EPUBs are an experimental feature, and may not work in all readers.

This paper was refereed by the Journal of Electronic Publishing's peer reviewers.

The Economist, a British magazine, offered a bottle of good wine to all those who would admit to having made wrong forecasts. If The Economist kept its promises, there are a good number of drunk information economists, information specialists, and information providers around Europe.

In the early Nineties, educational and cultural electronic publications were expected to be as available as those cooked meals that fall from the sky directly into people's mouths in the Land of Plenty: easy to grasp and abundant. Technological futurologists forecasted that through electronic publishing, authors would circulate their works widely, producers would see their investments rewarded by high profits, and distributors (information providers and librarians) would make cheap information widely available to all. These expectations were based on reassuring figures that predicted five to fifteen percent of the publishing business would go electronic by 2000, and for scientific, technical, and medical publications the figure would be between twenty and thirty percent of electronic publications. [1]

The forecasts were not entirely wrong. The many mergers and alliances that have reshaped the existing information and communication industries still make the headlines of newspapers and television. The conglomerates formed by the mergers between America Online and TimeWarner, or Vivendi and Vodaphone, are becoming the prominent actors of the new economy.

Today an incredible amount of information is available to all. Producers have taken advantage of the Internet to market their content and profitably penetrate institutional markets and households. Every actor within the book chain has benefited from the technological revolution. It is expected that electronic publishing will account for sixty-two percent of the publishing business by 2003.[2] Cultural policy makers have been deeply impressed by the way in which Amazon.com, Bertelsmann, Britannica.com, and others quickly penetrated the market of electronic publishing.

In spite of this, the commercial benefits of the technological revolution in education and culture-oriented electronic publishing are still linked more to expectations than to actual progress. While many entertainment products, especially for children and young adults, are now produced in electronic form, the bulk of cultural and educational publications are still produced conventionally and in conventional formats. Where electronic products do exist, they complement rather than replace print, resulting in few benefits, because publishers, distributors, and users must sustain both the printed and the electronic forms of production, distribution, and use.

Maintaining a double track system does not rationalize the distribution of cultural and educational materials, nor does it help establish a sound electronic-publishing system for them. As a result, educational and cultural materials still have a negligible market share, and their costs remain high in paper. Where educational and cultural publishers offer electronic products, their contracts are confusing and daunting. Information managers complain about the rising costs of academic publications in a climate of shrinking budgets for cultural and educational establishments. Messages threatening the end of free information highways and the advent of pay tolls, however moderate these may be, are causing concern among users of electronic publications in libraries and other cultural institutions.

What has gone wrong? Why, at the beginning of the new millennium, with so many Internet companies touted as stars of the stock market, is electronic publishing still fumbling? Why do so many firms operating in the new economy manage to double and triple their turnover, whereas cultural and educational electronic publishing does not seem to have taken off? What should be done in order to reverse this trend and make educational and cultural electronic publications appealing to both cultural institutions and households? And what policy measures can public agencies undertake to optimise the enormous investments they have made to improve and automate the educational and cultural networked infrastructure?

These questions have no easy answers. However, without altering the rules of free trade, public agencies could establish some measures that would create a better environment for cultural and educational electronic publishing. The aim of this paper is to start a discussion on the benefits of a policy framework for digital publications that should be promoted by public agencies, concentrated on a few measures.

  • Reinforce copyright regulations in accordance with the draft European Union Directive on copyright in the information society and monitor its future application.[3]

  • Apply the reduced value-added tax (VAT) rate for printed matter to electronic publications of an educational and cultural nature.

  • Create a functional link between the provisions governing the legal deposit of electronic publications in national repositories and national legislation protecting intellectual property.

  • Expand print-on-demand technology for all publication efforts directly supported by public agencies.

Cultural policies in the field of electronic publishing have so far been one of going with the flow, in the belief that the rapid pace of technological change does not require direct intervention as long as the market for culture and education oriented "content industries" is well established and prosperous. The time is now ripe for governments to acknowledge the need for a policy on electronic publishing, the development of which should be fostered by a culture-oriented environment. The longevity of coherent and successful book policies in practically all European states is a warrant that these proposals do not come out of the blue, but are based on a long-standing practice of government intervention that should be applied now to the electronic environment.

Trends in electronic publishing

Today four major trends can be detected in the field of electronic publishing:[4]

Internet bookshops. Prime movers in virtual book selling, such as Amazon.com, have been at the forefront of the development of the new digital economy. Today in almost every European country, one or two e-firms offer a range of titles that would be impossible to find in regular bookshops. Internet bookshops should theoretically entail consistent savings for users — up to 40% of the cover price of a book — for they leapfrog the distribution segment within the conventional book chain. In reality, savings are often erased by postal charges and overhead costs.

Electronic books. The future of the e-book is promising. It's ability to reach the market is dependent on the capacity to download texts directly from the Internet and on the availability of rich content directly bundled with the electronic book. Internet booksellers and the producers of electronic books are following the same strategy and both are working with content providers. In the near future a critical mass of e-book devices as well as of texts in electronic form in a standard format should be made available.

Digital publishing on a print-on-demand basis.[5] These hybrid publications stay virtual until they are printed, making limited print runs possible at affordable prices through special digital printing machines. Print on demand impacts both the production and distribution process. It may provide a solution for small print runs previously discouraged or prevented because of the high costs of the offset technology. It also contributes to creating a new model of distribution that makes the most of the network infrastructure.

"The medium is not only the message, it is the thinking behind any policy designed to regulate the message."

