect, other areas of publishing investment have also been dropping.
Last, let me touch on innovation, which of course is closely tied to investment. I have mentioned our members' strategic shift towards digital resources. This has had a major impact not just on our employment and the nature of that employment, as mentioned, but more importantly on students and teachers and student outcomes. Today, all of our members have digital solutions that adapt to student needs, presenting only the most relevant and timely material to optimize their study time and learning outcomes. We enable teachers across the entire spectrum of K-20 to assign, grade, and assess student outcomes in a far more efficient manner than ever before using these technologies. This is particularly important for distance learning, as you would imagine, which encompasses many first nations students.
This significant progress, in which Canada has been a world leader, is driving our students' abilities to compete in a global economy, but it is at serious risk when investment levels drop. The opportunity to both originate and adapt global solutions for our classrooms is lost when global firms find it more efficient to simply offer unadapted global content with minimal or no Canadian input.
As we make this critical transition in our business, it is clear that some degree of reliance on print will continue to have a role in classrooms: hence, the 600 million pages that are copied without compensation every year in Canadian schools, colleges, and universities. We ask that the legislative language we have tabled be used to restore this marketplace for content reproduction as a properly compensated one. This will enable critical funds to continue to flow back into the creation of Canadian educational resources with the attendant benefits to students, teachers, creators, and knowledge workers, who have long been a part of our country's high achievement in education.
Good afternoon. My name is John Hinds, and I am the president of News Media Canada.
We represent over 700 daily community and weekly newspapers from across the country, from coast to coast to coast, in both English and French. We're very pleased that you're holding these hearings because it's a critical time for the newspaper industry. Our currency is our content, so a good copyright regime is crucial to our business.
As you are aware, we are an industry that is facing a huge challenge as our business model has been disrupted. We're in the process of moving from a traditional industrial business where most revenue was from print advertising to a digital model where revenues come from readers and advertisers.
The one challenge the industry does not have, however, is a reader challenge. Canadians are consuming more and more newspaper content, with about 88% of people reading every week. They are obviously changing how they consume our content, although print is still read by about six in 10 Canadians every week.
Newspapers in Canada remain the biggest source of news in most communities, employing almost two-thirds of working journalists in the country. As you're aware, good content is expensive, particularly investigative and public interest journalism, which I think we would all agree is important to the functioning of a civil society. The newspaper industry continues to make big investments to produce quality fact-based stories in every community in this country.
However, we have a big challenge. As an industry we need to be able to get a return on the substantial investments that we make. Unfortunately, under the current copyright regime, this is becoming harder and harder to do. As we adapt our businesses to the realities of the digital market, we need to have a better way to protect that investment.
Historically, newspapers have complained about “rip and read” by our competitors at local TV and radio stations. At the time we understood that this was the price to pay for being a leader in news. However, the situation in the digital world is a totally different game. Free riders such as Google News and other aggregator sites are making no investment in content yet are making millions from our content. It's a sad fact of the Internet that many companies, large and small, old and new, Canadian and foreign, systematically scrape and republish newspaper content for commercial purposes, without payment or permission, and the current copyright regime allows it.
I would venture to say that each of you makes use of a news aggregator service in your parliamentary office. What's happening today is that our content is being scraped, copied, and distributed by commercial organizations, which then profit from displaying newspaper content without permission. It's clear that readers and advertisers value the editorial content from newspapers that appear on third party websites, platforms, and search engines, and this brings enormous value to these parties. In addition, publishers are increasingly seeing that these third parties are becoming substitutes for the original publication.
A free and independent press can only exist if there's adequate revenue to pay journalists, editors, photographers, and freelancers, among others. Today this arrangement is being eroded by a loss of revenue. The majority of the advertising revenue goes to search and social media. In addition, we see the unauthorized and unremunerated large-scale use of publishers' content, and the lack of legal recourse to deal with large-scale infringements.
Press freedom is not just a function of law; it depends on a market that can generate sufficient returns to the huge financial investment required to cover the large legal and commercial risks of the news business. A strong and vibrant market with meaningful rewards for success is an essential component of a strong, independent, and free press. In order for publishers to continue to produce news, analysis, investigative reporting, features, opinions, and to cover institutions such as Parliament, there has to be fair value exchange between those who produce content and those who distribute it.
