With
- Peggy Intrator
- Stevan Mitchell, Office of Intellectual Property Rights
- Lui Simpson, Association of American Publishers
Presented at BookExpo America 2015
Recorded May 28, 2015
For podcast release Monday, June 1, 2015
KENNEALLY: Welcome, indeed, everyone. My name is Chris Kenneally. I’m with the Copyright Clearance Center, online at copyright.com, and very happy to welcome you to a program called Content, Copyright & (Global) Commerce. Across the world of publishing, change is underway. Book publishing and distribution are fundamentally different than even a few years ago. An opportunity at a global scale is available to all sizes of publishers.
With a combination of digitally-driven print-on-demand and e-commerce services, as well as innovation in shipping and delivery, publishers are reaching readers on all continents. However, they must remain vigilant to protect their greatest assets – the content itself – from piracy and other unfair dealings.
Today’s session is targeted to publishers like yourselves ready to expand business beyond the US as well as for multinational publishers looking to learn more about current trends and breaking news in global licensing, exports, and copyright. Obviously, as a representative of a company called Copyright Clearance Center, with copyright in our first name, we find all of these issues very important and really believe that education is the best way to shed light on areas that can be sometimes dark and mystifying.
I’m known among my colleagues for saying, if you’re confused about copyright, then you’re beginning to understand the problem. It can be a real tangled web, and one that I think, after today’s session, will seem a lot clearer and a lot easier for you to grasp and use in your business lives.
There’s a quote from Albert Einstein – he said the world is a dangerous place to live, not because of the people who are evil, but because of the people who don’t do anything about it. I think that that really applies to the world of copyright and licensing. Everyone here in this room has a real stake in intellectual property, in promoting its value, in espousing the importance of respect for copyright. That is our responsibility. We need to really take that message with us wherever we go, not only here at a conference like Book Expo, but in our working lives and around the world.
A colleague of mine, Victoriano Colodron, at the London Book Fair, gave a kind of a TED talk – a kind of personal expression of his interest and concern and really respect for copyright. We’ve been tweeting that out under the hashtag of #copyrightconundrum. He made a couple of points that really fit within that 140 characters that I want to share with you. Here’s a few. Critics say old copyright rules should no longer apply. Critics say copyright restrains access to knowledge. Critics say copyright stifles creativity and innovation. Even the most extreme critics call for total elimination of copyright.
So are they right? Do critics of copyright have a case? I think, if you listen to our program today, you’ll find out that, indeed, we have a case on behalf of copyright, and we look forward to presenting it with you.
To do that, I am joined by a great panel today. Moving from the very far end, I want to welcome Peggy Intrator. Peggy, welcome. Peggy is a print and digital publishing consultant with successful and varied experience in launching and operating print and web-based publishing enterprises for both consumers and educators. She specializes in leveraging cutting-edge brand strategies, creating e-commerce marketing solutions and developing product lines. Her executive experience includes positions at Scholastic, Simon & Schuster, and Oxford University Press.
In the middle here, we have Stevan Mitchell. Stevan, welcome. Stevan is director of the International Trade Administration’s Office of Intellectual Property Rights – OIPR – at the US Department of Commerce. OIPR promotes foreign market opportunities for exports of US products and services through advancements in trade policy and provides direct assistance to companies seeking to protect and enforce intellectual property rights in foreign markets. Previously, Stevan served as vice president for intellectual property policy for the Entertainment Software Association.
And then directly to my left is Lui Simpson. Lui, welcome. Lui Simpson joined the Association of American Publishers – AAP – in August 2009 as executive director for international enforcement and trade policy. She manages the association’s enforcement program in several Asian markets as well as AAP’s engagement on copyright, technology, and international trade policy issues with both US and foreign governments. Prior to joining AAP, she was senior counsel for intellectual property policy at the Entertainment Software Association – so a bit of a mini reunion for Stevan and Lui. I’m very happy to have all of you here.
Peggy Intrator, I wonder if we could start, because I think the notion of global commerce for a conference like Book Expo – hardly new, but really is a shift if we look back over just the last 10 years, because before that time, the US market was really very much an internally focused one, and that is increasingly not the case.
