The revised Google Books settlement agreement may quiet international opponents, but it still gives Google a monopoly on commercializing out-of-print books where the copyrights are unclaimed and fails to protect consumer privacy, opponents said on Monday.
"We're at a cross roads," Internet Archive Director Brewster Kahle said during a panel late Monday on the Future of Books at the Commonwealth Club in San Francisco. "Is it going to be a subscription life...where one or two companies own the distribution and presentation (rights) to these books?"
In response, Google Books Engineering Director Dan Clancy said: "This is just one of a panoply of choices that people will have in the future."
Brewster Kahle, Internet Archive director, and Dan Clancy, engineering director of Google Books, face off during a panel at the Commonwealth Club.
(Credit: Elinor Mills/CNET)Google is scanning and digitizing books in libraries and publishers' catalogs so people can view and search them online and buy electronic versions. The company is striking deals with publishers for copyright-protected books and offering to pay rights holders to digitize out-of-print works, and will share revenue from sales with authors.
The agreement would settle a 2005 copyright infringement lawsuit filed by the Authors Guild over Google's book scanning plans.
Key concerns focus on licensing rights to so-called "orphan works" where the copyright holder is unknown, as well as books where the rights holder has not stepped forward--together estimated to represent more than half of the available works.
The modified settlement, filed in federal court in New York late on Friday, attempts to address U.S. Department of Justice concerns that the settlement would give Google unfair competitive advantages and violated copyright law.
Copyrights holders now have more control than they previously had. Authors and publishers were given seats on a Books Rights Registry board, a nonprofit that would be responsible for making payments and holding revenue from unclaimed works for up to 10 years. The registry is now required to search for copyright holders who have not yet come forward and revenue from unclaimed works will be used to locate copyright holders instead of for operations or distribution it to known copyright holders.
The revised settlement also could remove some of the heat Google was getting from governments in other countries over copyright concerns. Author and publisher groups in Germany, France, China, and elsewhere have voiced opposition to the Google Books plan. In response, Google, the Authors Guild, and other parties in the settlement excluded any out-of-print works not registered in the U.S. or published in the U.K., Australia, or Canada.
"Just because they are taken out of the agreement doesn't mean Google will stop scanning their books," Pam Samuelson, director of the Berkeley Center for Law & Technology, said of the works from the other countries. "Google has already scanned many of their books."
Also troubling to critics is the fact that the revised settlement circumvents traditional copyright provisions by allowing Google to digitize orphan works without first getting rights holder permission, while any Google competitors are blocked from doing so barring legislation granting them licensing rights.
"For the millions of volumes of orphan books that Google has already scanned in, they can offer those without risk of anyone coming forward and suing them for infringement," said John Simpson, a consumer advocate at Consumer Watchdog.
The Justice Department's main concerns were not addressed, others added. (A DOJ spokeswoman did not return a call seeking comment.)
"The Department of Justice was trying to get them to also create a mechanism for licensing to third parties and the amended settlement agreement doesn't go that far," Samuelson said. "It creates a fiduciary for unclaimed books to potentially license unclaimed books at some point in the future, but only if Congress passes orphan works legislation."
Why monetize unclaimed works before getting permission?
Danny Sullivan, editor-in-chief of Search Engine Land, wrote on his blog: "Given that everyone is so positive that you CAN find rights holders 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?"
"The Registry is trying to lay claim and charge for, monetize, works that have never been claimed and this is what causes the whole thing to be broken," Kahle of the Internet Archive said after the Commonwealth panel. The Internet Archive has been scanning books and archiving all types of media for years, but on nonprofit resources.
However, Clancy said most of the unclaimed works will eventually be claimed and predicted there would be legislation soon to resolve the matter. "We will have orphan works legislation before this thing is over ... [because of the settlement] people are pushing to resubmit it as we speak," he said.
Samuelson and other critics are worried that as a result of Google having the only comprehensive collection of out-of-print books, there will not be competitive pressure on the company to keep prices fair. "The risk of price gouging over time is very high and universities in particular have experienced excessive increases in prices of scholarly journals over the last few years," she said.