Direct publishing on the Net. The majority of publishers are waiting for electronic books to be widely diffused before converting their organizational structures and adapting them to generalized electronic production and distribution. However, some convincing strategies are being defined in this field, such as the Encyclopaedia Britannica.com, whose revenues are generated by advertising. That makes Britannica's system of content distribution more like television broadcasting than like publishing. Likewise, telephone companies are now offering free services that are supported by short advertisements during telephone conversations.

Science, technical, and medical publishers are in the forefront of electronic publishing. Most science, technical, and medical journals are available both in print and electronic formats, and some are available only in electronic formats. However, that has proven to be a problem for academic libraries because they are continuing their paper subscriptions as well as subscribing to electronic versions of the journals, thus increasing their costs substantially. So long as there is a demand for the two formats, the cost benefits of electronic publishing (some of them direct since delivery costs are minimal and the savings can be passed along; some of them indirect since libraries would need to build fewer shelves) will not be realized in libraries. In addition, the complex licenses for access to electronic publications are daunting to libraries who want to allow broad use of their holdings.

Several efforts are under way to work out solutions to this sad state of affairs. Among them are the NESLI project that provides access to electronic journals, and the JSTOR project that provides a database of articles and other materials to the higher-education and research community. These initiatives provide educational and cultural institutions access to licensed materials for a relatively small fee. Major science, technology, and medical publishers, such as Blackwell, Elsevier, Kluwer, Oxford University Press, and Academic Press are involved in this scheme.

Archiving electronic products is also a problem. Libraries and consumers find it difficult to archive electronic content in a context of rapidly changing software and technologies. A permanent collection of electronic content depends on what is offered by the publisher, and subscribers might be obliged to update and refresh all the content they possess as the publisher changes the technology. Eventually purchasing patterns may end up by being similar to those now practised in the telecommunication sector, where content is hired, but never owned. As a result, each consumer might need to re-establish a collection any time the content is packaged in a different form. This was the case for records in vinyl form; it is now the situation with analogue video being replaced by DVD technology.

With content treated as software, cultural exchanges as commercial transactions, and users of cultural content as consumers, what role is left for cultural policy?

A philosophical conundrum

One of the most difficult tasks in establishing a cultural policy on electronic publishing is to identify and define an electronic product or service having a cultural nature. Policies towards conventional cultural industries are usually medium-related. They are rooted in long-established patterns that permeate mindsets, opinions, and cultural effects. Accessing content from a television screen, a book, or a computer screen involves different practices and affordances. Books are believed to have a powerful educational and cultural impact, whereas broadcast programmes are seen as entertainment. As in McLuhan's celebrated formula, the medium is not only the message, it is the thinking behind any policy designed to regulate the message.

In traditional telecommunication regulation the democratic impetus finds its primary expression in the effort to provide universal access to a minimum level of communication services. For telephone providers, for instance, it consists (or better, consisted) of an obligation to respect some minimal requirements pertaining to universal service in a particular country, including scarcely populated areas where traffic is low.

In the broadcasting sector values are reflected in content regulations aimed at assuring that broadcasts provide the diverse information necessary for an informed citizenry. Common values such as freedom of expression and the right of reply, pluralism, protection for authors and their works, promotion of cultural and linguistic diversity, protection of minors and of human dignity, and consumer protection are among the basic principles that permeate European broadcast policy. The two main regulatory instruments of that policy are the European Convention on Transfrontier Television established by the Council of Europe on 5 May 1989, and the Television Without Frontiers directive established by the European Council on 3 October 1989. In the European film industry the two policies that support creativity and wider distribution of European films are Media from the European Union and Eurimages from the Council of Europe.

In the publishing sector, democratic requirements imply little regulation of actors entering the market and a wide range of incentive-based policies. The cultural policy of almost every country in Europe favours the production and spread of the written word with a view to guaranteeing the multiplicity and diversity of opinions and expressions. The book trade's exemptions from strict conformity to market laws allow that to flourish. Even countries characterized by outright liberalism have devised legal or policy machinery that builds a "mix" by favoring some businesses under some circumstances. [6] Such measures can broadly be divided into five categories:

  1. legal measures (in particular, the respect of the rights relating to intellectual property)
  2. fiscal measures (e.g. reduced VAT rate, tax exemption for book import);
  3. mechanisms regulating demand (e.g. library lending rights, support to textbooks, fixed book price, massive acquisitions made by libraries);
  4. support to improve content (e.g. grants for publishing projects and for translations);
  5. support to publishing houses and book selling firms (e.g. reduced postal charges, low-rate loans, training).

The kinds of policy instruments used in European countries for the book sector may be divided into two major categories: the use of libraries to promote a book policy, and subsidies. These two categories might be called the Anglo-Scandinavian model and the South-European model.

The Anglo-Scandinavian model (in the United Kingdom, Finland, and Sweden) is based on the idea that public libraries are the pillar of public reading. These countries compensate publishers and authors for works borrowed from libraries. While the United Kingdom relies exclusively on this method to help support publishers and authors, Scandinavian countries also grant large subsidies to publishers at the production, distribution, and sale stages in a book's career. These subsidies are channelled through libraries, which are both bulk purchasers of books and agents for the collection of public lending rights. In Scandinavian countries, particular attention is paid to the distribution channels, which are monitored very closely. Even bookshops receive subsidies based on their size, which allow them to modernize their facilities or to offer a greater range of books to the public.

In contrast, south-European countries, and in particular France, do not make libraries a major instrument of their support for books. They promote a fixed price for books by providing subsidies downstream, not only for publishers but also for distributors and book-selling firms, notably in connection with modernization schemes. In France the fixed book price is applied by law; in Germany and Austria it is the result of inter-professional agreements. In both models the reduced VAT rate for books marks the recognition of the cultural nature of books and the State commitment not to tax reading.