INTRATOR: OK. Looking at it a little historically, even as long as 10 and 20 years ago, the US publishers were interested in the international market, but it was mostly for English language teaching products, which always had a market overseas, for reference products – so the STM area – and selling off foreign licenses. That’s been going on for a long time.
The difference is that now publishers – all publishers – can look for international sales, and suddenly there’s a rise in the number of online global retailers. That’s one of the easiest ways for publishers in the US to start to get foreign sales. And there are many agencies opening up to help people sell international rights. So that’s the biggest shift.
KENNEALLY: Right. So your sales force doesn’t have to be enormous. You can really take care of this regardless of the size of the shop.
INTRATOR: And because the world’s gotten to be a smaller place, more and more titles that are popular in one country are known in other countries, and so people want to be part of whatever that international phenomenon is. That happens in children’s publishing for sure – even in English, not necessarily translated to other languages – and with international characters and brands.
KENNEALLY: Right. One of the things I think we’re going to find out this afternoon is that expectations around certain markets may not meet the realities of those markets. We’ll talk about that in a moment. But I wonder if you could point to some areas that are particularly exciting right now. We’re hearing a great deal about China today and throughout Book Expo, of course. They’re the guest of honor for BEA this year. It’s always been said, and continues to be said, that there’s great opportunity in China, but there is great opportunity elsewhere as well. Can you point to a few specific markets?
INTRATOR: There is great opportunity for English books in the Philippines, for example, which is in itself an English-speaking market, and in Singapore and Malaysia. The low-hanging fruit for publishing US books overseas would be the English-speaking markets overseas. There is the international schools market, which is a great place for not just education titles, but also trade books. And there’s the whole university-level market, which has always been a great opportunity for English books.
That’s just talking about English. If you want to talk about publishing in other languages, Korea does a lot of buying of foreign licenses, as does Japan. India is a great English-speaking market. I forgot to mention that one. Brazil is right now a very hot market for buying foreign licenses.
KENNEALLY: Right. Obviously the greater proportion of people attending Book Expo come from the trade book world, and that’s an important piece of this, but there are other aspects of publishing that do equally well – the education you’ve begun to speak about and professional books. In that marketplace like India, where English is a pathway to success, people would be homing in on those kinds of titles.
INTRATOR: English is a pathway to success in many Asian countries as well. That’s one of the reasons why children’s books do so well in Asian markets.
KENNEALLY: Right. Lui Simpson, I know that you also really want to call out the Philippines as an interesting case, because within Asia, they’ve done a great deal recently to really advance the cause of intellectual property rights.
SIMPSON: I do. But I just want to go back to a point that Peggy made. I think, in many of these markets, especially English-speaking markets like the Philippines, there already is a population that engages in reading for pleasure, and you don’t find that in, I would say, other Asian markets – for instance, like Taiwan, where the focus really is on the academic side, on the higher education.
While higher education publishers, STM publishers already have a market in those countries, you don’t yet find a significant market for English-language books in the trade world. But in the Philippines, as Peggy said, characters that are well known here, well known in Europe already find a ready market for them in the Philippines.
I think one of the important things that a publisher looks to when investing in a market or looking to go into a market is what the status or the state of intellectual property protection in that market is. I’m speaking not just of the copyright framework but, frankly, the ability of law enforcement, the judiciary to take on IPR cases where the rights-holder is ready to protect its rights.
In the Philippines, for the longest time, they were sort of a basket case country. You had not only counterfeits in all other content, but in the publishing market, unauthorized photocopying was rampant. Schools, universities did nothing about educating their students about the importance of respecting copyright – and frankly, respecting the copyrights of professors that were at that point teaching them.
So in the last few years, I think with especially the country being registered continuously on the Special 301 Report that is published by US government that identifies markets or countries that do not provide adequate and effective protection for intellectual property, the Philippines created an IP office or, frankly, reinvigorated it and appointed a director that was personally invested in ensuring that the government, his people, law enforcement were more dedicated to ensuring that rights were protected. With the advent of that newly revitalized and reinvigorated office, they did a lot to shut down markets that were notorious for trafficking or providing access to counterfeit and infringing materials.
KENNEALLY: There’s a great lesson there, it seems – if you can get the government behind it, if the rights-holders themselves support these efforts, if they really make a positive effort, they can effect some change, it seems.
