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The Google Book Settlement – One Year and Still Waiting

One year ago tomorrow, Judge Chin held the final Fairness Hearing for the Google Book Settlement.  As we know that all GBS watchers have been waiting on pins and needles for the last 364 days for a ruling, we thought that it might be worth looking back to review what has changed, and what has not, since February 18th, 2010.

What has changed?

Google continued its book-scanning efforts with reports pegging the total number of books scanned at 15 million at the end of 2010.  As we have long predicted, Google also stepped up its efforts to monetize its book-scanning efforts by launching Google eBooks in December, a cloud-based eBookstore.  As Publishers Weekly noted, “Google eBooks overnight becomes the largest e-book provider in the world” – a title that would likely be cemented if the Google Book Settlement is approved, effectively giving Google a court-sanctioned monopoly over millions of digitized books.  The launch of Google eBooks should dispel any remaining notion that Google is scanning books for some higher, altruistic purpose – the launch of eBooks and the acquisition of eBook Technologies just a few weeks later demonstrates that Google, as with any corporation, is simply in it for the money.

In addition to the cash that Google will rake in from eBook sales, book search advertising, and monetizing the personal data of consumers who search eBooks, Google’s move represents a push into yet another vertical market, thereby strengthening its position as the self-described “kingmaker” of the Internet.  Each time that Google moves into another market such as books, video, or maps, it does so because that market represents another source of consumer information.  The more information that Google has, the more ads it can sell, and the more advertisers it can lock into its web, further entrenching Google as the Internet’s preeminent advertising company.  As we have long argued, and the facts have long borne out, the proposed settlement is deeply flawed both in its content and the process through which it was created.  It should be rejected by the court.

As for Google’s partners in this deal – the Authors Guild and the Association of American Publishers – the year since the fairness hearing has brought many changes.  As we have noted, all the main negotiators of the settlement agreement have moved on from their positions, leaving no one with firsthand knowledge of the incredibly complex issues at stake to implement it should the GBS be approved.  Further, the rapid ascent of e-book commerce has both authors and publishers trying to figure out how exactly they fit in to this new digital landscape, making the massive contract abrogations inherent in the settlement even more troubling.  Authors need more control of their backlist and digital rights – not less.

In a separate, but related, development Harvard University Librarian Robert Darnton took the first steps towards the realization of a public-interest National Digital Library.  The OBA has always advocated for the mass-digitization of books, but object to a corporate monopoly overseeing that repository of knowledge.  As Darnton noted in The New York Times in January of this year, “There’s a conflict between the raison d’être of Google, which is to make money for its shareholders . . . and libraries whose goal is to make books available to readers.”

Darnton’s goal of a National Digital Library that would “make the cultural patrimony of this country freely available to all of its citizens” is precisely the kind of public-interest entity that we have long believed is necessary – in fact, OBA has laid out four principles that we believe are essential for the creation of a digital library that serves the public, rather than corporate, interest:

  • Large scale book digitization efforts must recognize their public utility and foster competitive instead of exclusive markets.
  • Long-term benefits for consumers must be prioritized and promoted over isolated commercial interests.
  • It must be done in a way that respects authors’ rights and copyrights
  • The conception of this promise must be developed in the open and grounded in sound public policy instead of through a private settlement that bypasses the responsibilities of our elected officials.

Whether or not the Darnton effort comes to fruition, his public interest model is the benchmark that all others, from Judge Chin to legislators to believers in the promise of mass digitization of books, should look to – and we should accept nothing less than that.

What has not changed?

One year ago, OBA summarized the myriad objections raised by the Department of Justice and the nearly 400 briefs filed in objection to the GBS.  While seemingly “old news”, it is vital that the stakeholders in this debate refresh their memories about just how dangerous the GBS and its implications are.  Each one remains unaddressed.


In its brief, the Department of Justice outlined its key points of objection and suggested changes to the Settlement, nearly all of which were ignored by the parties in the revised settlement. Each of those points the parties have failed to address are listed below and analyzed against the revised Settlement to provide a basis upon which to conclude whether the revisions sufficiently addressed DOJ’s concerns.

I. Any forward looking business models must not use opt-out, but use opt-in for absent rightsholders;

The forward looking business models of the revised Settlement remain opt-out for absent rights holders. This is counter to standard business terms and fails to address DOJ’s objection on this point.

II. Foreign rightsholders should be adequately represented;

Foreign rightsholders in the U.K., Canada, and Australia, as well as other foreign rightsholders whose books were published in those countries, will still be bound by the terms of the revised Settlement. In addition, Google has indicated that it will continue to scan and make snippet display of foreign books that have been excluded from the revised Settlement, significantly improving their search engine and providing financial benefit to Google’s ad revenues without compensating the owners of the rights to those scanned works. Google and its partners failed to address DOJ’s concerns on foreign rightsholders.

