Assessing the Economic Impact of Copyright Reform in the Area of Technology–Enhanced Learning

Executive Summary

This report examines the economic impact of a number of possible changes in the provisions of the Copyright Act applying to educational institutions. The legislative proposals being examined would broaden the “exceptions” in the Act applying to non-profit educational institutions in two respects: by extending them to distance instruction; and by expanding them to include the educational use of films, videos and certain publicly available material on the Internet.

The proposals are aimed at addressing concerns about the costs and difficulties of licensing non-print materials for educational use. The significant transactions costs involved in arranging licenses, along in some cases with the costs of royalty payments, are a deterrent to the use of digital content and other non-print materials in ways that are not covered by the educational exceptions in Sections 29.4 to 30 of the Act. These issues have taken on increased importance with the growth in distance education courses delivered online or with online enhancements and the rising use of computer-based technologies within the classroom, in research and in other education-related activities. Although the licensing of digital content is being facilitated by new online search and rights management systems, these developments only partly address the problems schools and universities face in responding to the growing demand of staff and students for access to electronically transmitted content.

Changes in copyright law can be assessed in terms of their consequences for natural or moral rights and on the basis of their expected economic impacts. The latter, which is the focus of this study, requires an estimation of the opposing impact of changes in copyright protection on incentives for the production of intellectual products and on access to these works by consumers, including those who would draw on these works to create new intellectual products. An assessment was made of these and other impacts of a number of the options stakeholders have proposed for reforming the provisions of the Act pertaining to educational institutions.

Extending Current Exceptions to Distance Education

Under Sections 29.4 to 29.6 (1) of the Act, reproduction of certain types (handwritten material onto a dry erase-board or flip chart, copies for use in a overhead projector) or for specified purposes (tests or examinations), the playing of radio and television programs at the time they are aired, and the copying of a news program or news commentary for showing later over the year are exempt from licensing requirements, so long as these occur “on the premises of an educational institution”. These are all activities that tend to occur with little advance planning. While the exceptions introduced in the 1997 amendments to the Act facilitate these activities in classroom instruction, current licensing requirements essentially preclude these activities in distance education. Extending the exceptions to distance education would be beneficial since it would encourage schools to make greater use of materials that confer gains in excess of their costs of provision. At the same time, this reform would not have any significant impact on incentives for creation of the relevant content.

Under Section 29.5 (b) of the Act, an exception is provided for sound recordings played within classrooms. In distance education where this exception does not apply, the complicated pattern of ownership rights and the difficult and lengthy processes involved in obtaining clearances have been a deterrent to the use of sound recordings. Extending the exception in the Act to distance education would allow instructors to take advantage of new opportunities for presenting their material and not have any significant negative impact on incentives for production of sound recordings.

Instead of extending these exceptions, the government could create a conditional exception that would be terminated when and if the requirements of educational institutions could be met through blanket licences. A conditional exception creates the incentive for strategic responses by stakeholders and would be very difficult to successfully implement. If these difficulties could be overcome, the net benefits are still likely to be less than those that would result from simply extending existing exceptions to distance education.

Facilitating the Showing of Films and Videos

Two options to facilitate the showing of films and videos were examined: extending the list of exceptions in Section 29.5 of the Act to the showing of films and videos on school premises; and expanding the definition of the classroom so that rights obtained for the performance of films and videos would apply to all showings, including those to distance education students. Both reforms would likely to produce significant social benefits. Providing an exception for classroom showings would allow institutions that are under budgetary constraints to take fuller advantage of educationally useful films and also reduce the outflow of royalty payments to foreign rightsholders. The second proposed reform directly addresses the problems institutions face in clearing rights for the use of films and videos in televised and on-line distant education courses. As with the other reforms discussed above, the consequences for producers and creators, who are generally targeting the overall North American if not the global market, would be extremely small.

Facilitating Access to Materials on the Internet

Under one proposed reform, an exception would be introduced in the Act to allow educational institutions to freely access content that has lawfully been made available on public Websites. This measure would respond to the concern that most use of the Internet as a learning vehicle occurs outside of schools. The Copyright Act would facilitate and encourage the use of Internet materials in coursepacks, distance learning, and classroom instruction and support the growth of online learning, which is seen to be important to Canada’s evolution as a knowledge-based economy. A policy to facilitate access cannot affect creative incentives where works have been produced without any expectation of compensation, which is the situation for the vast majority of material available on public Websites. The reform of copyright law would complement technological changes that are making it easier for those who want to charge for use of their material to control access and negotiate licensing agreements.

An alternative option would be to allow free access to public material on the Internet until a suitable blanket licence becomes available. It would be very difficult to establish criteria for an “adequate blanket licence”. Moreover, while a licence offering access to all Internet material of potential interest to students and teachers could be financially burdensome for some educational institutions, much of the royalty income it would generate would be owing to foreign rightsholders. Hence, as with the other reforms being considered, the preferable option is simply to extend the exceptions in the Act relating to educational institutions.