"Cultural uses of the Internet cannot be defined in relation to content."

The question is which of the measures now enforced by European governments should be applied to electronic publishing. Unlike film or television, publishing is a business whose existence need not be guaranteed by special provisions in the global arena. Entry barriers are minimal. Even poor countries that may not have a film or music industry always have a publishing industry with thousands of titles.

The creation of large publishing, audio-visual, and telecommunications companies has brought with it the creation of vast content databases. The TimeWarner/America Online merger, for instance, has made it one of the globe's largest telecommunications companies. Certainly companies like this intend to provide their information globally, and therefore will also provide access in languages other than English. However, they are not likely to provide access to their information — or other information — in "minor" languages spoken by relatively small numbers of people. Such selectivity is profit driven: more users mean more sales. To balance such a market-driven approach, states must think in terms of interventions with policies that favor cultural industries and protect content in national languages.

The starting point

A good starting point for a cultural policy on electronic content would be to define its objectives, scope, and related instruments. Cultural diversity can be sustained by a variety of actors in both production and distribution. Any cultural policy should suit the needs of those actors, but also be sensitive to the publics' social and political concerns in matters such as freedom of expression, diversity of content, and the participation of an aware and active citizenry. Cultural policy should aim:

at the greatest freedom, for the greatest number of communication and information suppliers, users, and brokers, and should therefore monitor and correct any situation in which control of access is subject to market failure and consequently out of balance. To put it in other words, a communication policy for access should strive for maximum equality in the distribution of communication freedom. [7]

To achieve these objectives, some basic principles are worth recalling. One is to separate regulations concerning the carrier and the infrastructure on which information is transmitted from regulations concerning the content that is transported. According to this principle, network industries (telecoms, cable, Internet) and content providers (broadcasters, publishers) should not be lumped together; they should be treated differently.

Another principle is neutrality. That is, identical services should be regulated in the same way, regardless of their means of transmission. As an example, in countries where the fixed book price exists, a book acquired through electronic means should not cost less than a book distributed on paper.

Other relevant principles are those of proportionality and the presence of general-interest objectives. The first requires that "the degree of regulatory intervention should not be more than is necessary to achieve the objectives in question."[8] The second calls for identifying and protecting society's general interests, such as freedom of expression or the promotion of linguistic and cultural diversity, through the regulatory process.[9]

Shared assumptions on principles, however, do not clarify what a cultural product or service is. According to UNESCO:

cultural goods generally refer to those consumer goods that convey ideas, symbols and way of life. They inform or entertain, contribute to build collective identity and influence cultural practices. The result of individual or collective creativity — thus copyright-based — cultural goods are reproduced and boosted by industrial processes and worldwide distribution. Books, magazines, multimedia products, software, records, films, videos, audiovisual programmes, crafts and fashion design constitute plural and diversified cultural offerings for citizens at large.[10]

This definition describes well what copyright industries are, but is less relevant for cultural policies. It is difficult to see why a reduced VAT rate might apply to software products, or public grants might be provided to the fashion industry.

In my definition of a cultural electronic product or service, I have made two assumptions. The first is that written, audio and visual culture, when channelled on the Net, is no longer a book, a record, a film, or a television programme, but "content," or "knowledge," and therefore it is all the same. This is the consequence of the convergence of all media: a system where the distinction among conventional cultural products is blurred. The second is that cultural uses of the Internet cannot be defined in relation to content. Only totalitarian states know exactly where the border between cultural and non-cultural products lies. The history of cultural policy shows that the concept of culture has evolved in the century in accordance with social changes and political interpretations.[11] It would be indeed quite difficult to separate cultural from non-cultural content — a choice that is more a matter of taste and personal judgement than a policy option. Problems would be both philosophical (what is culture?) and methodological (how to implement mechanisms of content selection in the vast ocean of the Internet).

Because a cultural policy for electronic publications cannot be medium- or content-related, policy makers should seek alternative ways to define education or culture-oriented electronic publications. A possible approach is to link cultural products and services to the already existing cultural and educational infrastructure, and in particular to those points of access where electronic products and services are consumed. In other words, policy makers may define electronic cultural content as the content that is electronically acquired, recorded, processed and disseminated in cultural and educational institutions and points of sale, such as universities, schools, museums, libraries, archives, bookshops, cinemas, and other licensed suppliers.

"The issue is eminently political."

There are two major problems linked to this definition. The first is: who is entitled to designate a "licensed supplier"? This difficulty can easily be overcome by establishing a set of criteria that "licensed suppliers" should fulfill in order to meet the objectives of cultural diversity. The second problem is that the cultural dimension of new technologies and the uses of the Internet are enshrined in cultural and education organizations' access points, but also include consumption in Internet cafes, households, and other places. I have deliberately excluded private cultural consumption in order to narrow the scope of my definition, and give cultural policy makers a minimal requirement and a viable criterion to evaluate measures that may be implemented in favour of electronic publications. After all, support measures for public and cultural access points are constantly present in governmental policies. And limitations of a cultural nature are also envisaged in the European Union draft Directive on Copyright in the Information Society, which assigns a preferential treatment to cultural and educational institutions. They are allowed to deviate from the exclusive right assigned to producers in intellectual property rights.

Suggested Policy Measures

I suggest that the following regulatory provisions be considered by cultural policy makers concerned about electronic publication. They are based on my definition of cultural content, and they are intended to create a sound environment for electronic publications of a cultural and educational nature. They compose a compact block of interlocked measures. Their aim is to promote pluralistic expression and cultural diversity as well as the cultural consumption of an active citizenry. They sustain each other and are components of an overall political philosophy that should recognize the cultural nature of electronic publishing and adapt existing measures in favour of books and reading to the electronic environment for the benefit of society at large.