SIMPSON: That’s true. I think, for the most part, many expect rights-holders to take on actions by themselves. And for the most part, rights-holders do, because it is private property. It is your responsibility to go out there and protect your rights.
But frankly, there’s a limit to what a private person can do in terms of protecting their rights, and government does have a very important and critical role to ensuring that the message is delivered that while rights-holders will take whatever action may be necessary to protect their rights – within the bounds of law, of course – government is integral to ensuring that those efforts are successful, and that they continue, and that the market receives the message that government itself has an interest in promoting the creative sector of their society. Because otherwise, if you leave it all to rights-holders, then the investment that should otherwise go into creating more works that the consumer desires and more innovative ways to delivering the content that the consumer desires – it’s going instead to enforcement investment as opposed to investment in developing those creative works.
KENNEALLY: Right. Stevan Mitchell, the Special 301 Report that Lui Simpson and indeed, I think, Peggy Intrator have mentioned – tell us a bit more about that. We’ll get to some of the surprises on that list in just a moment. But that’s a report that isn’t simply prepared by the government. It’s based on input from the public from businesses as well as individuals.
MITCHELL: That’s right, Chris. For folks who might not be familiar with the process, I would encourage you to look into it a little bit, not only for what it enables government to do, but for the information that it provides to you guys, who are looking to potentially expand or export products to particular markets.
The Special 301 process is an annual reporting process that is run by the US Trade Representative, but involves the participation of all of the interested agencies – all of the interested departments and agencies of the US government. Each year, the government opens up an opportunity for industry, for NGOs – for nongovernmental organizations – to report on the quality of protection and enforcement efforts they’re receiving in our trading partner countries. There’s no limit to the number of countries that industries or authors or organizations can bring to our attention through this process.
Filers have responded. We each year get hundreds of submissions a year as part of the Special 301 process and, as a result, look through them. And USTR releases, at the end of April each year, a report ordinarily identifying anywhere between 30 to 50 countries for some form of treatment, ranging from watch list to a priority watch list or even priority foreign country for countries that are failing to live up to their obligations to protect intellectual property and allow market access to US intellectual property owners.
But the interesting educational part of this – now there’s the government part, there’s the Special 301 Report that issues. It gives the government an opportunity to negotiate with these countries and to help improve their levels of protection. But what’s interesting is particularly under the Obama administration, all of the information that’s submitted as a part of this process is now entirely public. It can be found on regulations.gov, which means there are literally thousands of pages of documentation of other industries’ experiences in particular markets. So rather than having to hire counsel in country, rather than having to fly over and do a survey of various markets or online markets, you can literally learn from the experience of others from their Special 301 filing and really get a very good idea about which export markets are more attractive than others just with a few hours of online research.
KENNEALLY: It’s interesting because you’re sort of letting your competitors, your customers, and everybody involved do some of your market research for you. Fascinating.
MITCHELL: Absolutely. That’s true. Yeah.
KENNEALLY: At the same time, we talk about watch lists – and we’ll get into some of the countries on those watch lists and priority lists and so forth – we don’t necessarily want to leave the impression that this is to frighten people away from conducting business internationally or to be overly concerned about or to panic regarding their intellectual property rights being sort of thrown to the wind. Is that correct? Is that how you see it – this is not to frighten people, but to inform?
MITCHELL: That’s absolutely right. It has been called a carrot-and-stick approach. It’s been called a negative list approach. But the fact of the matter is that Special 301 exists for the US government to deliver an official message as to how other countries are doing with respect to commitments they’ve already signed up to, whether through the TRIPS agreement, the WIPO treaties, other bilateral commitments that they’ve made to the US or to other countries. It’s a report card on how they’re doing on commitments they’ve already made.
KENNEALLY: Right. Indeed, that report card just came out. As you say, it comes out in April, and you’ve released that. Can you give us some of the highlights of the Special 301 for this year?
MITCHELL: Sure. There are the countries that are perennially on the Special 301 list at the priority watch list level, sometimes because of legal deficiencies, more often because of enforcement deficiencies. They include Russia, China, India for various reasons. Oftentimes these are particular copyright issues that have been identified. Other times, they are patent deficiencies or failure to adequately enforce patents or trademarks. It’s again based on input from a broad variety of industries and stakeholders.