Samuelson reiterated her concerns about pricing at the Commonwealth panel event, adding that she doesn't think Google will price gouge in the immediate future, but that it could happen in the longer term. Clancy made no assurances but mentioned something about there being alternatives, like physical books, and that "the platform is there to provide the protections."
"The settlement is a total failure to address most of the problems the Justice Department raised and virtually all the problems raised by U.S. objectors and amicus [friends of the court] briefs," said Gary Reback, an antitrust lawyer and leader in the Open Book Alliance, whose members include nonprofit author groups, library institutions, and Google rivals Amazon, Microsoft and Yahoo.
"If we are going to allow Congress to [pass a law granting others licensing rights for orphaned works] why do we need a settlement?" said Reback. "The right way to do this would be to have Congress deal with it; not for Google to give itself a preference."
Of the settlement's handling of orphan works, James Grimmelman, a professor at New York Law School, writes on his blog that "It's a very clever hack. I have my doubts whether it's legal." Google remains "the only game in town" for unclaimed works, he said. (For more on the copyright implications of the settlement read Larry Downes' guest column on CNET News.)
The amended settlement also does not provide privacy protections for consumers that privacy advocates and authors including Michael Chabon, Bruce Schneier, and Jonathan Lethem had requested.
"One of our core privacy concerns with the settlement has been that reading records are not properly protected from disclosure to the government and third parties," the American Civil Liberties Union of Northern California wrote in a blog post. "Readers should be able to use Google Book Search without worrying that the government or a third party is reading over their shoulder."
In response to Samuelson complaining at the Commonwealth event that the revised settlement offers no privacy protections for consumers, Google's Clancy said, "We didn't think the settlement was the right place to discuss this."
Updated 8:20 p.m. PST with Google, Internet Archive, and Samuelson comments at Commonwealth Club event Monday night.
A revised settlement filed late Friday over Google's right to scan digital books places additional limits on the company.
The settlement allows out-of-print books from only English-speaking countries to be scanned, restricts the ways that Google can make money from scanning and digitizing out-of-print books, and requires a registry to seek out copyright holders who do not come forward.
The amended settlement comes after Judge Denny Chin of the U.S. District Court for the Southern District of New York granted on Monday a deadline extension to the parties to try to resolve issues that the U.S. Department of Justice had with the original October 2008 settlement.
The settlement now applies only to out-of-print books registered with the U.S. Copyright office or published in the U.K., Australia, or Canada--countries that have a common legal heritage and similar book industry practices--according to the FAQ on the revised settlement.
Each of those countries will have an author and a publisher seat on a Book Rights Registry board, a nonprofit that will be responsible for paying authors and publishers.
The Book Rights Registry will be required to search for copyright holders who have not yet come forward and to hold revenue on their behalf, under the revised settlement. An independent fiduciary approved by the court will make decisions regarding unclaimed works.
Readers will be able to preview and purchase books, institutions can buy subscriptions, and libraries will have free access at designated terminals. The revised settlement limits Google's future business models from the works to individual subscriptions, print-on-demand, and digital downloads. The company will need to get approval from the registry's board and provide notice to all claiming copyright holders before implementing any of the business models.
Copyright holders can now choose to make their books available for free or allow reuse under Creative Commons, as well have the option 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.
The settlement still allows any bookstore to sell online access to out-of-print books covered by the settlement, including unclaimed books. Copyright holders will still receive 63 percent of such revenue, while retailers will keep the majority of the remaining 37 percent.
A portion of the revenue generated from unclaimed works may be used to locate copyright holders after five years and will not be used for the registry's general operations or redistributed to other copyright holders as previously planned. After 10 years, the registry may ask the court to distribute these funds to nonprofits.
The Book Rights Registry will now hold unclaimed funds for 10 years, instead of five. After that time, the funds will go to nonprofits in the English speaking countries.
The Registry also is prohibited from sharing pricing information with anyone but the book's copyright holder, according to settlement. Authors and publishers will have until March 31, 2011, to make claims for the $60 to $300 per-book-digitization payments, and have until March 9, 2012, to remove works from Google's database.
The revised settlement makes it clear that Google will not display any content by default from works that are for sale as new internationally, which are considered commercially available. In addition, it includes language that specifies that Google will not share any private information with the registry without valid legal process.