  • Reinforcing copyright provisions

    In the centuries that followed the invention of print, copyright was a privilege given to stationers that prevented others from printing a work already published. In Europe the shift from the "privilege" paradigm to the modern form of intellectual property dates back to 1709 when England's Queen Anne set fourteen years as the term during which an author was given exclusive right for the reproduction of his work. France and the German-speaking countries went further by protecting the author's right through the author's life, and beyond.[12] Later on, a personal right (moral right) was vested in the creator and not the thing created. In the United States, the federal law of 1795 granted the right to publishers to exploit intellectual creativity. Two distinct systems spread in Europe: the Anglo-Saxon system, where copyright is essentially a property right, and the continental droit d'auteur, where the author is given the right to control and licence the work. Over nearly 300 years, copyright spread as a concept to every continent.

    The European Union and the World Intellectual Property Organization are re-thinking copyright in light of electronic-communications technology. They are balancing the original impetus to give authors or rights holders exclusive control over their content with the needs and opportunities of the digital era. Some fear that new technologies might excessively increase the number of copyright-protected titles, which would result in centralized control of content by multinational companies through international trade agreements and globalization of markets. Others fear that the electronic environment could become a haven for copyright flouting because of the ease of reproduction and distribution.

    The issue is eminently political and concerns the ownership of intellectual property and the right of the public to access it. The European Parliament sent a clear political message in 1999 when it decided to reinforce the protection of intellectual property in the electronic environment through the European Parliament and Council Directive on the "harmonisation of certain aspects of copyright and related rights in the information society."[13] Once adopted, the directive will give authors and producers exclusive right to authorize the diffusion of their work on communication networks and will also grant them remuneration for private copies.

    The draft Directive is still being debated on certain points. One of them concerns a publisher's right to publish parts of a work in another context. While the publisher may own the copyright, the question is whether a creator has any control over its integrity. Another is the list of exceptions to the general principle of exclusivity. Article 5.2 of the draft Directive says: "Member states may provide for limitations to the exclusive right to reproduction in the case that specific acts of reproductions [be] made by establishments accessible to the public, which are not for direct or indirect economic or commercial advantage."

    The European Parliament let member countries decide whether to exempt educational and cultural institutions (like schools, libraries, etc.) from the rules that apply to others. Publishers and producers complain that the aim of the European Union draft Directive was to harmonize European copyright laws and that, in leaving Member States free to regulate limitations in their applications, the draft Directive has failed to do so. Certainly the principle of non-interference in national copyright traditions has led the European Union to a quagmire of both principles and of the rules governing the collection of fees for the delivery of electronic publications.

    Because the draft Directive does not require uniformity, the publishing industry will have to rely on licensing and copyright-management schemes, and professional codes of good practice. Licenses are "negotiated between the copyright owner (the licensor) and the organization that wishes to exploit the material (the licensee)."[14] The guidelines set by the U.K. Publishers' Association suggest several options for use of copyright-protected works through licensing and copyright management schemes. For instance, the work can be sold outright so that the user faces no further obligation, or a user can buy a subscription for an unlimited number of uses without ownership. Other options include paying for each use of copyright-protected works, or paying for use of a work at a particular site.

    The EC sponsored IMPRIMATUR [FORMERLY http://www.imprimatur.net], a project established to test the technical management of electronic rights. IMPRIMATUR set up a prototype that would deal with rights management and would work across all platforms in accordance with internationally agreed standards. It also demonstrated that problems linked with electronic copyright are no longer technical. They are political: determining who should manage electronic rights and striking a balance between the interests of producers and those of users.

    Agencies that negotiate on behalf of publishers are the reproduction-rights organizations. In almost all European countries, reproduction-rights organizations may be given the authority to issue blanket agreements against the payment of a fee in order to cover the reproduction of copyright-protected works. In France and some other European countries reproduction rights organizations are established by law, but there is a need to enlarge their legislative mandate so that it also covers the electronic management of rights.

  • Limitations to exclusive rights: fair use vs. regulations

    In setting policy for use of cultural materials, governments will have to deal with the controversial concept of fair use — the general practice of lawfully permitted copying or excerpting of copyrighted material in the course of education, scholarship, or commentary, or in order to advance learning; or for other societal goals.

    In the United States, attempts to set up guidelines on the fair use of electronic publications within the CONFU (Conference on Fair Use) framework failed in 1999, for no agreement was reached on two of the thorniest issues concerning electronic publishing: distance learning and interlibrary loan.[15] In the United Kingdom, the PA/JISC Guidelines for Fair Dealing in an Electronic Environment[16] identified a series of scenarios where digital copying made either by a librarian or by an individual can be considered as "fair dealing." They do not deal with the interlibrary loan of collections of electronic materials made by educational institutions and users — a still-unsolved issue.

    In European countries, the principle of "fair use" in educational and cultural institutions is far from being standardized. This is the reason why the recently issued Council of Europe/EBLIDA Guidelines on Library Legislation and Policy in Europe[17] took a different approach. They suggest that "Governments should establish a legal position for libraries in copyright and neighboring rights" (art. 9.i) and that "copyright exemptions that apply to printed materials should, as far as possible, also apply to digital materials" (art. 9.ii). There are two important consequences underlined by these two articles. The first is that existing practices in libraries should also be valid in the electronic environment, with the principle of public access being safeguarded and not limited by the exclusive right given to authors and producers. The second is that the application of copyright provisions in libraries (and possibly also in educational and cultural institutions) should be regulated and not left to free negotiations between the public and the private sector. Because libraries in educational and cultural institutions serve the public good, and because they do not benefit by being able to engage in free trade, there is good reason for governments to protect them from free trade. One way to handle this would be for governments to establish collective-bargaining bodies in charge of negotiating collective agreements, licensing or other forms of contracts with rights holders. This would be a way to preserve the nature of public service ensured by the public information infrastructure.

