WASHINGTON — With two hurdles to clear before it can set up its Book Search project under the terms of a major settlement with authors and publishers, Google is on a bit of a public relations jag to defend the deal against its critics.
The settlement agreement, reached in October, resolved a three-year-old copyright dispute, and is currently under review in a federal court in New York. In the meantime, the Department of Justice has opened its own antitrust probe into the matter.
But here at Google’s outpost in the nation’s capital, an increasingly important part of the search giant’s operations, some of the company’s top lawyers dismissed concerns that it could start gouging customers for access to what could become the world’s largest library, or that the settlement will give Google a stranglehold over books whose authors cannot be found — the so-called “orphan works.”
Under the settlement, Google agreed to commit $34.5 million to establish a nonprofit registry for authors to claim their works and choose whether they want to participate in the Book Search project. Opponents of the deal have claimed that the orphan works provision would give Google control over the majority of books that are out of print but still in copyright, a charge that Google disputes.
David Drummond, Google’s chief legal officer, said that the registry would give authors an incentive to come forward and claim their works, ultimately reducing the number of orphan works.
“We think it’s fairly small and it’s going to get smaller,” Drummond said in a meeting with reporters this morning. “We believe that a lot of the critics of the settlement are exaggerating the extent of orphan works out there in the corpus of out-of-print works.”
Google is promoting the settlement as a way to create a revenue stream for books that would otherwise be lost to obscurity. Consumers would be able to purchase out-of-print books through Book Search, and Google would cut authors and publishers in on the revenue from ads placed alongside their content.
“It’s not like television, which seems to exist in perpetuity, or songs where you get a recurring revenue stream,” said Alexander Macgillivray, Google’s deputy general counsel. “For books, basically, they fall out of print and it’s done. The author receives nothing.”
“For a publisher, it wasn’t economical to keep pushing some of these books because of limited readership,” Drummond said. “So enter the long tail and the Internet and the ability to make a market for things that have small numbers of people interested in it — many, many things with small numbers of people interested in it. That’s sort of the economic model you see on the Internet.”
And Google is looking to broadcast that message to as wide an audience as possible.
The Book Search settlement is a frequent subject on Google’s public policy blog. This afternoon, Drummond is scheduled to give a speech at the World Copyright Summit on the settlement and Google’s efforts to partner with rightsholders. Last week, Macgillivray appeared on a panel discussion at another Washington conference to defend the deal.
For several years, Google has advocated for legislation that would clarify orphan works under existing copyright law.
The New York judge is scheduled to hold the final hearing on the settlement agreement in October, with a ruling to follow, pegging an optimistic launch date for the new Book Search sometime next year.
“Hopefully we’ll come out of the gate running,” Drummond said.
Another part of the settlement concerns pricing. In addition to selling digital versions of copyrighted titles, Google would also offer institutional subscriptions to its catalog. All public libraries in the United States would be given one free subscription for a designated computer terminal, but would have to pay for additional accounts. Private libraries and businesses would also have to subscribe.
Opponents of the deal worry that Google, as the only game in town, would have the clout to gouge customers for the subscriptions. The fear is that because the digital catalog would be so large, institutions would be all but forced to subscribe, giving Google unreasonable leverage over the market.
Not so, said Macgillivray, pointing to a clause in the 334-page settlement agreement that limits Google’s control over the subscription pricing. The agreement requires Google to set prices at a level that would give institutions “broad access” to the service. Though the term is a little vague, Macgillivray said it gives libraries and other institutions the ability to challenge the pricing in arbitration court.
“This is not like a regular commercial agreement, where a company can just decide the price,” he said “We will be in violation of the agreement if we don’t ensure broad access.”
“They can subscribe and then later claim that the price was too high, and if they win in arbitration, we have to refund them the difference,” he added.
As for the regulatory probe, which focuses on antitrust issues and Google’s market power, Drummond said it is running along different lines than the judge’s review of the settlement.
“I think it’s a separate case,” Drummond said. “I don’t think the subject of the DoJ’s review is necessarily what they’re looking at.”
Much has been made lately of a new crop of regulators taking a closer look at the activities of companies in Silicon Valley, and particularly Google, whom Christine Varney, the DoJ’s new antitrust chief, described as a monopoly in a speech last year.
With regulators now probing Google’s Book Search settlement, its hiring practices and a slight overlap in the makeup of its board of directors and Apple’s, Google’s legal brass is getting used to the drill.
“We’re not super surprised by being inspected,” Drummond said.
“We fully expect that regulators will from time to time take a look at what we’re doing,” he added. “There’s probably a feeling that antitrust enforcement and reviews were not as vigorous in the past eight years as they might have been. I’m sure that the administration takes that position.”