What we are seeking is a change to the balance of the law, with publishers having control over their content and being provided with legal protection and clarity. We hope that any new legislation would provide legal protection by introducing rights to protect the unauthorized reproduction and distribution of publications in the digital space.
This is something we see in film, music, and software, whose works are copyrighted. The law gives the creators of content in those industries the legal right to decide how and when their content is made available, and perhaps equally as important, to enter into fair and appropriately negotiated agreements with users. We would like to be clear, however, that this is for commercial purposes only. Any new right would have no impact on anybody's right to link or share articles. Publishers, of course, encourage their readers to link and share their articles through multiple share buttons on a website or application.
We've been continually told by members of the government that we need to embrace new business models. Canada's newspapers have made an important transition to digital over the past decade, with high degrees of innovation and large growth in audiences. We've embraced the digital age, and many newsrooms now contain as many technical staff as editorial. However, large-scale exploitation of the content by third parties without prior authorization/remuneration, makes it difficult for publishers to sustain quality independent journalism.
It's essential that Canada's copyright regime catches up with today's realities and allows publishers the right to control the commercial use of their content.
Mr. Chair, first of all, I would like to clarify something: I represent Wikimedia Canada, but not the Wikimedia Foundation.
Members of the committee, let me introduce myself: My name is Jean-Philippe Béland, and I am the vice-president of Wikimedia Canada.
The mission of Wikimedia Canada is to give Canadians free and open access to knowledge, in addition to providing them with the tools and skills required to contribute to sharing their knowledge globally. We help Canadians to collect, develop and disseminate their knowledge and other educational, cultural and historic content in all languages of Canada, including aboriginal languages, under a free licence or in the public domain.
In this context, a free licence is a licence that the authors apply to their creations, which allows anyone to use, transmit and edit the content of creations without permissions or royalties, while the authors retain authorship of their works.
This work applies in large part to online projects, under the Wikimedia platform. Wikipedia is the most known of Wikimedia projects. It is a collaborative encyclopedia consulted by several million visitors every day and is available in over 300 languages. The Wikimedia projects are supported by the Wikimedia Foundation, based in the United States, and of which Wikimedia Canada is an official branch.
Wikimedia is a non-commercial and advertising-free platform. Unlike Google or Facebook, the Wikimedia Foundation does not keep personal data profiles of its users.
The importance of Wikipedia in the field of access to knowledge is well established. The encyclopedia is developed by thousands of volunteers from around the world, including many dedicated Canadians. The site is ranked sixth among the most visited sites in the world, and it is very often among the first results given by search engines. We can say with certainty that Wikipedia is one of the most popular sources of information and knowledge among citizens. In fact, it is a central node in the Web ecosystem, since Facebook and YouTube recently announced that Wikipedia content would be a central element of their plan to combat false news.
The type of licence used to distribute content on Wikipedia is a cornerstone of the project, enabling the widest possible dissemination of knowledge by allowing the content to be reused without royalties or permissions.
In a letter from its ministers, the Government of Canada stated that an “effective copyright system should foster a market and an environment in which all users have access to content … for the purposes of information, entertainment, education and cultural heritage”. Wikimedia Canada is proud to see the Government of Canada's efforts for open government. For a government to be considered open, it must promote all means that make information accessible to its citizens. Wikimedia is one such means.
It would be wise to take advantage of the exceptional referencing of Wikimedia projects in search engines. Good quality and reliable information should always be among the first research results to which citizens have access.
Contributors to Wikimedia projects are very enthusiastic about accessing quality content from the Canadian government to improve articles in the free encyclopedia. To date, there is a major barrier to the use of this content. Indeed, it is protected by default by crown copyright, which prohibits its use in Wikipedia and other Wikimedia projects.