I would encourage everybody here to check out the 2015 report in particular. It used to be that the introduction to the report was very brief. It laid out the statutory authority for Special 301, and then most of the filing was in the appendices, where there were pages and pages of descriptions of particular countries’ authority, how well they were doing in protecting IPR under that authority.
This year, the 2015 report has an extensive preface that really characterizes the state of international IPR – how important it is, countries that are doing things that are commendable and that should be emulated by other countries, where legal reform and enforcement efforts are going, where there are new threats to product release and product distribution. It really is a remarkably informative government product, and I recommend it to our –
KENNEALLY: Right. Lui Simpson at AAP, I would imagine – I haven’t read the report myself, but I would imagine AAP contributed or at least offered thoughts on that. But I know you did respond to the report itself. There was something from the beginning of this month. It would surprise people, I think, in this room to hear about the importance of copyright concerns, not in countries they might suspect, but in Canada.
SIMPSON: That’s true. AAP is part of a larger coalition of copyright owners called the International Intellectual Property Alliance. Our comments on many countries – some of which Steve has already mentioned – are directed or channeled through the IIPA. And I’m glad you raised Canada, because it is surprising that a market that one presumes to be as developed as Canada does present significant problems for the publishing industry.
KENNEALLY: The issue there is around so-called copyright reform, which I think we want to talk a little bit about more broadly. But in Canada, I believe in 2012, they reformed the copyright law and led to some –
SIMPSON: Unintended consequences.
KENNEALLY: – unintended consequences.
SIMPSON: Canada had been engaged in a long copyright review and reform process. They went through three versions of a bill. Finally, in 2012, as you mentioned, they finally adopted what is called the Copyright Reform Act. The problem there was, although they succeeded in adopting a framework that does put into place some of the so-called World Intellectual Property Organization Copyright Treaty requirements, such as improving their protections for technological protection measures, which ensures that a rights-holder can protect access to his works, the problem with the Canadian law was it suddenly decided that it would include, undefined, the so-called exception for education as fair dealing.
As you can imagine, when an exception is undefined, when parameters are not set for what education means, for how education should be applied, and by what institutions, many of the educational institutions in Canada decided that, well, since it says education, that essentially guarantees us the right to do whatever we want with published products. So many school districts decided that they were not going to renew licenses with the copyright collecting society in Canada, that they would not engage in appropriate adoption processes, because, presumably, one school that bought one copy could then make copies of the same textbook for everybody in that school.
There’s been a sea change in the way in which royalties are being paid to access copyright. If you’re not collecting royalties or paying royalties on books that they do use, it does present a significant problem in terms of royalties being paid to authors and publishers.
So we’ve taken up that issue. We have asked US government to engage more significantly with the Canadian government to find out exactly what can be done to address that matter. So far, there hasn’t yet been, I would say, significant effort by the Canadian government to find out exactly what’s going on in the market, where the market is failing and what, in terms of the current law, can be done without actually engaging in another long and arduous legislative reform process.
KENNEALLY: Right. It’s interesting, of course, because when one hears about reform, whether it’s for copyright or anything else, it’s always a matter of reform on whose behalf. We are hearing of calls for copyright reform here in the United States, and it’s true as well in the European Union. The ironic part there is that the parliamentarian representing the case for copyright or against copyright, as it were, is with the German Pirate Party, and she will be helping to direct the reform efforts there.
So again, I think the point to be made for this audience is to be watchful regarding all these things. One hears about reform and thinks, oh, well, that’s nice. But indeed it can have the kinds of consequences with a direct impact on their businesses.
SIMPSON: That’s true. I think, for most governments, they are for the most part thoughtful in the way they undertake copyright review and reform. I would just point to the process that’s been going on here in the US. I think it’s almost over two years – right, Alan (sp?) – or close to two years that the US – well, at least Congress, the House Committee on Judiciary, has been engaged in what they have insisted calling a copyright review process. Essentially, they’ve conducted hearings on significant topics that matter to publishers, such as the making available right, preservation, educational uses. They’ve conducted a lot of hearings to determine where the gaps might be, what might need fixing, and frankly, what isn’t broken and shouldn’t be fixed.
