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Brexit—Key Questions for Independent Publishers
Notes from the IPG’s special meeting on Thursday 30 June 2016
Chaired by IPG president Jonathan Harris with:
Shireen Peermohamed, partner at Harbottle & Lewis
Kamal Singh, a financial director who works with many IPG members
Richard Fisher, IPG academic correspondent and former managing director of academic publishing at Cambridge University Press
What is going to happen to general UK laws?
‘There’s a lot of uncertainty. We don’t know what kind of deal we’re going to end up with and we don’t know if it will require us to abide by EU laws or whether we’re going to be able to ditch them. But although there’s uncertainty, that also presents an opportunity to shape the law. Talk to the IPG about particular issues that you have with current law or gaps, and help to set the direction of travel.’ SP
‘Whilst there is a lot of uncertainty in a way nothing has fundamentally changed on a day-to-day basis, so the first thing to say is not to panic. It will probably be about two years before there are any legal changes, and until we know more about them nothing really changes.’ KS
How will copyright be affected?
‘Copyright is largely based on national laws and international treaties, so will be unaffected by the vote. Books that you publish here will still be protected here, and in most countries throughout the world, including the EU. Having said that, there have been attempts to harmonise copyright law in the EU through the Digital Single Market initiative and bring in new exceptions to copyright. There’s a lot of uncertainty around those, and whether the exceptions will be introduced remains to be seen. It’s still important to follow progress on these EU initiatives and have some input on them if they are relevant to your business.’ SP
Is the UK’s copyright law likely to diverge from the EU’s in the future?
‘It’s a very interesting question, and it may depend on what deal we do. If we have an arrangement like the European Economic Area model then we’ll probably have to follow EU law and effectively be bound by EU law judgments. If we end up with another arrangement then I can see divergence down the line; there are aspects of European IP law that some English judges have raised eyebrows at.’ SP
What will happen to trade marks?
‘There’s an unanswered question about what will happen to pan-European trade marks. Will it be possible to split off the UK element, albeit at a cost? It would be sensible to review your trade mark registrations and see what might be affected. Think carefully about what your trade mark filing strategy for the UK and Europe might be in the future and plan your budgets accordingly, bearing in mind the potential increase in costs.’ SP
What happens to the rights in our contracts?
‘I’ve had more questions about contracts in the last few days than anything else. Publishing rights are rarely granted for “the EU” as a distinct territory, but it’s worth looking at your existing contracts to be clear over which territories are covered—“the EU” is a moving target now.’ SP
Can we get out of any contracts?
‘It’ll come down to what your contracts say. For example, most will have a force majeure provision that allows you to terminate a contract or put it on hold if it is impossible to fulfil the contract. It’s unlikely that leaving the EU will be a force majeure event, unless there are for example trade barriers preventing you from fulfilling a contract or there’s a catastrophic failure of banking payment mechanisms preventing payments to the EU—the fact that a contract is now more expensive or less valuable probably won’t be grounds for terminating it.’ SP
Should we be worried about currency exchanges?
‘Currency has fluctuated, and that has been a challenge for businesses. Since 23 June sterling has fallen by 7% against the Euro and 8% against the dollar, but it’s begun to bounce back in the last few days, so we need to wait and watch and see where things finally settle down.’ KS
What will happen to exports?
‘To start with your export customers will find your books that much cheaper, so that’s a good thing. You should continue to invoice your export business in sterling rather than in foreign currencies, because you don’t want to be exposed to currency fluctuations.’ KS
‘The fall in sterling provides a short-term boost to many export-driven academic publishers. The globalised nature of some STM research will provide some sort of protection.’ RF
How will printing and production costs be affected?
‘Businesses printing overseas are likely to see their costs rise as a result of the fall in value of sterling. A lot of companies have already been contacted by their overseas printers who are looking to restate quotes they have given. Businesses should communicate with them and see how in the short term the impact could best be absorbed between themselves. You could try to negotiate better prices by consolidating similar format books, thereby increasing print orders. A lot of printers will want to invoice in euros or dollars, but I’d try to avoid that as far as possible, as again you would not want to be exposed to currency volatility.’ KS
Should we be repricing our books?
‘I would suggest holding on for a little bit until things stabilise. Your costs are going to be going up, so it logically follows that your prices should follow, but you are in a competitive environment so there are lots of things to take into account. I’d wait and see before making fundamental changes.’ KS
‘There are IPG members, especially in academic publishing, who price in dollars or euros as things stand, and it’s a tough judgment about what to do. For the next fortnight I think hold your horses and see, but after that we just don’t know—it’ll be a watching brief.’ RF
What happens to VAT?
‘Until the law changes, nothing changes, so I wouldn’t worry about that for now. It’s business as usual for the foreseeable future—just focus your attention on things you can control.’ KS
Will the US tax agreements used for author royalties still apply?
‘Yes. The UK has its own tax treaty with the US, so that’s not affected.’ KS
Can we expect customs delays when shipping books?
‘Not yet, and for at least two to three years—but we don’t know for sure.’ RF
How will Higher Education be affected?
‘We’re possibly going to see a return to the student cap, and there are major implications for levels of student debt and fee increases—though that said, nothing is going to happen until 2020 as things stand, and the message on the Knowledge Economy white paper is that it still stands. The decline in the pound may increase non-EU student numbers and compensate for EU students who will inevitably find the UK a less attractive place to study. Whether or not students will be included in overall immigration numbers is unresolved and a real political hot potato.’ RF
What will happen to HE funding?
‘It’s hard to see a post-Brexit government viewing HE funding as a massive priority, particularly in areas where IPG members are strong, like the arts and social sciences. But we’ll see—none of this is known.’ RF
What about funding for research and Open Access?
‘Academic publishing research funding post-2020 is a huge unknown. EU funding is massively important, particularly to the British scientific community, and there are real implications for universities’ debts and Open Access. There was going to be funding available to facilitate the transition to more adoption of Open Access, and I can’t believe it’s a healthy climate for that now. The UK has been a major proponent for Open Access along with the Netherlands in EU corridors, but we won’t now be there to take those discussions forward.’ RF
Should I be worried if we have staff from EU countries?
‘The consensus is that everyone who is here already will probably be allowed to stay, which should give some reassurance to staff. But there’s also an argument that if you are thinking about employing people from the EU, do it sooner rather than later.’ SP
Where do we stand on data protection rules?
‘A new EU regulation on data protection was agreed last December, and it’s due to come into effect in May 2018. It will apply to any business that offers goods and services in the EU or monitors data from EU citizens. If we are still in the EU by then it will automatically take effect here—and even if we’re not, EU businesses are unlikely to want to transfer data to UK businesses unless they have some assurances that the data protection laws we have here are adequate—ie that they pretty much match the EU regulation. So in some shape or form, this EU regulation is likely to be relevant to your businesses. It’s sensible to think about this now, and risky to make assumptions that just because we’re leaving the EU this law won’t be relevant.’ SP
How should publishing respond to this vote?
‘It’s really important that as an industry we understand the Leave articulation, and British publishing needs to recognise the strength of other views. There are massive demographic sectors we don’t deal with properly at the moment, like those left behind by the digital economy. Our collection of businesses is probably the most pro-Remain small business grouping in the UK, but it is important to remember that a lot of other small businesses don’t share our cultural orientation. We need to think about all that while recognising the strength of the Remain argument.’ RF
IPG, 4 July 2016
You can download this document here.