Authors and publishers from outside of the covered countries can still enter into promotional and revenue-generating programs through Google's Partner Program.
"The changes we've made in our amended agreement address many of the concerns we've heard (particularly in limiting its international scope), while at the same time preserving the core benefits of the original agreement: opening access to millions of books while providing rightsholders with ways to sell and control their work online," Dan Clancy, Google Books engineering director, said in a statement.
"We're disappointed that we won't be able to provide access to as many books from as many countries through the settlement as a result of our modifications, but we look forward to continuing to work with rightsholders from around the world to fulfill our longstanding mission of increasing access to all the world's books," Clancy said.
According to Google's FAQ, the court will create a timeline for the revised settlement, "which will likely include a notice period, an objection period, and a final fairness hearing in early 2010."
Google is seeking rights to scan and display out-of-print books as part of a larger effort to create the modern day equivalent to the Library of Alexandria. Opponents argue that the settlement puts too much power in the hands of one company.
In September, the Justice Department voiced objections to the proposed settlement on antitrust grounds. The agency was bothered by the fact that Google and the Books Rights Registry, a nonprofit that will pay authors, would have sole control over the pricing of institutional subscriptions to the digital library. The DOJ also raised questions about whether the proposed settlement complied with Rule 23 of the Federal Rule of Civil Procedure, as well as copyright law in general.
Google first announced plans in 2003 to make books searchable and has hit snags with its efforts since, being sued by authors and facing opposition internationally.
The Internet Archive is enlisting some heavy hitters in its challenge of Google's proposed settlement with book publishers and authors.
Microsoft, Amazon, and Yahoo are joining with a few library associations to oppose the settlement, Peter Brantley, the Internet Archive's director, told The Wall Street Journal in an interview. The coalition, which is expected to be announced in a couple of weeks, will be co-led by antitrust lawyer Gary Reback, Brantley said.
It's an unusual reunion for Reback, who marshaled industry opposition to Microsoft's efforts to squeeze Netscape from the browser business. Reback, who until 2000 was a partner at the storied firm of Wilson Sonsini Goodrich & Rosati, was responsible for compiling evidence to aid the U.S. Department of Justice's antitrust case against Microsoft on behalf of Microsoft's Silicon Valley adversaries. In 2003, PeopleSoft hired Reback in its failed effort to fend off Oracle's hostile $6.3 billion takeover bid.
Reback is the second prominent attorney to be linked this week with the growing opposition to the settlement. On Wednesday, The New York Times reported that Scott Gant, a lawyer with Boies Schiller & Flexner, would act on his own as an author concerned about the use of class action status to lump all authors into the same pool.
Google is digitizing the works from many major libraries, including the New York Public Library and the libraries at Stanford and Harvard universities, and is making those texts searchable on pages with advertisements. The Authors Guild, which represents more than 8,000 authors, sued Google in September 2005, alleging that the company's digitizing initiative amounted to "massive" copyright infringement. The suit was subsequently granted class action status.
Under the proposed $125 million settlement with the Authors Guild and the Association of American Publishers, announced in October 2008, Google would have the right to show content from books online that are still in copyright but that are no longer in print. In addition, those copyright holders could be paid for online sales of their books.
Authors and publishers may opt out of the proposed settlement, but if they do nothing, they're considered part of it. That includes authors who can't be located.
Google has book-search agreements in place with numerous publishers, but the company hopes that the settlement will permit it to bring many more books into its service. In a victory for settlement opponents, a judge gave authors four more months to decide whether to participate.
Currently, users of Google Book Search are able to view snippets of books online. The settlement agreement would allow Google to make whole pages of copyright works available to online searchers.
The Justice Department appears to be stepping up its antitrust probe of Google's settlement last year of a class-action lawsuit filed by groups representing authors and publishers, according to reports in The New York Times and The Wall Street Journal.
The Justice Department has sent formal requests for information, called civil investigative demands, or CIDs, to publishers involved in the settlement, according to the reports. The increased scrutiny may signal the Justice Department's opposition to the settlement, which still requires court approval.
