Publishing Workshop, Beijing, September 4, 2007 Dr. Ashis Gupta, Publisher, Bayeux Arts, Inc., Calgary, Canada Professor Emeritus, Haskayne School of Business, University of Calgary

Some TRENDS to Consider
 The NA Publishing industry at a crossroads  Aggressive ‘supply chain’ management; smaller reprints. POD, an important NA trend.  US print market losing $100 million/year to global competition (Coffee table books – China)  Consolidation in print industry; new alliances.  Open access Electronic books (MIT, Athabasca)  Globalization of publishing operations

THINK Before Entering the US/Canadian Market
 Tariff Barriers: Duties, quotas, etc.  Non Tariff Barriers: Local Content requirements, Hiring of local
staff, Transfers of Chinese staff etc.

 Intellectual Property and Competition Law: Complex.
(More information at the close of this session)

 Anti Competitive Practices: Laws against dumping, cartels,
price fixing, pressure from monopolies and other competitors.

 Product and Service Standards: How Standards are
managed – health/safety, materials, environmental conditions, etc.

 Dispute Resolution: How predictable and Fair

Appropriate Entry Strategy

Exporting Licensing Joint Ventures Wholly owned subsidiaries

Location and Experience Curve economies Low development costs and risks Local partner’s knowledge, shared costs/risks Better global strategy, location and experience

Transport costs, Trade and local market barriers Limited global strategy, some economies lost Limited global strategy, some economies lost High costs and risks

Corporate Sustainability in a Globalized World
 Strategy: Integrate long-term economic, environmental, social
concerns while maintaining global competitiveness

 Financial: Meet shareholder demands for sound financial returns,
long-term growth, open communication, transparent financials.

 Customer & Product: Invest in customer relationship,
product and service innovation, and technologies over long-term using financial, natural, and social resources effectively and economically.

 Governance & Stakeholder: High standards of corporate
governance and stakeholder engagement, codes of conduct.

 Human: Manage Employee satisfaction through organizational
learning and optimal remuneration and benefits programs

Is your Corporate Profile ready for North American Market?
Analyze your product line/technology Your Company’s Business Model Present Scope of Company’s geographical region and territory  Your Company’s current Mandate and strategic plans  Company performance over past THREE years, including reference to key competitors  Company’s Code of Ethical Practices   

Can You Develop a “Global Publishing Mindset”?
Global Mindset
 Focus on big picture and changes in company’s global environment  Strong confidence in Vision and organizational process  High value of multi-cultural teams  Diversity recognized as a source of opportunities  Always open to change

Parochial Mindset
 Focus on national markets and local trends  Emphasis on tight headquarter control and hierarchical structures  Limited cross-national cooperation  Diversity viewed as threat to rigid strategies  Difficulty in coping with change

Starting a Business in the U.S.
When beginning a business, you must decide what form of business entity to establish. Your form of business determines which income tax return form you have to file. The most common forms of business are :      Sole Proprietorships Partnerships Corporations S Corporations Limited Liability Company (LLC)

Legal and tax considerations enter into selecting a business structure.

 In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. A corporation can also take special deductions.  The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. However, shareholders cannot deduct any loss of the corporation.

Limited Liability Company (LLC)
 LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation.  Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single member” LLCs, those having only one owner.  A few types of businesses generally cannot be LLCs, such as banks, insurance companies and nonprofit organizations. Check your state’s requirements and the federal tax regulations for further information.  There are special rules for foreign LLCs.

Employee Identification # (EIN)
Certain business conditions require an Employer Identification Number (EIN). The EIN is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN. You may apply for an EIN in various ways, and now you may apply online. This is a free service offered by the Internal Revenue Service. You must check with your state to make sure you need a state number or charter. Some of the most important business conditions requiring an EIN are:  You withhold taxes on income, other than wages, paid to a nonresident alien  You operate your business as a corporation or a partnership  You have employees

 The form of business you operate determines what taxes you must pay and how you pay them. The following are the four general types of business taxes.  Income Tax  Self-Employment Tax  Employment Taxes  Excise Tax

Income Tax
 All businesses except partnerships must file an annual income tax return. Partnerships file an information return. The form you use depends on how your business is organized. Refer to Business Structures to find out which returns you must file based on the business entity established.  The federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. An employee usually has income tax withheld from his or her pay. If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. If you are not required to make estimated tax payments, you may pay any tax due when you file your return. For additional information refer to Publication 583, ‘Starting a Business and Keeping Records.’

