As expected, a revised Google Book Settlement has been filed today — about as late as possible. The agreement narrows the scope to the US, UK, Canada and Australia. It alters how revenue generated by “unclaimed works” will be handled. It formally grants retailers who license out-of-print books covered by the settlement — including Google competitors — a 37% share of sales. It also clarifies how the book pricing algorithm will work.
Google has a blog post about up about the news, which in turn points to:
I haven’t had a chance to go through the actual agreement, and given that it’s 10PM Pacific time, I won’t be getting through it this evening for this article. Instead, I’ll focus on what’s in the summary document. I’ll try to highlight anything I think wasn’t addressed by the Department Of Justice objections to the last settlement agreement. I’ll do this all incorporated into my live blogging of the press conference held about the settlement.
The Press Conference
On the call were Richard Sarnoff, chairman of the American Association of Publishers; Paul Aiken, executive director of the Authors Guild and Daniel Clancy, engineering director for Google Books. The first two represent the plaintiffs that sued Google. Missed the call and really want to hear? Call (719) 457-0820 or (888) 203-1112 and enter code 3915040.
Engineering Director Richard Sarnoff, Authors Guild Executive Director Paul Aiken and me for a public conference call at 9:15 PM Pacific/12:15 AM Eastern to discuss our amended agreement. To participate, ask for the “Amended Google Books Settlement Conference Call,” and use the following numbers:
Sarnoff spoke about the international scope of the settlement, and how it was changed (note, anything I exact quote should be an exact quote, as best I caught it):
“This settlement is NOT about setting up the digital future of publishing. This settlement is about not leaving ?whole? books behind …. this is about reclaiming the past. We recognized some foreign countries and rights holders were concerned …. so we’re adjusting and scaling back the scope.
OK, to better explain what Sarnoff is talking about, let’s look at what the settlement summary says:
As revised, the settlement will only include books that were either registered with the U.S. Copyright Office or published in the U.K., Australia, or Canada. After hearing feedback from foreign rightsholders, the plaintiffs decided to narrow the class to include only these countries, which share a common legal heritage and similar book industry practices. British, Australian, and Canadian rightsholders are joining the case as named plaintiffs and will also be represented on the Board of the Book Rights Registry.
In addition, as we have stated previously, we have clarified the wording in the agreement to make it clear that works that are for sale as new internationally are considered commercially available and thus Google will not display any of their content by default.
This is in reaction to part of what the DOJ was concerned about:
The Proposed Settlement operates to sweep in untold numbers of foreign works, whose authors, under current law, are not required to register in the same manner as U.S. rightsholders. Many of those authors have never published works in the United States and are not members of the Authors Guild or the Association of American Publishers, which exclude many foreign copyright owners from membership by virtue of their membership criteria….
As the filings of France and Germany make clear, some of the United States’ trading partners have serious concerns about application of the Proposed Settlement to foreign authors and, in any event, the parties have not demonstrated that the class included representation sufficient to protect the interests of these foreign rightsholders.
Sarnoff also stressed that only those in the US can preview or by in copyright works.
Aiken spoke next, addressing unclaimed works. He summarized how funds will be be held for 10 years, not 5. How unclaimed funds will go to charities as determined by court order after 10 years. After 5 years, 25% of unclaimed funds may be earmarked for the purpose of finding rights holders.
Let’s go again to the settlement summary:
The amended settlement agreement requires the Book Rights Registry to search for rightsholders who have not yet come forward and to hold revenue on their behalf. The settlement now also specifies that a portion of the revenue generated from unclaimed works may, after five years, be used to locate rightsholders, but will no longer be used for the Registry’s general operations or redistributed to other rightsholders. The Registry may ask the court after 10 years to distribute these funds to nonprofits benefiting rightsholders and the reading public, and may provide abandoned funds to the appropriate government authority in compliance with state property laws. The Registry will now also include a Court-approved fiduciary who will represent rightsholders of unclaimed books, act to protect their interests, and license their works to third parties, to the extent permitted by law.
Just as with the original agreement, nothing in the amended settlement limits anyone’s ability to use unclaimed works. In terms of the small subset of unclaimed works that some have referred to as “orphans,” as we’ve said repeatedly, the settlement agreement takes one important step towards opening up access to unclaimed books. In the meantime, we continue to encourage legislation that provides meaningful avenues for any entity to use these works.
As for the DOJ’s view, hang on. I’ll get back to that during question time.
Sarnoff talked about competitive issues in general, and going to the settlement summary on that is actually more useful:
Syndication of All Works in the Settlement to Others, Including Google’s Competitors
As Google first announced in September 2009, any book retailer — Amazon, Barnes & Noble, local bookstores, or other retailers — will be able to sell consumers online access to the out-of-print books covered by the settlement, including unclaimed books. Rightsholders will still receive 63% of the revenue, while retailers will keep the majority of the remaining 37%. This provision has been explicitly written into the revised agreement as a Google obligation.