In my opinion, limitations to the exclusive right on intellectual property should be made attractive to publishers and producers by setting up incentive-based policies that would partially refund to publishers and producers their possible losses. By combining fiscal incentives and compensation schemes, policy makers can help establish a new culture-oriented electronic publishing industry. Such measures could parallel public measures in support of the book sector such as reduced VAT rates, lending rights and massive acquisitions made by libraries. Of course, compensation and fiscal incentives may not be workable under the agreements made within the World Trade Organization. There is a general trend to decrease government intervention in trade; to suggest extending restrictions on cultural goods to electronic publishing might not be well received. This is a good reason to create coalitions in the electronic publishing sector and to advocate the need of a cultural instrument in global negotiations that would be favorable to the development of both publishing and culture. Like lending rights, fiscal incentives are not a hidden form of protectionism intended to give a competitive advantage to national industries, but are a way of encouraging educational and cultural progress, in particular in developing countries.

The case for a reduced VAT rate for "licensed suppliers"

In many countries books and some other cultural products enjoy a special fiscal treatment usually consisting of a reduced VAT rate on sales. This principle, which works for categories that correspond to a precise social interest and only benefit the end consumer, is also well acknowledged by the Council Directive 92/77/EEC of 19 October 1992 supplementing the common system of value added tax amending Directive 77/388/EEC [formerly http://europa.eu.int/eur-lex/en/lif/dat/1992/en_392L0077.html] (approximation of VAT rates).[18] In the appendix H of the directive the list of goods and services that may be subject to reduced rates of VAT includes:

Supply, including on loan by libraries, of books (including brochures, leaflets and similar printed matter, children's picture, drawing or colouring books, music printed or in manuscript, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or substantially devoted to advertising matter." [19]

The special VAT rate applied in the book field can be as low as zero — or at least far lower than the standard rate. In Western Europe only Denmark and Sweden apply the standard VAT rate and tax books up to 25%.

The preferential fiscal regime applied to books is nurtured by the idea that "there is no human activity, collective or individual, in which books play no part and which, thanks to the book, cannot be known, practised, analysed, discussed, etc."[20] In everyday practice this assumption has led to two main consequences. First, books are indivisible and tax laws do not distinguish by the book's topic or genre. In several eastern European states, a reduced VAT rate for special categories of books, such as textbooks or children's literature, has resulted in highly controversial and cumbersome practices. Second, the preferred treatment applies to the entire book production chain, as all of the participants are involved in the same societal objective.

"It is practically impossible to determine the content until it is converted from bits and bytes to text."

Special fiscal treatment is also given to other cultural industries. The press and the cinema, for instance, enjoy the same preferred treatment, very often under the same advantageous conditions as the book. In Europe the standard VAT goes from fifteen percent in Luxembourg to twenty-five percent in Sweden and Denmark. The general picture of indirect taxation for cultural industries in Europe is as follows:

Table 1: The VAT rates applied to the products of the cultural industries
Country Books (1997) Dailies Periodicals Cinema (4) (1995) Sound recordings (1995) Video cassettes (1994)
Austria 10% 10% 10% 10% 20% 20%
Belgium 6% 0% 0%(1) or 6% 6% (n) 21% 21%
Bulgaria 22% 22% 22%
Czech Republic 5% 5% 22% 5%
Denmark 25% 0% 0%(2) or 25% 25% 25% 25%
Estonia 0%(6)
Finland 12% 12% (g) 22% 22%
France 5.5% 2.1% 2.1% 5.5% (n) 20.6% 20.6%
Germany 7% 7% 7% 7% (n) 15% 15%
Greece 4% 4% 4% 18% 18% 18%
Hungary 12% 25%
Iceland 14% 0% 0% 24.5%
Ireland 0% 0% 0%(3) or 3.3% 12.5% 21% 21%
Italy 4% 0% 0%(3) or 4% 10% (n) 16% 16%
Latvia 0%(7)
Lithuania 0%
Luxembourg 3% 3% 6% 3% (g) 15% 15%
Netherlands 6% 6% 6% 6% (n) 17.5% 17.5%
Norway 0% 0% 0% 0% 23% 23%
Poland 0% 0% 22%
Portugal 5% 0% 0%(2) or 17% 5 % 17% 17%
Russia 0% 20% (5)
Slovak Republic 6% 6% 25% 25%
Slovenia 5%
Spain 4% 4% 4% 7% 16% 16%
Sweden 25% 0% 0% 0% 25% 25%
Switzerland 2% Exemption Exemption Exemption 6.2% 6.2%
Ukraine 20%
United Kingdom 0% 0% 0% 17.5% 17.5% 17.5%
(1): Publications which are at least weekly. (2): Publications which are at least monthly. (3): Political weeklies. (4): (n): on net receipts; (g): on gross receipts. (5): With an additional tax of 1.5%. (6): On school text-books. (7): On works for children, school text-books and scientific, technical and medical books.
Source: Rouet (1999) VAT and book policy: impacts and issues, op.cit.

These measures apply to conventional cultural industries, not the electronic environment. In electronic commerce, the physical means of transport are no longer required, the "goods" are non-corporeal, and the distinction between goods and services is blurring. Moreover, it is practically impossible to determine the content until it is converted from bits and bytes to text.