I think, for many rights-holders, the thinking is we’re done with the hearings. Frankly, enough has been said about what needs to be done, what cannot be done, and what shouldn’t be done. And we look to Congress now to take up seriously what it should be doing in terms of identifying where fixes can be made and what fixes they should be.
We have yet to reach a stage where legislation in draft form will actually come out, but I do think, as Chris mentioned, it’s very important for rights-holders such as yourselves to be engaged in that process. Frankly, the Association of American Publishers has been very engaged with every government agency that you can think of and with Congress in ensuring that the publishing industry’s concerns, the publishers’ interests are adequately expressed and, as best we can, protected when reform actually does take place.
If you’re interested in finding out those positions, I would encourage you to go to www.publishers.org and find AAP positions on the many important issues that do have or will have an effect on the way you conduct business.
KENNEALLY: Peggy Intrator, as you work with your clients in looking at foreign licensing opportunities, foreign rights opportunities, these issues matter because the rights that they have or don’t have is really – that’s what it’s going to come down to. The rights issues absolutely must be clear, or they could be in legal rough waters.
INTRATOR: What I was thinking about as I was listening to the conversations was that for most publishers big and small, the way you operate overseas is you get partners that you get to know. If you’re trying to sell into Korea, you’re probably finding either a Korean distribution company or a Korean publisher with whom you’re doing business, and you make deals with them and you have an understanding with them, and that’s your first step.
The idea of your copyright being violated – if that happens, it is up to the rights-holder to make that happen. But for the most part, you’re working with a company that you hope is a shield for that, who is also helping to protect your rights. You’re not out there without some local people on the ground.
KENNEALLY: Right. And their experience in country really matters, because you can’t know the intricacies of every legal structure.
INTRATOR: Exactly.
KENNEALLY: Right. Stevan Mitchell, we’re hearing about a treaty – you’ve mentioned a few treaties – some abbreviations that people in the audience may or may not be familiar with, TRIPS and WIPO and so forth. But there is one that we hear a lot about in the news these days, and that’s TPP. There are some important aspects around intellectual property rights and copyright that come into the TPP agreement – or we expect to see that, because we haven’t seen the agreement yet. Talk about that. Tell us why people in this room should care about TPP from a business perspective.
MITCHELL: Thank you, Chris. I appreciate that. Of course, the treaty is still being negotiated, so I will try to give you a general sense about the benefits of agreements like the TPP generally. But I wouldn’t want you to take my comments as reflecting anything that’s currently represented in negotiating texts, since all of that is –
KENNEALLY: Fair enough.
MITCHELL: – currently still the province of the negotiators.
INTRATOR: Sorry. Can you say what TPP stands for?
KENNEALLY: Oh, I’m sorry.
MITCHELL: Trans-Pacific Partnership agreement negotiations –
INTRATOR: Thank you.
KENNEALLY: Thank you, Peggy. Yes.
MITCHELL: – which currently involve the US and 11 other countries, many of them trans-Pacific countries, including Australia –
KENNEALLY: With the exception of China, we should point out.
MITCHELL: – New Zealand. Yeah, and it does not include China, although the agreement will be open after finalized for countries that might wish to dock with the agreement in the future. It includes Australia, New Zealand, Malaysia –
F: Singapore.
MITCHELL: – Singapore and Canada and Mexico also. In many ways, it’s an opportunity to shore up our relationships with NAFTA partners as well.
KENNEALLY: So not necessarily new markets, but new provisions and protections that may come about?
MITCHELL: That’s correct. There are certain real advantages from a trade perspective to having such a broad agreement in place at this time with those nations. As I mentioned, it creates a framework for the future, for future trade rules. It is an opportune time to circle the wagons and have an agreement in place with those nations versus allowing for trade rules to be largely undefined. The fact that an agreement with those 11 nations gives us an opportunity to agree upon mutual levels of intellectual property protection, labor protections, environmental protections is an extraordinary opportunity.
More specifically for copyright owners, there are some real benefits. It includes provisions on strengthening the environment for digital products and services, affirming that copyright protection exists for those products, affirming the commitment to join the WIPO treaties and to protect against infringement in the digital environment, and to protect against, as Lui mentioned, the compromise of technological protection measures, so that the act of breaking a protection that is intended for a work released in the digital environment is itself an actionable offense, in addition to the underlying copying or the underlying infringement.