The amended settlement clarifies how Google’s algorithm will work to price books competitively. The algorithm used to establish consumer purchase prices will simulate the prices in a competitive market, and prices for books will be established independently of each other. The agreement also stipulates that the Registry cannot share pricing information with anyone but the book’s rightsholder.
In addition, the amended settlement removes the non-discrimination clause (commonly called the “Most Favored Nation” clause) that pertained to the Registry licensing of unclaimed works. The Registry is free to license to other parties without ever extending the same terms to Google.
This seems designed to address the DOJ’s concern that Google would have the right to sell out-of-print books because it’s covered by the agreement, while competitors had been assured outside the agreement they’d have rights to. Now, they get included within the agreement with a guaranteed revenue share. The DOJ also had concerns about price fixing, which apparently an algorithm that will “simulate” the real world is designed to rectify. Somehow, I don’t think a black box algorithm is that reassuring. But supposedly, the details of this algorithm are also being revealed.
Clancy then spoke, saying essentially Google’s all excited. This opens up more books for the world. Google’s looking forward to going beyond countries covered in the agreement and working with international rights holders.
While he didn’t address this, let me bring in the remaining part of the settlement summary:
The amended settlement does not change the primary access models outlined in the original agreement, including enabling readers to preview and purchase books, selling institutional subscriptions to the whole database, and giving libraries free access at designated terminals. Under the revised agreement, possible additional access models to which Google and the Registry might agree in the future have been reduced and are now limited to: print-on-demand, file download, and consumer subscription. The amended agreement also enables the Registry to increase the number of terminals at a public library building, and it clarifies that rightsholders can choose to make their books available for free or allow re-use under Creative Commons or other licenses. Rightsholders can also choose to modify or remove restrictions placed on Google’s display of their books, such as limits on the number of pages that users can print.
Suffice to say, the DOJ has a number of objections on access that these changes are designed to address.
The first was from the Associated Press, who had spoken to the Open Book Alliance (which opposed the original settlment) and got a statement that the settlement doesn’t go far enough, it’s sleight of hand, surgical nip and tuck. And now the statement is live, so let’s see it in full:
Our initial review of the new proposal tells us that Google and its partners are performing a sleight of hand; fundamentally, this settlement remains a set-piece designed to serve the private commercial interests of Google and its partners. None of the proposed changes appear to address the fundamental flaws illuminated by the Department of Justice and other critics that impact public interest. By performing surgical nip and tuck, Google, the AAP, and the AG are attempting to distract people from their continued efforts to establish a monopoly over digital content access and distribution; usurp Congress’s role in setting copyright policy; lock writers into their unsought registry, stripping them of their individual contract rights; put library budgets and patron privacy at risk; and establish a dangerous precedent by abusing the class action process
So the response to that? Clancy stepped up, saying there were lots of discussions on how to change things. Adjustments were made to address class member concerns (the people involved in the lawsuit, rather the the Open Book Alliance, which is not a party to the suit). “I understand Amazon, Microsoft and the Internet Archive don’t want to increase access to these books,” he said, or very close to that. That was a zinger, stressing that the Open Book Alliance just happens to be backed by major Google competitors. Not that Google minds. Clancy said they welcome the competition and feel the settlement addresses concerns.
Aiken: “These are substantial changes.” He added that yes, the core settlement was largely protected but that it had to be, as it was in general seen correct.
Sarnoff: Said he assumed the OBA hadn’t read the settlement. That was probably true enough. The press conference itself appears to have started about 1/2 hour after the settlement was out. Some reporters on the call mentioned they hadn’t even read it.
The next question was if there had been feedback from the Justice Department about the changes.
Sarnoff: Had discussions with them and feel have addressed their key concerns.
There was another question I then largely missed. I put in the next one. After scanning the summary, and the DOJ objections, I felt these two objections were largely not addressed:
Because the owners of orphan works are an incredibly diverse group that includes not only living authors or active publishers, but heirs, assignees, creditors, and others …. these rightsholders are difficult or impossible to locate, and thus difficult to notify. Moreover, no amount of notice is likely to protect those orphan rightsholders who are unaware of their rights or unclear how or whether they want to exploit them. Yet, if an out-of-print copyright owner does not come forward within five years, profits from the commercial use of the out-of-print work are distributed to pay the expenses of the Registry and then to the Registry’s registered rightsholders.
