Google, Books and ‘Consumer Bandwidth’

Google’s settlement with publishers and authors in a copyright-infringement dispute involving the search giant’s Book Search project is earning some cautious praise for ending a protracted legal squabble in a manner that appears to please all sides.

In addition to the customary celebratory statements from the three groups involved — Google (NASDAQ: GOOG), the Author’s Guild and the American Publishers’ Association — that accompanied yesterday’s announcement, some of the major libraries involved in Google’s digitization project heralded the settlement.

“We have been negotiating for almost two years with Google and the plaintiffs to shape this agreement for the public good,” Stanford University Librarian Michael Keller said in a statement. Joining Stanford in the negotiations were the University of Michigan and the University of California.

“We believe that the proposed settlement offers significant benefits for readers everywhere and therefore society as a whole, providing easy access to texts via Google to libraries throughout the country, and expanding dramatically the amount of material that can be freely read (not just searched) by the public.”

Google began its Book Search project four years ago in conjunction with its library and publishing partners. In 2005, groups representing authors and publishing houses filed two class-action suits alleging widespread copyright infringement.

Through the settlement, Google will pay $125 million to the plaintiffs, including $34.5 million to set up a Books Rights Registry where authors can register to ensure they are compensated for their work.

The agreement, which is still pending approval from the U.S. District Court for the Southern District of New York, would restart Google’s scanners and expand the amount of copyrighted material that Google can offer for free. Instead of the brief snippets from in-copyright works the search engine offered before, Google would make 20 percent of the text available for free online viewing under the settlement.

The agreement would see Google compensate the authors and publishers in the form of the advertising revenue generated from the book search pages, as well as a share of sales of the online versions of the texts it offers on the site. Google also places links to online stores such as and Books-a-Million where consumers can purchase hard copies of the books.

While they praised the settlement, the university libraries noted that they each had independent cooperative agreements with Google, and that those would now have to be renegotiated.

“Any final decision to continue contributing to Google Book Search will be made after negotiation and finalization of such an amended agreement,” the libraries said, adding that they expected to reach acceptable terms and continue participating in the project.

The American Library Association, the trade group that represents some 66,000 public, private and research libraries across the country, is suspending judgment on the settlement to accommodate a thorough review.

“We’re really not in a position to react,” Corey Williams, associate director of the ALA’s office of government relations, told “On the one hand it seems positive from the point of view of access. On the other hand it’s too soon to know what the implications are.”

Part of the ALA’s reason for hedging comes from the uncertainty over which libraries will be given free access. In announcing the settlement, Google said that public libraries and universities would receive free access to its Book Search catalog, including the complete texts of in-copyright works at special computer terminals. Private-college and research libraries could purchase access through a subscription fee.

Williams said that the ALA will not have an opinion on the matter until it becomes clear which libraries would be required to pay for the service, and how much it would cost.

Google did not immediately respond to a request for comment on the licensing terms.

The settlement even drew some backhanded praise and a poke in the eye from one of Google’s staunchest foes on the copyright front. Viacom, the media company that is embroiled in a $1 billion copyright-infringement lawsuit over its video content appearing on Google’s YouTube, released the following statement on yesterday’s announcement:

“Copyright laws provide creators with the incentive to create the works consumers crave. The AAP settlement honors the deal: reconfirming that copying requires permission and proving once again that when that fundamental tenet is honored, innovation thrives. It is unfortunate that the publishers had to spend years, and millions of dollars, for Google to honor that principle. We hope that Google avoids the wasted effort and comes more quickly to respect movies and television programming.”

YouTube’s Ricardo Reyes poked back.

“Google and YouTube not only respect copyrights, we offer state-of-the-art tools that allow content owners to control, distribute, and earn income from their content. Thousands of partners all over the world understand this and are succesfully using our systems. We hope that Viacom will join them in taking advantage of these opportunities rather than persisting in baseless litigation.”

Impact on publishers and book sellers?

While the settlement doubtless comes as a relief to all parties involved in the litigation, it isn’t likely to be enough to save the book industry, according to Michael Norris, senior analyst at Simba Information, a market-research firm that studies the media and publishing sectors.

“It’s definitely good that this agreement was reached,” Norris told “I think that the important thing is that publishers need to be realistic about what possible wealth they can create with this agreement. In this industry, not all roads go through the Internet.”

E-commerce still represents less than a third of total book sales, so an incremental expansion of the digital choices available is likely to have scant impact on the overall industry, Norris said.

“I don’t think it’s going to have a great impact right out of the gate. The place where people buy a lot of their books are still in the physical locations,” he said. “If you look at the way trade books actually work, very few of the revenue that publishers get in is through electronic sales. None of this is going to mean a whole lot if publishers don’t get more people to talk about books.”

The problem facing the book industry is fundamental. As people have less and less free time, what Norris calls “consumer bandwidth,” they are also facing a glut of new media content available on the Web. Many consumers just don’t have the attention span to wade through long-format printed material anymore.

That secular effect shows in the numbers. Simba is still collecting third-quarter information from booksellers, but Norris said that about half have reported declining year-over-year sales for the most recent period, due in part to the slumping economy and consumers’ waning interest in books. Even Amazon (NASDAQ: AMZN), which had long hovered above the economic fray, significantly cut its own revenue guidance for the fourth quarter when it reported earnings last week.

Much of the attention being paid to the digital book these days has been reserved for the Kindle, the e-book reader Amazon debuted last year to considerable fanfare. Amazon does not make sales figures for the device public, but analysts have speculated that the device could become a billion-dollar business by 2010.

But given the consumer-behavior trends that are buffeting the book industry, a snazzy e-book reader offering rapid-fire downloads of a large catalog of titles isn’t the answer.

“The growth of this industry isn’t always going to be about shortening the amount of time people can have a book brought to them — it’s really going to be about getting more people excited about reading,” Norris said. “The enthusiasm as a reader is something that’s going to have to be recaptured by this industry, rather than saying, ‘If I can’t have it in two minutes then I’m not interested.'”

Asked how that could happen, given the problem of eroding “consumer bandwidth,” Norris echoed the uncertainties of the industry: “That’s the question.”

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