The Finnish Government’s Consultation on eBooks: The Curious Case of Cherry Picking and Mistaking Lending for Renting

Photo: Matt Ryall, CC-BY 4.0

A 2023 public consultation in Finland on eBooks, to which Knowledge Rights 21 responded, has just closed. It recommends that the existing system of payment by the government for loans of books and audiobooks from public libraries is updated to cover e-books and e-audio books.

However while we support this in principle, the government’s specific recommendations are highly problematic.

Libraries and taxpayers paying for the failings of publishers

Firstly, publishers (and so, whether they liked it or not, authors also) decided at the eve of the digital era that the way to give access to eBooks for libraries is by licence. Thus, from a legal standpoint library lending of eBooks is governed not by copyright law but by contract law.

This has had a number of damaging consequences for not only libraries but also education, research and the public more broadly. As eBooks are licensed, it means that libraries do not have an automatic right to buy eBooks anymore, with publishers outright refusing to license libraries eBooks not uncommon. Even where they do agree to license them, the licences come with strings attached, as well as delays, the risk of removal of titles with no warning and other downsides that make many in the library profession wonder if giving access to eBooks via libraries is sustainable.

Yet this has not necessarily worked for authors either. From their perspective, this means that it is only if the publisher contract requires royalties to be paid that they can benefit financially from loans by libraries. In other words, whether payment for loans from libraries in Europe is forthcoming depends on what the contract between the publisher and the author says.

Yet as the Finnish consultation concludes, “the question of remuneration cannot be solved by agreements between authors and publishers.” Why not? You may ask.

In plain English, the Finnish Government appears to have concluded that authors in Finland are not being adequately remunerated for e-Book loans from libraries when they are subject to a licence. This is seemingly not uncommon.  In fact, a 2017 study by Auteursbond and the Lira Foundation found that 68% of authors received no royalty payments from publishers at all for licensed-based loans of eBooks.

Cherry picking to make up for market failure

Turning to the specifics of the Finnish recommendations, essentially what is being proposed in response is that the taxpayer steps in to rectify the issues that licensing has brought about – inadequate licence-based payment to authors from publishers for loans of e-books and e-audio books that take place in libraries. This evidently has its origins in authors not being in a position to negotiate favourable contractual terms with their publisher, rather than addressing the original question at hand – how to ensure that libraries are able to offer a full and meaningful collection of eBooks to their users.

Therefore, in spite of publishers (and therefore authors) having rejected copyright law as the means for libraries to lend e-Books (as they have chosen to regulate these activities by private contract law) what is now being proposed by the Finnish government (like the UK government before them) is cherry picking from copyright law to make up for the market failure that has resulted from licensing.

What do we mean by this? In Europe, the law provides that lending from public libraries, where based on copyright law (i.e. that a library can outright acquire a work and lend it as allowed for in the law), is subject to payment. These payments, derived from the European copyright framework are called “public lending right payments”, or sometimes just “PLR”. Where loans are based on licences, no payments are required to authors.

To put it another way, rather than the Finnish Government intervening to require publishers to pay authors fair royalties for library lending when subject to contract arrangements in the first place (something we wholeheartedly support), some of the cherries from copyright law are being selected to solve the issue of the market failure that a reliance on licensing has brought about.

The European Court of Justice (CJEU) has already ruled that lending of any e-book available on the market is already lawful under existing copyright law – namely the Rental and Directive (See Vereniging Openbare Bibliothekenv Stichting Leenrecht C-2016:856 “VOB”). What the Government should be doing is benefitting not just authors, but members of the public, schools, universities and researchers by implementing this 2016 ruling clearly into Finnish law. Given that some publishers are refusing to license libraries at all in Finland, or books may not be available in electronic form[1], this would be a clear win for libraries, authors and the taxpayer who is being asked to pay for this.