In order to address this problem of knowledge dissemination, it is our view that the Copyright Act, specifically section 12, which governs crown copyright, should be revised to make government and agency data free for use. Therefore, we propose that the Canadian government replace crown copyright with placement into the public domain of all its works or, at a minimum, grant a licence allowing their reuse without having to request permission, including for commercial purposes. This proposal is entirely consistent with the vision of Canada's open government. Ultimately, this would allow Canadian content to be reused and, as a result, more widely disseminated and accessible for the benefit of all citizens.
Let's take a simple example. In the United States, where the work of federal employees is automatically placed in the public domain, government produced photographs are used to illustrate Wikipedia articles and are subsequently reused by journalists for whom Wikipedia is often the first reference.
Currently, many encyclopaedic articles on topics of interest to Canadians are illustrated with photographs from the U.S. government, as they are in the public domain, or with poor quality photographs. If the Government of Canada adopted a policy similar to that of the United States, the government's official photographs would be placed in the public domain and could be used on Wikipedia to illustrate the articles concerned.
Let's take a slightly more complex example, which involves all of the Canadian government's data collected by its researchers across the country. Making this data accessible to all would allow the reuse of data sets for new research and collaborations, both in Canada and internationally. We can think of weather data, for example. If these data were made compatible with those in the Wikidata database, researchers and citizens around the world would have access to them. In addition, the Government of Canada and its citizens could benefit from the fact that the Wikimedia Foundation offers free cloud hosting to maintain this data. In addition, they could be integrated with other data for further research and better results.
Such provisions would not change the protection of classified documents and other confidential information that must remain secret or not be disclosed to the public, since this information is already protected by other laws and regulations and these would apply.
I would like to thank the committee for inviting Wikimedia Canada to participate in the Copyright Act review process. We remain available to participate in efforts to make government more open and accessible.
I would be pleased to answer all your questions.
Thank you very much.
It's interesting. In terms of your comment about the print media, I think lately we've seen that somewhat in northern Ontario through Sault Ste. Marie. We've seen the decline of the other media as well. Television is now centralized in Sudbury, where they have some reporters. CBC used to have a stringer and now they don't. But there has been a rise of some of the Internet companies, like SooToday, that also have a presence in Guelph and in Thunder Bay, etc. I'm sure you're familiar with them.
One of the differences as well, it seems to me, is that some of these Internet companies that are starting up aren't necessarily unionized and don't have a collective agreement—
Mr. John Hinds: No.
Mr. Terry Sheehan:—and they have different revenue streams that they're trying to work on.
I've watched the evolution of SooToday and the Sault Star. The Sault Star is trying to pick up some of the Internet presence. To get to my question, one of the things the Sault Star will do, say, is put out an article and then share it with Facebook and Twitter.
Has there been any thought about any kind of compensation? Facebook loves it, and the Sault Star must want to do it as well, because when I share with my x number of followers, there it is. Are there any thoughts or discussions about how any kind of compensation could happen by using social media and, if you will, the traditional forms of media?
Yes. I think everybody recognizes the value of social media. I think we all see those articles on social media, and newspapers put a lot of their content on social media. I think that's a voluntary thing. What we're more concerned about is the compensation model when it's not done voluntarily. Using social media vehicles to drive audiences is one thing, I think, and that's essentially voluntary.
Google is another example. I mean, there are a lot of them. If you talk to Village Media, which owns SooToday, you can see that they have a very effective relationship with Google.
Mr. Terry Sheehan: Yes, they do.
Mr. John Hinds: Interestingly enough, in a lot of cases, they don't use Google ads. They sell their own advertising in the Soo and in those communities, because you just can't make enough money on the Google ads. They're selling their own ads but they're using a lot of the tools, many of which are free. It's the classic frenemy discussion that our members have with it, but obviously social media is absolutely key to the future.
The challenge we find is about retaining the brand, though, because I think one of the things you see is that even if you talk to people and they say they get all their news from X social media site, they're actually not getting their news there. They're getting the news from a journalistic brand. I think that's a really important connection to maintain in a world where really all you have is your intellectual property and your brand. I think part of the scraping and part of the non-licensed content distribution destroys that brand connection with the reader. If you get it on social media, and it's put there by the brand, the brand is there. It's a Globe and Mail story, say, on Facebook and that's clear, but it's not the generic story, one where you don't know where it came from.