III. Author/publisher representatives that are parties to the Settlement Agreement must be bound by the settlement and not have separate deals;

Just as with the original Settlement, the revisions did not eliminate the ability of the parties to opt-out of the terms they negotiate on behalf of an entire class so that they can negotiate separate and, presumably better, terms for themselves on the side. On this issue, Google and its partners failed to adhere to DOJ’s suggestion.

IV. Funds escrowed from unclaimed works cannot be diverted to other rightsholders;

The amended Settlement creates an “Unclaimed Works Fiduciary” that somewhat alleviates this concern, although the independence of the UWF is questionable. Its governing board will be appointed by the class representatives with approval of the court. In addition, nothing in the revised Settlement allows the UWF to license competitors of Google, so the UWF remains simply an administrator of this settlement and not a means to effective competition.

V. Book rights registry should have additional obligations to find absent rightsholders to avoid conflicts among class members;

Although the revised Settlement adds language to the provisions on the Book Rights Registry that mentions efforts to locate absent rightsholders, the remaining opt-out language in the Settlement gives Google license without the consent of the rightsholder. Accordingly, nothing has changed to ensure proper consent is given by absent rightsholders. Google has failed on this point to address DOJ’s concerns.

VI. Settlement notice needs to be more robust if broad class is being used;

The notice program under the revised Settlement does not appear to be materially different from the first notice effort, which was the subject of substantial criticism by rightsholders. It appears that Google and their partners have failed to heed DOJ’s insistence that their prior notice was insufficient and therefore have failed in providing sufficient notice to the class on the revised Settlement.

VII. Settlement cannot allow horizontal pricing agreements by rightsholders;

The revised Settlement attempts, but fails, to alleviate this concern by the parties agreed to cede pricing decisions to Google to make “unilaterally” through a pricing algorithm that attempts to simulate competitive prices. The problem remains; however, as the Settlement itself is still a horizontal agreement to set prices. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 222 (1940) (“[P]rices are fixed . . . if the range within which purchases or sales will be made is agreed upon, if the prices paid or charged are to be at a certain level or ascending or descending scales, if they are to be uniform, or if by various formulae they are related to the market prices.” Further, it ignores the incentives that Google would have as a monopolist in setting prices, and creates no means of ensuring that pricing is actually “competitive.” It would be unusual indeed for the government to accept some self-imposed and self-regulated promises on pricing to substitute for actual competition.

VIII. Settlement cannot create de facto exclusive copyright license for Google;

The amended Settlement still grants Google a de facto exclusive license to an enormous corpus of books – namely, essentially every English language book published before 2009 for which the owner cannot or will not voluntarily license others (now called “unclaimed works”, a term which includes “orphan works”). There were no changes that would allow competitors access to “unclaimed works” in the corpus of scanned books. Google has failed to address a key concern of DOJ is failing to dispose of the de facto exclusive license.

IX. Settlement cannot rely on additional class action litigation to ensure competition;

The Settlement, as amended, would still require competitors to infringe, litigate, and hope to negotiate a comparable deal. Google has failed to address this key concern of DOJ, preventing any chance for competition.


Over 400 third party briefs were filed on the Google Books Settlement, with 90% of them objecting to the deal. In addition to the comprehensive brief filed by the Department of Justice, many of the third parties had additional concerns with the Settlement.

I. Different rightsholder groups may need to be excluded/represented (e.g. academic authors, literary agent authors, photographers);

The amended Settlement was negotiated by the same narrow parties, did not include representatives of others’ interests, and did not create any additional subclasses despite the divergent interests that were highlighted in numerous objections to the Settlement.

II. Privacy concerns must be addressed;

Google and its partners made one minor tweak which did nothing to address the major privacy concerns expressed by the nation’s leading advocates on privacy issues.

III. Google’s commercialization of “Non-Display Uses” must be specifically disclosed and understood by class members;

No changes at all were made to Google’s license to broad “Non-Display Uses” in the amended Settlement, nor does it elaborate on what uses Google plans to make under that license. It also made no changes to the severe restrictions that Google has imposed on third parties who might wish to conduct research on the corpus.

Where are we today?

In short, the list of concerns with the GBS has only grown over the last year, and Google’s actions in the eBook market and elsewhere have done nothing to assuage the problems that have existed from the beginning.  As we look back over the last year, it is clearer than ever that the GBS is an agreement riddled with flaws in both process and content.  Once again, we urge Judge Chin to reject the GBS.

Originally posted on The Open Book Alliance Blog by OBA.

Written by internetarchive

February 17, 2011 at 4:02 pm

Posted in Uncategorized

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