Rather than doing this, the Report in fact bends over backwards to avoid the VOB CJEU case. It does this by muddling two entirely separate rights that are provided by copyright law. Namely, it confuses lending (in law defined as “making available for use, for a limited period of time and not for direct or indirect economic or commercial advantage, when it is made through establishments which are accessible to the public” e.g a library) with rental (“making available for use, for a limited period of time and for direct or indirect economic or commercial advantage”, e.g by a commercial entity like Amazon etc)[2].

The Report incongruously suggests that from a legal perspective a CJEU case (Nederlands Uitgeversverbond and Groep Algemene Uitgevers v Tom Kabinet Internet BV and Others C-263/18) relating to commercial rental of e-books by a private company is more relevant to e-book library policy making than a Court of Justice ruling on not-for-profit e-book lending by libraries (i.e. VOB). Confused? We are too.

In doing so, it asserts that a European Court of Justice ruling explicitly on eBook lending by libraries and the lending right (as along as subject to PLR payments to authors and loan on an owned to loaned basis) is not relevant to eLending. Instead, we are supposed to believe a case on a different exclusive right in copyright law (rental), undertaken by a private company for profit is!

The upshot is that the Report proposes that new payments for authors for e-Book library loans should sit outside copyright law, but nevertheless sit in parallel with and be modelled on the PLR payments for authors paper loans from libraries as required by copyright law.

What of course this does, by adopting copyright norms in determining principles, but ignoring them in their delivery breaks the link between the right of libraries to lend all books and author payments.

Why cherry picking is bad for the public, students and researchers

The issue with the Finnish proposal is that whilst it seeks to borrow copyright-based principles to make up for market failure, it does not provide any benefits to libraries or their users. While it will result in taxpayers paying for the shortfalls of publisher-author contracts, it won’t guarantee access to all licensed e-books to the public via libraries – something that copyright law guarantees in regards to paper books.

As our submission and our position paper outlines, Knowledge Rights 21 believes this is unacceptable. The paper – digital gap surrounding book loans must be closed. As is the case with paper books, libraries should have the right enshrined in copyright law to lend any eBook also. Instead, the proposal undermines freedom of expression, education and science as guaranteed by the Finnish Constitution, and by not guaranteeing access via libraries to all eBooks, it undermines the public interest.

We believe that if the Finnish Government wants to rely on copyright norms to solve issues caused by licences and contract law, it should not cherry-pick bits from copyright law and abandon the rest. If authors are to have a new right to be paid for library loans of eBooks (equal to the law that across Europe requires for paper lending), then this should be accompanied by the parallel new right for libraries – namely the right to acquire and lend any eBook available in the market. Furthermore, a library should have the right to digitise any paper book and lend it on a one copy one user basis. (For more information on this, see our eBook position statement).

Whilst we support fair remuneration for authors we are opposed to some rights in copyright law being extended for the sole benefit of authors (in order to take the pressure off publishers to pay them properly) without them being extended in parallel for the benefit of libraries and their users. This would be unjust and unbalanced, and we believe runs counter to Art 16 of the Finnish Constitution, as well as undermining the role of libraries as set out in the Finnish Public Library Act (1492/2016) – for example, the obligation to maintain versatile and up-to-date collections and versatile literacy skills. [3]

In conclusion, we believe the Finnish proposal offers little if anything to libraries. Whilst we strongly support authors receiving fair remuneration for library loans, if the Finnish government wishes to do this without supporting the ability of the public to loan any book they want from a library, it should seek to reward authors by only intervening in the currently unequal contractual relations between publishers and authors.

In other words, if the centuries old tradition and the public interest of being able to access any title from a library in support of freedom of expression, research and education is not to be respected, the Finnish government should seek to sort out the problem with publishers, rather than ask the taxpayer to pay for it.

[1] Additionally, given that a book may not be available in electronic form it is important that a library has the right to digitise a paper book and lend on a “one copy-one user” basis.

[2] See Article 2.1. Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (codified version)

[3] Laki yleisistä kirjastoista  Sect 6.

14 February 2023