It encourages the creation of a liability-driven framework to address online infringement – something like the US notice and takedown system, which, while not perfect, has certainly been the best system seen to date to address online infringement by allowing rights-holders to notify service providers when those service providers’ facilities are being used to facilitate infringement and gives them an incentive to respond in an expeditious manner.
I already mentioned the TPM’s circumventions, as well. There are a multitude of protections for copyright holders in the digital environment. There are also provisions on border enforcement, which incentivizes customs services to do more at the border to prevent the influx of infringing product.
Of all of the talk of copyright and intellectual property reform, I wouldn’t want for anyone to take it as though it is under reconsideration within the US government. The US commitment to negotiating strong intellectual property provisions, not only in the TPP but in other agreements, is as strong as ever, and we practice it every day.
KENNEALLY: I wanted to make that point, because in an environment where, as we heard from Lui Simpson, copyright reform is potentially undermining copyright, an agreement like TPP, but not only TPP, could help to strengthen it in some ways.
MITCHELL: Absolutely. Absolutely. It represents many times the best experiences not just of the United States, but of rights-holders globally, and the systems of protection, the systems of enforcement they have found to work well for them. They then report to their trade negotiators, and the trade negotiators get together and say, OK, how can we expand this network and make it work for all of us?
SIMPSON: But Chris, a point of correction – I didn’t say that copyright reform undermines copyright. I think –
KENNEALLY: It has the potential. Excuse me.
SIMPSON: It depends on, I suppose, how engaged the relevant rights-holders are, because obviously, if you’re not engaged, then you are not there to make sure that your interests are protected. But in many respects, many governments have provisions or mechanisms that ensure that there is appropriate opportunity for rights-holders, as well as all interested parties, to provide their views as to the direction that appropriate and correct copyright review and reform should take.
There is always room for improvement, but where something isn’t broken, frankly, don’t make attempts to fix it. Because then you again engage in those unfortunate unintended consequences that may come about due to inadequate thinking as to where something should be taken or where something should go.
KENNEALLY: Right. The discussion around copyright that is taking place – has been taking place for such a long time now – is usually focused on the digital aspects of copyright, the digital transfer of materials and so forth. But I know that everybody here has a concern with alerting people to being watchful and careful with regard to the hard copies, with regard to print and so forth. Indeed, Lui, I think your experience is that some of the panic over digital may be misplaced, and that more attention should be focused on the print copies – on the potential for counterfeit in that area.
SIMPSON: I think it very much depends on the market. I think, unlike other content industries, the publishing industry very much has feet in both worlds, or a foot in both worlds, I guess. We still very much are an analog industry. We have a thriving print component that I don’t think is going to go away anytime soon. I certainly would regret if it ever did. But there is a growing and fast growing digital book side.
I think both sides should be protected. One tends to think that simply because there is this clamor for digital, that print doesn’t matter anymore. Frankly, in many of the markets that we look to and many of the markets where growth is still possible, they still very much are a print world. Essentially Asia, Middle East, Africa – those remain print worlds.
Sometimes, when I go to speak with governments that don’t yet have a thriving digital sector, they always tell us, you’re talking about all of these problems that you have online – that online piracy is decimating this industry or that industry. But what you’re forgetting – in many of these markets, we still are very much a print market. So I think it serves us well to remember that we still are an industry with a thriving analog market, and we shouldn’t forget that.
KENNEALLY: Right. Peggy Intrator, I imagine that rings true for you as well – that on the positive side of things, tremendous part of the opportunity is still with print.
SIMPSON: Definitely still with print. The statistics I have is that exports of e-books is only 6% of US exports, so 94% of the books that the US exports or receives are still in print. I think we should distinguish between e-books selling overseas and online retailers selling print books and e-books, because the big rise has been in the online retailing world, which brings in its own problems and sometimes is an opportunity for piracy to happen, because it’s happening over there, and people will take something that’s been popular for an online retailer and create pirated editions. That does seem to happen in some places.
KENNEALLY: Right. Before we turn to some questions from the audience, I’d like to take a moment to sort of reflect on why this is all so very important to the publishing industry and a phrase that we hear a lot about – the creative economy. Stevan Mitchell, the brand US really has a tremendous power and influence around the world. We have a trade balance – indeed, an imbalance in a positive way – with regard to intellectual property. Speak to that. Speak to the power of the creative economy as the US pushes out its works into the world.