The European Commission has taken an important step forward by issuing the "Communication on E-commerce and Indirect Taxation," [21] designed to simplify the fiscal regime in electronic commerce. The EC proposed that "a supply that results in a product being placed at the disposal of the recipient in digital form via an electronic network is to be treated for VAT purposes, as a supply of services." This proposal is likely to be the regulatory principle underpinning a Community Directive and, as a consequence of the treaties of the European Union, national legislation on indirect taxation. If that happens there may be a disparity between cultural goods (like newspapers and books, for which a reduced VAT rate is requested), and the same goods delivered in digital form, which would be taxed at the full VAT rate. By making electronic transactions a service, the European Commission would be violating the European Union's principle of neutrality under which taxation should be neutral and equitable between forms of electronic commerce and between conventional and electronic forms of commerce.[22]

I think that using the culture-oriented electronic publishing chain would be useful in establishing whether a special fiscal regime should be applied to content available on the Internet. Book publishing and electronic publishing organizations should urge the European Union to issue a directive that would standardize indirect taxation on e-commerce according to the principle of neutrality. Such a directive would have the following effects:

  • At a microeconomic level, it would have an immediate impact on that part of electronic publishing — usually academic and scientific publications — that addresses cultural and educational institutions. A reduced VAT would mean that institutions would have the funds to subscribe to more electronic publications. The most immediate impact could be an increase in the number of licenses for individual users and thus a wider market for publishers.

  • The electronic publications that would benefit from this directive would be identified as "cultural" or "educational," creating an easily identifiable segment on the Internet, and therefore developing a marketing advantage, highlighting their cultural or educational value, and perhaps creating a new demand from individuals who otherwise might not be aware of them. In turn, that demand could accelerate the process of establishing electronic divisions in publishing houses, thus fostering efficiencies of scale and a lower cost of data maintenance.

  • Fiscal authorities would benefit, too. The increase in demand (because of lower prices) would offset losses from a reduced VAT rate on publications. In addition, there would be qualitative benefits: Educational and cultural publications — and their producers — will have been identified, and taxing them appropriately will be easier. And, at least within the European Union, the principle of neutrality would be supported for producers of content in print and as well as for producers of content in an electronic format.

The most important results would be political. Identifying the boundaries between commercial and non-commercial market segments would create opportunities for non-commercial publications to be made available through independent points of access, instead of being hard to find in the globalized marketplace that convergent industries now offer. The "new" media economy emerging from the mergers of telecommunication and media industries is going to be an access economy based on pre-selected, mass-oriented content. Policies fostering the consumption of culture-oriented content where cultural practices are usually embedded — the cultural infrastructure — would put negotiation clout in the hands of the public. Users would be able to identify educational and cultural works in electronic format. That could spur demand for them and would-be buyers would exert influence on market strategies centrally controlled by global producers and suppliers.

Linking legal deposit of electronic publications to copyright provisions

The principal way governments build national collections of their countries' written heritages is by requiring that publications be deposited in central repositories — usually national libraries or specialized archives. (Deposit is voluntary in the Netherlands and in some European countries for certain categories of materials.) Legal deposit has been around a long time for printed documents; it has more recently been extended to audio-visual documents, films, microfilms, and other categories of non-print material. Denmark, Germany and Spain have extended legal deposit to music and sound recordings, too.[23] In spite of legal and technical problems, a few countries — notably France, Germany, and the Nordic countries — have already implemented provisions intending to ensure the deposit and preservation of electronic publications.

Norway was the first country to require legal deposit of digital publications. Since 1989 in Norway documents of all types on any media had to be deposited. That law was groundbreaking, as it was passed in a time when electronic publications seemed to be marginal. Denmark followed the Norwegian example and adopted a new legal deposit act in 1998.[24]

When the Norwegian program began a decade ago, electronic publications were seen as dynamic, constantly updated, and therefore hard to capture. The law being vague, at that time it was thought that dynamic publications should be excluded from the deposit collection; instead, national bibliographic services planned to provide a link to on line material by setting up a National Home Page.

"The guidelines for legal deposit do not go as far as they should."

Later on, theories on legal deposit advocated for selective deposit of electronic material, focusing on material of a cultural and educational nature. Since 1998 the Swedish Royal Library and some other national libraries have sought to amass complete collections of digital publications by using robots. In Sweden they automatically download all Swedish or Sweden-related content.[25]

Technical problems proved easy to solve; the issue with deposit is access. Many Web sites that provide valuable information move or delete information (or parts of it) when it is no longer current. Even now, many articles reference electronic publications that do not exist anymore. The deposit of electronic publications ensures the availability of electronic communication.

Publishers hesitate to deposit their electronic products in repository libraries because they are concerned that free access to and electronic distribution of those publications would seriously compromise their ability to collect fees. If national libraries do not work out appropriate arrangements with publishers to ensure that the public be allowed to access electronic material, there is a risk of creating national "dead collections," deposited for storage purposes and not open to access. The objectives of access, under certain conditions and in compliance with existing laws on copyright, should therefore be explicitly mentioned by legal-deposit regulations.

The Council of Europe/EBLIDA Guidelines on Library Legislation and Policy in Europe states that legal deposit should:

Cover all categories of publications and appropriate policies for each of them should be set up. With the extension of legal deposit legislation to cover all types of information carriers including digital material, it becomes imperative to build a bridge between legal deposit legislation and copyright legislation. Such legislation should ensure access to deposit electronic material and offer a reasonable compensation to the copyright holder.[26]

Although the guidelines for legal deposit mention copyright, they do not go as far as they should. They state the important principle that there must be a functional link between deposit provisions and copyright regulations. In the Council of Europe/EBLIDA Guidelines, copyright becomes a core component of the written heritage and a firm link is created between preservation and access policies. However, the guidelines do not propose practical solutions. Even in those countries where the deposit of electronic publications has become a well-established practice, the problem of access has not been solved.

