Case Settled: Google To Become Bookseller

by Wendy Davis, Oct 28, 2008, 5:09 PM

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Google said Tuesday it will get into the book-selling business as part of an ambitious settlement of a copyright infringement lawsuit brought by authors and publishers.

The agreement, if approved by the court, will go far beyond the typical settlement in copyright disputes. The deal calls for Google to pay $125 million total--$34.5 million of which will fund a new book rights registry, similar to the music industry's ASCAP and BMI. Should that happen, it will mark the emergence of the first new collective rights organization in decades.

And in a portion of the 323-page agreement that could set off antitrust alarms, Google will begin selling downloads of books at prices that it sets together with the new registry. Google will either use an algorithm to determine the price, or Google and the registry will agree on it. The agreement calls for Google to keep 37% of the revenue from books sold and from ads displayed around those books, while publishers and authors will get the remaining 63%.

A federal district court judge still must sign off on the deal.

Google was sued by the Authors Guild and the Association of American Publishers in 2005 for copyright infringement stemming from efforts to digitize books.

The search company scanned in books from public libraries, including books under copyright, and made snippets searchable. But authors and publishers complained that this program violated their rights. As part of the settlement, Google agreed to pay $60 for each book it scanned in without permission.

But whether the scans actually violated book publishers' copyrights is not answered by the settlement. Google had argued that displaying small snippets of books constituted "fair use," but it's difficult to predict whether courts would have agreed.

For that reason, all sides can claim victory with the settlement, said Eric Goldman, director of the High Tech Law Institute at Santa Clara University. "Both parties may view this as a win, because they faced a high degree of uncertainty about what the court was going to do."

But, Goldman added, even if a judge signs off on the deal, it's not certain that the agreement will survive antitrust scrutiny, given that it calls on Google and this new registry to set prices.

Authors Guild President Roy Blount, Jr. praised the deal in a message posted online. "We expect that millions of out-of-print books (and many in-print books) will be available through Google Book Search to readers," he said, adding that authors need not participate.

Currently, Google is facing a copyright infringement lawsuit by Viacom stemming from pirated clips on YouTube. In that case, Google argues that the Digital Millennium Copyright Act immunizes it from liability for works uploaded by users.

While the settlement with the book publishers will not necessarily carry any influence in other copyright disputes, Google co-founder Sergey Brin told The Wall Street Journal Tuesday that it might consider creating a similar type of registry for digital video. "With video and our fingerprinting technology, we are essentially building the registry," he reportedly said.

The arrangement with book publishers doesn't mark the first time Google has tried to get into the content-selling business. In January 2006, Google opened an online video store and offered episodes of TV shows for sale. But Google closed that store in August of 2007.

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