Book Industry Strategy Group
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Book industry strategy group FINAL REPORT TO GOVERNMENT SEPTEMBER 2011 BOOK INDUSTRY STRATEGY GROUP 1 © Commonwealth of Australia 2011 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Department of Innovation, Industry, Science and Research, GPO Box 9839, Canberra ACT 2601. ISBN 978-1-921916-21-2 DIISR 11/129 Editing by Wilton Hanford Hanover Design and artwork by GRi.D Printed by Elect Printing, Fyshwick Acknowledgments The Chair and members of the Book Industry Strategy Group would like to acknowledge the generosity of the following organisations in providing data for the research into the Australian book industry: » Australian Publishers Association » Copyright Agency Limited » Nielsen BookScan Printed on Pacesetter Satin, which has ISO 14001 (Environmental Management System in use), FSC (mixed sources — product group from well-managed forests and other controlled sources. Also produced using elemental chlorine-free (ECF) pulps. BOOK INDUSTRY STRATEGY GROUP 2 Letter Senator the Hon Kim Carr Minister for Innovation, Industry, Science and Research Parliament House Canberra ACT 2600 Dear Minister On behalf of the members of the Book Industry Strategy Group, following the review requested by you in April 2010, I present the Group’s report on the Australian book industry. In setting up this review, you asked that the Group assess the impacts of digitisation on the whole book supply chain. Since work began on the review, the speed of change has escalated and major impacts have already been felt within the Australian industry. The closure in Australia of 130 Borders and Angus & Robertson bookshops, although not solely resulting from digitisation, demonstrates the scale of change that is occurring. The findings and recommendations contained within the report reflect the need for government and industry to work together to achieve the reforms required for the Australian industry to compete effectively within the global market. The industry recognises the need to innovate and to invest in infrastructure to sustain a local industry which, in turn, supports the development of Australian content and creativity. In presenting this report to you, I would like to acknowledge the dedicated contribution made by a broad group of people. First, I thank the members of the Group, especially my Deputy Chair, Louise Adler, who made a major commitment of time and resources to produce this report. In addition, I recognise the contributions made by the hundreds of consumers and industry operators who participated in the Group’s consultations. Officers from your Department were exemplary in their support, energy and expertise. The Book Industry Strategy Group records its appreciation to you, and them, for providing the resources to make its work possible. I am also grateful for the work of my technical adviser, Dr Dennis Perry. Yours sincerely The Hon Dr Barry Jones AO Chair, Book Industry Strategy Group 30 September 2011 BISG members Ms Louise Adler, Deputy Chair Mr Philip Andersen Mr David Barnett Ms Lorraine Cassin Mr Graeme Connelly Mr Tom Crago Mr Alan Fahy Mr David Gaunt AM Mr Ross Gibb Mr Alexander Grant Mr Angelo Loukakis Mr Emmett Stinson BOOK INDUSTRY STRATEGY GROUP 3 Mr Chris Warren BOOK INDUSTRY STRATEGY GROUP 4 Contents Letter of transmittal 3 Terms of reference 7 Executive summary 8 List of recommendations 11 Prologue: Cultural development and creativity in the digital revolution – a personal perspective 15 PART 1 UNDERSTANDING THE BOOK INDUSTRY 21 1 Introduction 21 Note from the Chair 21 The scope of this review 22 Policy background 24 2 Economic contribution of the industry 27 Sales income 27 Exports 30 Employment 33 Investment and innovation 33 Regional impact 34 Economic contribution by subsector 34 3 Current operating environment 39 Technological change 39 Changing consumer preferences 41 Emerging trends in digital readership 44 Response by the Australian book industry 48 A competitive environment 53 Commercial uncertainties 58 Copyright and piracy 60 4 Book industry SWOT analysis 61 PART 2 TRANSFORMING THE INDUSTRY 64 5 Industry transformation strategy 64 Competitive advantages 64 Opportunities 64 Actions 65 Industry outcomes 65 The future 65 BOOK INDUSTRY STRATEGY GROUP 5 6 Recommendations 68 Integrating the book supply chain 69 RECOMMENDATION 1: Book industry collaboration 69 Competing effectively in the global book market 71 RECOMMENDATION 2: GST and price 71 RECOMMENDATION 3: Postal rates 74 RECOMMENDATION 4: Parallel importation of books 76 RECOMMENDATION 5: Export support 77 Improving supply chain efficiencies 81 RECOMMENDATION 6: Book distribution network 81 