 When you have employees, you as the employer have certain employment tax responsibilities that you must pay and forms you must file. Employment taxes include the following:  Social security and Medicare taxes  Federal income tax withholding  Federal unemployment (FUTA) tax

Immigration Issues
 If you are not a citizen or a lawful permanent resident, you may need to apply for an Employment Authorization Document (EAD) in order to work in the United States.  You must determine whether you are eligible for an EAD through an immigration attorney or through a United States Citizenship and Immigration Services office or government website.  If you are authorized to work for a specific employer, such as a foreign government, you do not need an Employment Authorization Document.  Once you get your EAD, you will then also need to get a business permit from your local city or county where you set up shop. If you will have employees, you will need to get workers’ compensation insurance, and will need an understanding of tax withholding laws.  For information you may contact a law firm like Fragomen.

N.A. Market Size
Publishing Companies New Titles / year Book Sellers Public Libraries Broadband Subscribers Internet Users Government Subsidies

490 11,500 2,000 900 8 million 22 million $ 50 million

15,000 195,000 5,238 6,000 58 million 211 million

Number of U.S. Publishers
 6 large publishers (in New York) 3-400 medium-sized publishers 86,000 small/self-publishers
The six U.S. conglomerate publishers are        Random House, Inc. Penguin Putnam Inc. HarperCollins Holtzbrinck Publishing Holdings Time Warner Simon & Schuster, Inc. Four are foreign owned

U.S. Trade Book Production
(All Hardback and Paperback)
Category Agriculture Arts Biography Business Education Fiction Genl. Works History Home Econmcs. Juveniles Language Law Literature 1995 93 365 601 602 232 4,307 140 481 618 4,507 276 209 579 2003 42 237 775 897 455 4,952 114 718 486 5,294 693 95 664 2004 42 247 812 1,116 429 5,125 142 666 487 6,660 500 125 488 2005 33 309 811 1,000 415 5,479 97 623 533 5,267 340 87 450

U.S. Trade Book Production(2)
(All Hardback and Paperback)
Category Medicine Music Philosophy, Psychology Poetry, Drama Religion Science Sociology, Econ Sports, Recreation Technology. Travel TOTAL 1995 488 96 713 276 686 686 1,254 444 1,274 472 19,734 2003 568 131 838 256 956 1,144 1,533 571 1,041 465 22,914 2004 593 90 910 225 839 1,047 1,600 524 965 528 24,159 2005 (Prelim) 700 77 842 232 825 1,141 1,505 641 1,029 501 23,017

Est. Book Publishing Net Sales
2002-2005 (Thousands of Dollars)
2003 Trade (Total) Adult Hardbound Adult Paperbound Juvenile H/bound Juvenile P/bound Bk Clubs, Mail Ord Mass Mkt P/back Audiobooks Religious E-Books Professional EI-HI (K-12 Eductn) Higher Education All Other TOTAL 6,534,828 2,060,949 1,013,895 2,718,721 741,264 1,771,443 1,187,100 161,049 883,406 80,793 3,268,778 5,939,920 3,133,920 153,932 23,115,180 2004 6,267,199 2,190,788 1,042,284 2,264,695 769,432 1,613,784 1,081,448 159,922 932,877 123,695 3,334,153 5,945,860 3,190,340 161,629 22,810,907 2005 7,828,050 2,221,700 1,140,989 3,614,748 850,613 1,505,661 1,083,611 206,299 875,971 179,110 3,300,812 6,570,175 3,359,428 158,558 25,067,676 Compound Growth 9.1% 1.7% 3.8% 19.6% 2.8% -8.2% -3.5% 12.9% 14.2% 81.5% 1.5% 4.3% 3.6% 5.1% 4.4%

Copyright Law in U.S.A.
Purpose  The first Copyright Act of 1790 was passed pursuant to the United States’ Constitutional provision that grants Congress the power “to promote the progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” (United States Constitution, Article I, Section 8, cl. 8 – known as the “Intellectual Property Clause”). Thus, the Constitutional aim of copyright protection has always been “to promote the progress of Science and useful Arts.”

Copyright Law in U.S.A.
Subject Matter  In keeping with its purpose and its power to give authors control over their works for a specific period of time, copyright law has evolved to accommodate two centuries of technological and cultural change. After the enactment of the Copyright Act 1790 which lent protection to books and maps, intellectual property protection was steadily expanded to include engravings and prints (1856); photographs (1865), paintings, drawings, and designs (1870); photographs, newspapers, and all writings by authors (1909); motion pictures (1912); and sound recordings (1971). Contemporary copyright law protects “original works of authorship fixed in any tangible medium of expression,” and is embodied in the statutory regulation 17 United States Code Section 102 (17 USC § 102).Therefore, the question of what can be the subject of a copyright is a critical, threshold issue. By extending protection to the “tangible expression” of “original works of authorship,” copyright law does not “extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described.” (17 USC § 102 (b)).