Whether legal deposit may become an instrument for a policy on public access at a national level depends very much on the role that national repositories play within national library systems and, even further, on the role libraries play within national information policy and planning. As Melot put it: "before deciding the role that national libraries should play, it would be good to know better the national role of libraries."[27] In some countries national libraries have a co-ordinating function within national library systems. There is no doubt that national libraries could easily lead a consortium of libraries and negotiate for better conditions to access electronic publications on behalf of all the other libraries of the country.

Compensating rights owners

In my opinion, if countries were to adhere to a principle of compensation for rights owners, it would have a tremendous impact on the nature of legal deposit and on national libraries themselves, especially those in small or less-wealthy countries. A double-track system could be set in place that would be both complete and selective. For archiving purposes, legal deposit would be absolute: publishers could not request compensation for the intake and local access to electronic publications. After all, national repositories assume the burden of maintaining the deposited collection. Remote access would be selective, as the limited budgets of national repositories cannot allow generous policies of compensation.

"Print on demand is a powerful instrument for re-designing book policies."

The most significant change, however, would concern national libraries themselves. They should radically re-think their role in three ways. First, they should create vast repositories of national content in electronic form where copyright issues have been cleared with the rights owners. The simultaneous creation and maintenance of content repositories both by private and public sectors — the model we are now heading toward — is a luxury that can only result in overlapping work and waste of resources. And it is certainly not to be followed in developing countries. Second, they should be able to disseminate such content through a network of library consortia and other institutions on a simplified fee-based tariff system. By complying with copyright regulations and paying producers, such consortia would reinforce authors' rights in the electronic environment. Third, when and where needed, they should establish contacts with a network of sale points where publications available online may be printed locally through print-on-demand techniques and at the payment of an additional fee for value-added services. That is a radical change that is of relevance not only to national libraries but to the entire library and information profession.

Direct support to print on demand

As a hybrid form between electronic and printed publications, print on demand should be the darling of cultural policy makers. Print on demand can be considered an enhancement of the photocopying machine: the input is digital content in the form of a diskette or a formatted file; the output is a book. This simple process offers a technical solution that allows printing a book where and when it is needed. It is low-cost publishing for limited print runs and universal distribution. It is especially useful for publications in minor languages, and it alleviates the constraints of non-commercial content. It allows authors to find possible publishing outlets. It facilitates academic publishing (with its small markets). It breaks down national borders by diffusing literature beyond traditional distribution circuits, thus encouraging dialogue and intercultural exchanges and fostering freedom of opinion and pluralistic views. It may help foreign languages to penetrate the Anglo-Saxon market, one of the most self-sufficient in the world, where no more than two per cent of titles are translations. It may allow, for instance, Albanian (or Armenian, or Georgian) writers to diffuse their works in Albanian (or Armenian, or Georgian) for the emigrant diaspora and to print them locally.

Yet policies that support publications have not been updated to include print on demand, even though many books are born from public grants for authors or translators. For cultural policy to be effective, policy makers should be concerned whether market conditions guarantee the life of the book they have contributed to bringing into existence. Theoretically, this should be a publisher's business, but once publishers have recovered production costs, to what extent do they really bother? Today print on demand is not viable beyond a certain threshold of printed copies (usually set at 500, but technology evolves quickly). At that point, the price of an offset publication is lower, and recouping costs is easier.

Lack of awareness (and sometimes imagination) among public administrators may well account for this state of affairs. Certainly policy makers have to overcome publishers' unfamiliarity with new techniques and uncertainty about the implementation of new business concepts. policy makers who rely on the creative role of publishers in title selection fear that the conversion of publicly supported schemes for publications to the print-on-demand pattern would have devastating effects for the diffusion of "difficult," non-commercial publications. They are wrong.

Print on demand is a powerful instrument for re-designing book policies. Instead of providing direct support to the print publication of research and literature, public powers should shift towards the support of just-in-time marketing and delivery of desired material. Instead of supporting a single, fixed approach to production and distribution, policy makers should help private publishers to fully enter electronic commerce and to enjoy the beneficial effects of the new networked economy. Titles being awarded public support should be given the chance to reach their direct customers (universities, libraries, and individuals) through networks and not have to engage physically cumbersome distribution channels. This move initiated by public powers would be a decisive boost in re-designing a more rational (electronic) publishing chain.

Public support policies should center on potential customers and not producers. Once the literary or research value of a publication is ascertained, public policy should concentrate on the distribution and marketing side, and should fund advertising campaigns on the Web, support the partial or full translation of literary texts, finance thematic portals, promote digital printers, and establish any kind of measure designed to encourage the national talent to emerge and to be known at national and international levels.

Of course, the conversion of public systems supporting literature should be gradual and should facilitate and optimize the changing positions of actors in the publishing business. By setting up well-funded programmes, public powers may help re-orient publishing professionals towards new tasks and functions. Whatever the strategy, however, all measures should aim at guaranteeing creativity and cultural diversity, access to content, and participation by all groups of the population in the information society.