The Proposed Settlement does not forbid the Registry from licensing these works to others. But the Registry can only act “to the extent permitted by law.” S.A. § 6.2(b). And the parties have represented to the United States that they believe the Registry would lack the power and ability to license copyrighted books without the consent of the copyright owner – which consent cannot be obtained from the owners of orphan works. If the parties are correct, the Registry will lack the ability to provide competitors with licenses that will allow them to offer to the public anything like the full set of books Google can offer if the Settlement Proposal is approved.
In short, there’s a big issue with the so-called orphan books. The owners of these books don’t give permission to be included, and Google gets a license under the settlement to use the works anyway. Why not exclude them from the settlement and defuse a major issue?
Aiken: We don’t know which ones are the orphan works. There’s lots of confusion of out-of-print works with orphan works. The success rate of finding out of print authors is quite good. Once you have some money for to locate them, the success rate in finding authors is around 90%.
Clancy: The opt-in model is the model that Google uses today. The problem that we were solving here is not the problem of orphan works. It’s the unclear rights situation. If you did the opt-in model …. then you don’t have an organization that can effectively …. part of the way you’re going to find them, is that you have money being held for them. For us, we felt …. this will be a database where books are claimed …. we don’t believe that will happen today [without a settlement nor through congressional action] …. we don’t think [leaving out the unclaimed works] would solve the problem and find all these works that aren’t [really] orphans at all. We don’t think an opt-in solution would open up many of them.
This confused me. By their nature of being unclaimed works, the authors and publishers never opted-in to being scanned. So how can Google say the model is opt-in?
Aiken explained that Google’s general model for adding books not covered by the settlement is opt-in. Clancy then also clarified that for all known works [that are still in copyright], opt-in is used. And that the actual number of orphan works is small.
In other words, for books in copyright with known authors or publishers, Google asks permission for them to be included through its partners program. But the library scanning project, that has some books that were scanned which are in copyright but without known rightsholders. While these were scanned on an opt-out basis, the settlement effectively converts them into opt-in by holding that permission (and any revenues) in trust, for when the rightsholders are found.
Which, frankly, still isn’t opt-in. And given that everyone is so positive that you CAN find rightsholders for most of these unclaimed works, why not go out and find them first, then ask if they want to be included. Surely the settlement can generate enough money from books with known authors to fund that without having to include these books at the outset?
Aiken: Underlying all this is a mess that only a class action can clear up. There are books that had no digital rights ever granted. To sort through all those would be a burden. You would not solve this problem. You can’t solve this.
I did a mental double-take on this. Seriously, the only way to solve the rights problems of books with unknown works is through a class action lawsuit that started over whether scanning books was a violation of fair use? An issue itself that isn’t even being resolved by this but just side-stepped. Why not ask the US Congress to pass laws to address this?
Aiken responded to say that this is “our solution, a solution using class action law” and stressed that class suites are a part of civil procedures authorized by Congress. Somehow, I don’t think that’s going to satisfy some of those who feel the settlement goes to far into establishing new copyright law, a concern even the DOJ raised.
Clancy added that on orphan works [real ones, those without authors that can be foudn], they don’t think legislation will take decades:
In fact, what we think what this settlement does is solve one of the biggest challenges with orphan works …. that no database base exists …. it will be made public [when the registry established by the settlement locates rightholders of unknown works, anyone can tap into that database to contact them] …. we think that helps everybody, because everyone can turn to it. We can get good orphan work legistlation done.
Sarnoff: We are certainly hoping that this settlement is the key that unlocks a positive outcome on the legislative process on orphan works as now there’s a way to actually implement any legislation that congress decides on orphan work [IE, there's a registry for rightholders that can tie into legislation] …. thinks much confusion that orphan works are not the same as out-of-print works. Vast amount of out-of-print works that will be claimed …. so we have three diff buckets. One large bucket of out-of-print works, the vast majority will be claimed. Orphan works that will be claimed when revenue is attached to them. Lastly, whatever the remainder is that never get claimed and where rights holder can’t be identified, those are the orphan books where Congress may want to take action.
There was one more question on institutional sales that got beyond me, then the call ended.
Department Of Justice Files Objections To Google Book Search Settlement: Our summary of the DOJ objections to the original settlement, from September.
Google’s Schmidt To Book Settlement Critics: What’s Your Solution?: Also from September, this provides a brief overview of the case in general and the orignal settlement.
The Laboratorium: James Grimmelman is a lawyer who has been following the case shortly. He doesn’t have an analysis up yet, but he will. If you can’t wait, look at his tweets for today. He does a change-by-change summary, tweet-by-tweet.
Press Review+: Google Book Search Revised Settlement Settlement (2.0) Released; What About Libraries?: From ResourceShelf, a growing resource list of coverage.
Also see related discussion at Techmeme for even more press coverage and commentary.