Under the proposed $125 million settlement with the Authors Guild and the Association of American Publishers, announced in October, Google would have the right to show content from books online that are still in copyright but that are no longer in print. In addition, those copyright holders could be paid for online sales of their books.
Authors and publishers may opt out of the proposed settlement, but if they do nothing, they're considered part of it. That includes authors who can't be located.
Google has book-search agreements in place with numerous publishers, but the company hopes that the settlement will permit it to bring many more books to into its service. In a victory for settlement opponents, a judge gave authors four more months to decide whether to participate.
Google is digitizing the works from many major libraries, including the New York Public Library and the libraries at Stanford and Harvard universities, and is making those texts searchable on pages with advertisements. The Authors Guild, which represents more than 8,000 authors, sued Google in September 2005, alleging that the company's digitizing initiative amounted to "massive" copyright infringement. Five large publishers filed a separate lawsuit as representatives of the Association of American Publishers.
Currently, users of Google Book Search are able to view snippets of books online. The settlement agreement would allow Google to make whole pages of copyright works available to online searchers.
Authors and publishers of tens of thousands of out-of-print books have submitted claims for compensation from Google Book Search as called for in a settlement agreement to a copyright lawsuit, a lawyer in the case said on Wednesday.
Under a $125 million settlement Google reached in October with book authors and publishers who sued over the company's book-scanning project, the search giant is required to provide notice to authors, publishers, and their heirs and successors that they may be eligible for payment.
The notice is being published in 218 countries and 72 languages, according to a statement from Boni & Zack, a Philadelphia-area law firm that represented the Authors Guild in the lawsuit.
Authors and others are submitting claims on a special Web site that went live January 5, attorney Michael Boni said in an interview. Under the settlement terms, copyright holders will receive $60 per scanned book and 63 percent of ad revenue.
"The notice program is succeeding and notice has already gone out to most of the class members around the world," Boni said. "There is still some more notice to be provided, but we are on track and we are pleased."
Google representatives did not immediately respond to questions via e-mail and telephone.
Google is digitizing the works from many major libraries, including the New York Public Library and the libraries at Stanford and Harvard universities, and is making those texts searchable on pages with advertisements.
The Authors Guild, which represents more than 8,000 authors, sued Google in September 2005, alleging that the company's digitizing initiative amounted to "massive" copyright infringement.
The U.S. Senate on Tuesday afternoon passed the Webcaster Settlement Act, the legislation that lays the groundwork for Web radio stations to negotiate reduced royalty rates for the songs they stream over the Web.
The bill passed through the House of Representatives on Saturday and is now headed to the White House, where President Bush is expected to sign it.
"I'm relieved, optimistic, and grateful to our listeners," said Tim Westergren, founder of Pandora, a Web radio station and music-suggestion engine.
Webcasters have long complained that the royalty rate to stream music is too high for Web radio stations to generate any profit. Representatives from Internet radio and the music industry have been in negotiations for more than a year. Recently, the two sides have gotten closer to an agreement and both say they are confident a deal is within reach.
The deal needs the blessing of Congress because the parties seek a statutory license. Under such a license, any Web station is allowed to play songs that fall under the license without seeking permission. In return, Webcasters are required to pay the negotiated rate.
Westergren, who emerged as a de facto spokesman for the bill, said that had it not made it through Congress, a long delay would have ensued before an agreement could be reached, a situation he says would have driven some Web stations out of business. That's why Webcasters and representatives from the music sector, including representatives of the Recording Industry Association of America, teamed up to get the bill passed.
Believe it or not, the RIAA was in there fighting shoulder-to-shoulder with Pandora and the Web radio stations to fend off any threats to the legislation.
The most imposing obstacle came from traditional broadcasters, who lobbied hard the past weekend to snuff the bill for reasons that are still unclear. Rep. Howard Berman (D-Calif.), who has a history of voting for pro-copyright-holder issues, helped mediate a settlement with the National Association of Broadcasters, and the group dropped its opposition.
"This is a welcome and encouraging development and a sign of the constructive working relationship between the music industry and Webcasters," said Mitch Bainwol, the RIAA's chairman and CEO. "Together, we want to make this marketplace work for both music fans and music creators."
It's important to note that the bill doesn't guarantee a settlement between the Webcasters and music industry. They now have until February 15 to reach an agreement.