MITCHELL: Thank you, Chris. I did put together a couple of trade figures that I’ll take you through slowly. Some of them pertain to IP more generally – copyrights, trademarks, and patents – others more specifically to copyright. But I think they all really do serve the theme that intellectual property, and particularly copyright, are a very valuable US resource. In the same ways that countries have their resources and seek to protect them, including in international trade negotiations, intellectual property remains the greatest resource of the United States, both in the form of product exports and services exports. I’ll give you a little bit of a flavor for that.
Merchandise exports from the IP-intensive industries in 2010 – IP-intensive industries being the ones that rely most extensively on copyright, trademark, and patent protection – comprised $775 billion, or 60% of total US merchandise exports. If you break that down into copyright merchandise, then you find that the contributions of the copyright industries to the US economy are also outsized. Jobs directly attributable to the copyright sector – and this is based on figures that are reported by the Statistic and Economic Administration (sic) and US PTO – 5.1 million jobs attributable to the copyright-intensive industries in 2010. That’s in the US job market.
In terms of job growth, job growth in the copyright sector is stronger even than job growth in other IP industries, at 2.4% per year. The copyright industries represent the largest segment of self-employed jobs, at 0.8 million jobs in the United States. GDP contributions – contributions by the copyright-intensive industries – $641 billion in value added, or 4.4% of overall US GDP.
One really surprising figure – wages in the copyright sector – copyright brings the highest weekly wages of any of the IP-intensive industries. Going back to 1990, workers in the copyright industries were paid 30% more than in other comparable industries. In 2010, this increased even further, to 77% more. So it continues to be not only a tremendous resource for the US in terms of commerce, but for US workers also.
Now, we’ve seen a transformation in recent years – and you’ve no doubt seen it in your own businesses as well – to services and to services exports. Here, the US is now doing a better job of tracking those services exports and has some fairly remarkable figures. US total services exports in 2013 – the entire pie – $687 billion. This compared to service imports of $462 billion. In other words, the United States was responsible for $225 billion more in services exports than services imports, resulting in a trade surplus.
Let’s compare this to the goods world, which we hear about all the time. There, the US continues to suffer a trade deficit of $741 billion. So while we’re losing ground in that sense, in the goods world, we continue to make up immense amount of ground in the services world, and that’s one of the reasons why it’s so important to protect those services once distributed in foreign markets.
KENNEALLY: Right. Lui Simpson, I believe it’s the case that an ideal would be a kind of global distribution model that lets goods travel around the world in sort of a frictionless way, but we don’t have that yet. It’s still very much a territory-driven marketplace. Yet publishers can really do a great deal to ensure that rights and licenses get easier, that the exchanges happen in a more efficient way.
SIMPSON: I think so. (laughter)
KENNEALLY: (laughter) Yes. Of course you do. Yeah, I hope you do. But I guess what I’m trying to say is that for the audience here, it would be about looking at the agreements that they offer, doing the kinds of things that make these transfers more easy than they might be today.
SIMPSON: The US government was going to take a look at that or is taking a look at that. One thing that came from those discussions was it is up to private sector to make sure that there is less friction in movement of goods, in the way rights or licenses may be executed, so that the consumer or the user can gain access to what would be most useful to him or her.
KENNEALLY: OK. Peggy Intrator, a final thought with regard to the creative economy? I know you have some numbers that – we hear about $687 billion and lots of billions there, and the book world still remains a very significant part of that. The lion’s share of headlines might be the latest X-Men movie or Iron Man or something like that, but books are still a very significant piece of that pie.
INTRATOR: Within what I assume is that total IP area, book publishing is about 15%.
KENNEALLY: Movies themselves are only 16% or 17%, so it’s a really neck-and-neck race, if you will, for that.
INTRATOR: Right. Exactly.
KENNEALLY: All right. With that, I want to thank again our panel – Lui Simpson with the Association of American Publishers, Stevan Mitchell with the Office of Intellectual Property Rights, and Peggy Intrator, a publishing consultant. Thank you all for joining us today. My name is Chris Kenneally for Copyright Clearance Center. Thank you, indeed. Bye-bye.
(applause)