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here to view newsletter PDF How one settlement may change the Publishing IndustryThe way authors and publishers are paid for their creative works is facing significant change. In 2004 the internet search giant Google, Inc. began scanning millions of books in anticipation of creating an unprecedented online digital library. In response, groups of authors and publishers sued Google for copyright infringement – these lawsuits were subsequently combined and given class-action status in the Southern District of New York. This past fall, a proposed settlement was reached between Google and a combined group of authors and publishers. A hearing to determine the fairness of the proposed settlement will take place before the Federal District Court on October 7, 2009. If approved by the Court, the settlement will have far reaching implications for all authors and publishers. The proposed settlement, which can be found here, will allow Google to provide online access to a digital library on par with the Library of Congress. Since the settlement stems from a class-action lawsuit, the settlement will apply to everyone in the class who does not affirmatively opt out by September 4, 2009. In other words, this settlement will apply to nearly every author and publisher. Under the settlement, Google would create a licensing program similar to the ASCAP and BMI programs already in use by the music industry. Under these licensing programs, content users pay a flat fee and in returngiven a limited license to use whatever music they wish from the program’s library. All the fees collected from the program are pooled and distributed to the content creators based on the demand for each particular work. ASCAP and BMI have been successful because they eliminate the transaction costs involved in acquiring and negotiating licenses. Will the Google Books settlement prove as successful? One provision in the settlement provides that authors and publishers who have not opted out are prohibited from establishing a competitor to Google Books. If this provision is included in the final settlement, competition to Google Books will be foreclosed because few authors and publishers are anticipated to take the affirmative step of excluding themselves from the settlement. Another provision of the settlement allows Google Books near exclusive rights to distribute orphan works. Orphan works are works which are protected by copyright whose owners cannot be identified or are not easily identifiable. Critics of the settlement note that these two provisions would give Google too much power. At this point, it is unclear whether the Court will approve the settlement. Recently, a significant victory was won by those who oppose the settlement when, on April 28, 2009, Judge Denny Chin ordered a four month extension of both the deadline to opt out of the settlement and the date of the fairness hearing. Previously these dates were May 5, 2009 and June 11, 2009 respectively. Further, the Department of Justice is investigating the proposed settlement for possible antitrust violations. At this point, only one thing is certain: the outcome of this dispute will mean significant changes for the publishing industry.This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use.
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