See Kara Tsuboi's interview on Monday with Westergren, in which he explains why he's fighting to save Web radio.
Technology companies are supposed to be wide-eyed novices on Capitol Hill. I've read that they don't spread enough money around or aren't hip to the ways of Washington.
Regardless of whether that's true, this weekend saw Pandora, a struggling music service, whip up enough support among fans of Web radio to help persuade the House of Representatives to unanimously pass the Webcaster Settlement Act on Saturday, according to multiple people associated with the bill. The proposed legislation is designed to give Internet radio stations added time to negotiate a settlement with the music industry on reduced royalty rates.
Lower rates are vital to the survival of Internet radio stations, according to Tim Westergren, Pandora's founder, who pleaded with the public on Friday to call their congressional representatives and demand they support the bill. Webcasters and the music industry are close to reaching an agreement, but if the legislation fails to pass it could push the discussions back months and deliver a financial death blow to some services, Westergren said.
According to one Washington lobbyist, phone calls from the public were one of the factors that helped the legislation pass in the House and now have it headed for a Senate vote within the next two days without any major parties gunning for it.
Two other factors, however, likely played larger roles in getting the bill through the House: the lobbying efforts made by National Public Radio and some 12th-hour deal making to appease traditional radio broadcasters, who were trying to kill the legislation, according to sources.
"You know," said a fatigued Westergren, "it was a nerve-racking day."
In crunch time, Howard Berman came through
Saturday started with lobbyists for the National Association of Broadcasters "making a huge press in the House, blasting every (Congressional representative's) office" with appeals to kill the legislation, according to a lobbyist with knowledge of the events.
NPR, the publicly and privately funded nonprofit organization created by Congress in 1970, has plenty of friends in Washington. The group, which produces Webcasts and supports the bill, e-mailed members of Congress on Saturday, explaining how much it needed the legislation and that a deal on a new royalty rate couldn't be struck without it, sources said.
The real deciding factor came when Rep. Howard Berman (D-Calif.) met with members of the NAB. They told him that they feared their Web competitors would get a deal done first. Under the terms of the legislation, SoundExchange, the body that collects royalties and is part of the Recording Industry Association of America, has until Dec. 15 to negotiate a new rate. The NAB apparently was worried that the deadline didn't give the organization enough time to strike its own royalty agreement.
"Berman said 'Fine, we'll extend the date until Feb. 15, which gives you two more months to talk,'" said one music-industry source with knowledge of the discussions. "There isn't anything in the act that prevents traditional broadcasters from reaching their own royalty rate."
That did the trick, according to the source. Dennis Wharton, an NAB spokesman confirmed Saturday night that the NAB met with Berman and that the deadline was extended. He said the trade organization has dropped its opposition in both houses of Congress.
This means that unless something unforeseen happens, the Webcaster Settlement Act should pass, according to insiders.
Then what? Internet radio stations must still reach an agreement with the artists and labels about how much to pay them for streaming their music over the Web. Sources on both sides say they are closer than ever before to a number, and should the Webcasting bill pass in the Senate, they predicted that a deal could be reached as early as next month.
Update at 5:50 p.m. PDT: The House actually did weigh in on the bill on Saturday, passing it unanimously by a voice vote.
Proponents of Web radio stations are predicting a very close vote in Congress on a bill that they paint as life or death.
The House of Representatives is set to vote Sunday on the Webcaster Settlement Act, which would allow Web radio stations to negotiate with the music industry for a royalty rate lower than what Congress mandated last year.
Companies like Pandora are seeking a reduced rate and say that they simply cannot afford to keep operating with the higher rate.
The bill was scheduled to go to the House floor Saturday morning but was postponed twice. Meanwhile, the National Association of Broadcasters, which opposes the bill, was also using the extra time to sway lawmakers.
Because the bill is being considered under a suspension of rules, it will require a two-thirds majority to pass.
Asked which way Congress was leaning, Pandora founder Tim Westergren said it is too close to call.
"NAB is gunning full bore to kill the bill," Westergren said. "It's become a straight up battle between NAB lobbying might and constituents. Calls from listeners have been raining in since last night. (It's) touch and go."
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