RECOMMENDATION 7: Digital infrastructure 83 RECOMMENDATION 8: National university press network 85 Rewarding and protecting creativity 88 RECOMMENDATION 9: Digital copyright protection 88 RECOMMENDATION 10: Lending rights for ebooks 90 RECOMMENDATION 11: The statutory licence for education 91 RECOMMENDATION 12: Protecting copyright online 92 Supporting the business environment 95 RECOMMENDATION 13: Digital skills development 95 RECOMMENDATION 14: Statistical data 96 RECOMMENDATION 15: Small business development 97 RECOMMENDATION 16: Book print industry reform 99 RECOMMENDATION 17: Digital content for schools 101 RECOMMENDATION 18: Tertiary education materials 103 RECOMMENDATION 19: Tax support for authors 106 Supporting Australian culture 109 RECOMMENDATION 20: Literature Board review 109 RECOMMENDATION 21: National Book Council 111 APPENDIXES 114 Appendix A 114 The Book Industry Strategy Group 114 Appendix B 115 Addressing the Book Industry Strategy Group terms of reference 115 Abbreviations and acronyms 126 References 127 BOOK INDUSTRY STRATEGY GROUP 6 Terms of reference The Book Industry Strategy Group’s terms of reference recognise that digital technologies are changing the way books, both printed and digital, are being produced and delivered, and the expectation that books delivered on digital platforms will command a growing share of the market. The terms of reference are: 1 What digital platforms for books are available in Australia, how they work, what features they offer, and how extensively they are used. 2 How fast the market for digital delivery of books will grow in Australia and internationally, what factors might slow or hasten that growth and what is the relative position of printed books. 3 The potential size and structure of the Australian digital and printed book markets, taking into account (a) demand from individuals, libraries, government agencies, and research, educational and cultural institutions; (b) the needs of the aged and people with disabilities; and (c) the needs of regional and remote communities. 4 How the supply chain for trade, educational, scholarly, scientific and technical books has been, and will be, affected by digital technologies, taking into account the impact on authors, publishers, printers, wholesalers, retailers and consumers. 5 Options for encouraging efficiencies in the supply chain for printed books, integrating it with digital delivery of books on a global scale, and increasing the overall competitiveness of the Australian book industry. 6 (a) How business models are likely to change in the digital environment; (b) how this is likely to affect business models for printed books; and (c) what can be done to facilitate these changes. 7 Opportunities for the Australian book industry to participate more actively in the global marketplace for printed and digital books over the next decade, including by creating, adopting, and using new technologies. 8 How existing Commonwealth programs and activities can be refocused to support the industry’s adaptation to new technologies. BOOK INDUSTRY STRATEGY GROUP 7 Executive summary The traditional book supply chain in Australia – authors, publishers, printers, booksellers – is changing at an unparalleled pace. The emergence of digital technologies is affecting book production, publishing, distribution, marketing, communications, online retailing and consumption. In addition, digitisation and globalisation are eroding the protections formerly provided by Australia’s geographical barriers, forcing its book industry to compete in the global marketplace. In spite of these changes, the impacts of digitisation and globalisation are creating, and will continue to create, opportunities for the book industry. However, books are more than an industrial output, as conventionally defined. The book culture must be stimulated and transformed. Publishing must not be looked at only in terms of its economic value but also of its relationship to culture and education in general. The opportunities presented by the digital revolution should be welcomed and the publishing industry should be moving fast to adapt. Publishers, governments and institutions should be looking for imaginative links between themselves, including, for example, opportunities for Australian universities to combine to create a major academic publishing house for ebooks and print books. In order for the Australian book industry to continue to serve its critically important cultural and educational role, its economic viability must be assured. In the current environment, where protective barriers brought about by distance or other market protection mechanisms are being lowered, continued economic viability simply