Conclusions

This list of possible measures to be applied to the electronic-publishing field demonstrate that the role of governments should not be neglected in the new economy of culture accessible on networks — the new access economy. There has been a strong debate on whether and to what extent governments should intervene in setting up a democratic and open information society. In the early nineties many saw an information society exclusively driven by the private sector; they were adamant in claiming no interference of, and power of initiative by, the public sector. There is no doubt that the advent of the new economy is the result of strong entrepreneurial capacities that have found no limit both in investments and visionary perspectives on the new frontiers of electronic commerce. Nevertheless, every government in Europe has allocated an ever-growing amount of resources to the development of the new economy, and has promulgated a vast array of measures in all sectors of public administration, particularly in education, training and culture.

Today there is wide recognition that no cultural and societal objective can be pursued without the involvement of public powers in a catalyzing, mediatory, or facilitating function. Problems linked to electronic publishing cannot be considered in isolation, however. The issues of production and distribution of networked content are as important to the future as books were to history, helping to democratize society and disseminate knowledge. The struggle on copyright has certainly drawn the attention of the cultural world to the importance of intellectual-property rights in the electronic environment. Access to information is the new frontier for legislators and policy makers willing to develop a culture-oriented information society. It took no less than five hundred years for enlightened politicians to notice the impact of the book on human development and to define book policies accordingly. It is to be hoped that it will take much less time to shape a circuit of electronic content that serves personal development, freedom of expression, equal access to information. and our cultural diversity.


This paper is a largely amended version of the background paper What policy for electronic publishing? Four urgent measures, produced for the Colloquy of European Ministers responsible for cultural affairs A time for choice: towards a democratic policy for books and electronic publishing (Frankfurt, 16-17 October 2000), organized jointly by the Council of Europe and the German federal Commissioner for Culture and media. The views expressed in the document are those of the author and do not necessarily reflect those of the Council of Europe. I would like to thank the JEP editorial staff for their suggestions of amendments and changes.



Giuseppe Vitiello is in charge of the Electronic Publishing, Books and Archives Project of the Council of Europe. Earlier he held positions as lecturer in Italian and Linguistics at the Universities of Toulouse and Orléans and as Assistant to the Director of the National Library of Florence. Between 1989 and 1991 he was seconded to the European Commission as national expert to assist in the implementation of the "Telematics for libraries" programme. He has been consultant for various private firms and governmental agencies in Europe. He is author of four books and various articles and reports in information science, history of culture and translation, and in the library field. He can be reached by e-mail at vitiello@issn.org.


References


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    12. In France, the bills on the propriete litteraire et artistique were adopted in 1791 and 1793; the first law on the protection of intellectual and artistic property in German speaking countries was adopted in 1837; see Manfred Rehbinder (1998). Urheberrecht (10. Auflage). Munchen: Beck.return to text

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    16. PA stands for the Publishers’ Association (of the United Kingdom) and JISC for Joint Information System Committee, a strategic advisory committee working on behalf of the funding bodies for higher and further education in England, Scotland, Wales and Northern Ireland. (Guidelines are posted on http://www.publishers.org.uk).return to text

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    18. Council Directive 92/77/EEC of 19 October 1992 supplementing the common system of value added tax and amending Directive 77/388/EEC (approximation of VAT rates) ([formerly http://europa.eu.int/eur-lex/en/lif/dat/1992/en_392L0077.html]).return to text

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    22. This discrepancy has gone almost unnoticed. See however "Libri, il rincaro corre su Internet," Il Sole — 24 ore, Wednesday 23 February 2000, n. 52, p. 24.return to text

    23. Vitiello, Giuseppe. (1994). Il deposito legale nell’Europa comunitaria. Legal deposit throughout the European communities. Milano: Editrice Bibliografica.return to text

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    26. Council of Europe. (2000). Council of Europe/EBLIDA Guidelines on library legislation and policy cit.return to text

    27. Melot, Michel. (1994). Qu'est-ce qu'une bibliotheque nationale aujourd'hui?. In Agence de cooperation culturelle et technique. Actes du Forum des Directeurs des bibliotheques nationales des sommets francophones. Ecole internationale de Bordeaux. Talence, France 29 novembre - 3 decembre 1993. [Ottawa] : Banque internationale d'information sur les etats francophones, 9-20, quoted on p. 13.return to text

    Links from this article

    Council Directive 92/77/EEC of 19 October 1992 supplementing the common system of value added tax and amending Directive 77/388/EEC (approximation of VAT rates) [formerly http://europa.eu.int/eur-lex/en/lif/dat/1992/en_392L0077.html]

    The Council of Europe's Eurimages, http://www.coe.int/t/dg4/eurimages/default_en.asp

    Directive 77/388/EEC [formerly http://europa.eu.int/eur-lex/en/lif/dat/1992/en_392L0077.html]

    Encyclopaedia Britannica, http://www.britannica.com

    European Convention on Transfrontier Television, http://conventions.coe.int/treaty/en/Treaties/Html/132.htm

    The European Union's Media, http://europa.eu.int/comm/dg10/avpolicy/media/guidelines/ldpromo_en.html

    IMPRIMATUR. [formerly http://www.imprimatur.net]

    JSTOR, Journal Storage, http://www.jstor.org

    "Legal deposit and national bibliographic services : developments in the framework of the cooperative perspective and the convergence phenomenon,"http://www.ifla.org/VI/3/icnbs/vitg.htm

    NESLI, National Electronic Site Licensing Initiative, http://www.nesli.ac.uk

    Proposal for a regulation of the European Parliament and of the Council amending Regulation (EEC) No 218/92 on administrative cooperation in the field of indirect taxation (VAT) [formerly http://www.ispo.cec.be/ecommerce/legal/taxation.html]

    Television Without Frontiers, http://europa.eu.int/comm/avpolicy/regul/twf/applica/156en.htm