Copyright Law in U.S.A.
Scope of Protection  The scope of protection grants exclusive rights in an author’s artistic creations, including the right to “reproduce the copyrighted work in copies,…prepare derivative works based upon the copyrighted work… distribute copies…of the copyrighted work to the public” (17 USC § 106(1)-(3), (5)). To enforce the protection of an author’s copyrighted expression, copyright law allows for a claim of infringement against any person who is thought to violate the author’s rights in his work. To prove a claim for infringement of an owner’s copyright, the copyright holder must show valid ownership of the copyright (see Registration below) and “copying of constituent elements of the work that are original.” (Supreme Court precedent from Feist Publications, Inc. v. Rural telephone Service Co. 499 U.S. 340 (1991)).

Copyright Law in U.S.A.
Registration  Under American law, the Copyright Act does not require registration as a prerequisite for protection, and does not require notice of copyright either. Nevertheless, registration in the U.S. is necessary for works originating in the U.S. in order to file a claim of infringement against unauthorized use. One can register a work with the Copyright Office in the Library of Congress. Names and titles alone are not protected by copyright (but may be registered as trademarks). Action for Infringement A defendant’s copying for the purpose of an infringement claim must be unauthorized and is considered “improper or unlawful appropriation” of copyrighted material. In this context, courts require that a substantial similarity exists between the defendant’s work and the protectible elements of plaintiff’s. Thus the allegedly infringing work must be derived from the plaintiff’s copyright protected work and must be an unauthorized appropriation. An important defense to copyright infringement is codified in 17 USC § 107 known as the “fair use” doctrine. Fair use is a defense that establishes permissible use limiting the exclusivity of owners’ rights. The fair use limitation on copyright is applied on a case-bycase basis. Section 107 provides a non-exclusive list of purposes that establish fair use of a protected work.

Copyright Law in U.S.A.
Duration  As mentioned above, copyright protection derives its power from Article I of the Constitution and is a right that may be secured for “limited times.” U.S. Const., Art. I, § 8, cl. 8. Thus, the duration of a copyright determines when a work has protection, when protection is renewed, and when a work loses protection and enters the public domain. Duration is determined by the formalities of date of publication, governing copyright, notice, and renewal.  An analysis of copyright duration requires inquiry into the date of publication. “Publication” refers to a combination of factors involving use, control over a work, and restrictions or lack thereof on public access to the work. Although publication is not a requirement for protection under the Copyright Act of 1976, it is important for the establishment of valid copyright in works published prior to January 1, 1978 (when the 1976 Act went into effect). Thus, only works protected by valid copyright on or after January 1, 1978, are protected under the 1976 Copyright Act and have a term of protection that consists of the duration of life of the author + 70 years (17 U.S.C.A. § 302). Under the Act, works of corporate authorship are protected up to 120 years after creation or 95 years after publication, whichever is earlier.

International Law
and Copyright Protection
 The Berne Convention for the Protection of Literary and Artistic Works (“Berne Convention”), is an international agreement about copyright, which was first adopted in Berne, Switzerland in 1886. China is a signatory to the Berne Convention. The Berne Convention requires that signatories recognize the copyright of works of authors from other signatory countries, just as it recognizes the copyright of its own nationals, which means that, for instance, Chinese copyright law applies to anything published in China, regardless of where it was originally created. A work created in one of the countries that are signatories of the Berne Convention is protected in all of the member nations and does not require individual protection in each nation. Copyright under the Berne Convention is automatic which means that there is no requirement of formal registration for a work to be protected. Under the Berne Convention, an individual may proceed with a claim of infringment on unregistered works. Although U.S. law requires registration for such actions, it provides an exception for “actions for infringement of copyright in Berne Convention works whose country of origin is not the United States” (17 USC § 411 (a)). The Berne Convention provides that all works except photographic and cinematographic shall be copyrighted for at least 50 years after the author’s death, but parties are free to provide longer terms. Although the Berne Convention states that the copyright law of the country where copyright is claimed shall be applied, article 7.8 states that “unless the legislation of that country otherwise provides, the term shall not exceed the term fixed in the country of origin of the work,” i.e. an author is normally not entitled a longer copyright abroad than at home, even if the laws abroad give a longer term. Some countries have not accepted this rule.

U.S. Vendors Carrying
China-related Books
         • ( ( used books Asian Rare Books ( used and rare books Association of American Academic Publishers Online Catalog ( lists over 75,000 book titles from over 60 presses Blackwell North America ( Can set up vendor profile for East Asian Studies. Cheng & Tsui Company ( www.cheng& language learning materials; books and movies on/from China. China Books & Periodicals (San Francisco) ( China Sprout ( Chinese cultural and educational products. The Chinese University Press (HK) ( East Wind Books (  Hanshan Books (UK) ( mostly rare and second hand books in art history, architecture, archaeology. Homa & Sekey Books ( Lexington Books ( M.E. Sharpe ( Paragon Books ( Penguin Group USA ( Rowman & Littlefield Publishers ( Shambhala Publications ( Asian religions Tuttle ( Popular titles on China. Westview Press ( Popular titles on China. World Wide Art Books ( art books and exhibition catalogues          

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