Quotes of the Day

Critics of Google's book-searching agreement with publishers and authors were cheered last week when antitrust regulators in the Justice Department set their sights on the search giant's publishing deal, demanding more information.

"This is a monumental settlement that's at stake, and for the government to show this kind of attention is heartening," says Lee Van Orsdel, dean of university libraries at Grand Valley State University. "The increased scrutiny on the part of the DOJ tells us that our concerns are resonating far beyond the library community," concurs Corey Williams, associate director in the office of government relations at the American Library Association.

Goliath Google facing off against a legion of librarians and, possibly, the U.S. Justice Department — now there's a fight.

Indeed, a deal that once appeared a sure bet for rubber-stamp approval is now the target of angry opposition and intense regulatory interest, which throw its future into question.

At issue is a $125 million settlement agreement reached last October that gives Google the right to make millions of books available for reading — and purchase — on the Internet. Under the pact, a Book Rights Registry will be set up that will allow publishers and authors to register their work and get paid for their titles through institutional subscriptions, ad fees and book sales. Google will retain 37% of the revenue, with the remainder going to the registry to be distributed to authors and publishers. The deal effectively gives authors and publishers control over their work in the digital world and pays them for it. For the public, it means easy click-of-the-mouse access to millions of books that sit on dusty shelves in university libraries across the country.

The agreement, which must still get federal court approval, was aimed at ending two lawsuits filed in 2005 against Google by the Authors Guild and the Association of American Publishers. Basically, authors and publishers had complained that the Web-searching king had broken copyright laws when it scanned millions of books from university and research libraries and made snippets of their content available online.

In a complex settlement agreement, which took three years to hammer out and spans 135 pages excluding attachments, Google will be allowed to show up to 20% of the books' text online at no charge to Web surfers. But the part of the settlement that deals with so-called orphan books — which refers to out-of-print books whose authors and publishers are unknown — is what's ruffling the most feathers in the literary henhouse. The deal gives Google an exclusive license to publish and profit from these orphans, which means it won't face legal action if an author or owner comes forward later. This, critics contend, gives it a competitive edge over any rival that wants to set up a competing digital library. And without competition, opponents fear Google will start charging exorbitant fees to academic libraries and others who want full access to its digital library.

"It will make Google virtually invulnerable to competition," says Robert Darnton, head of the Harvard University library system.

Although competitors could scan orphans, they would not be protected from copyright suits as Google is under the agreement. "They'd face lawsuits all over the place," making the risk too big, said Darnton.

Without competition, pricing could go wild, critics claim. The registry, which oversees pricing, is comprised of authors and publishers who stand to benefit from high subscription fees. "There will be no incentive to keep prices moderate," Darnton says.

The library community recalls with horror the pricing fiasco that occurred when industry consolidation left academic journals largely in the hands of five publishing companies. The firms hiked subscription prices 227% over a 14-year period, between 1986 and 2002, forcing cash-strapped libraries to drop many subscriptions, according to Van Orsdel. "The chance of the price being driven up in a similar way (in the Google deal) is really very real," she says.

In a sign that Google has been listening to critics' complaints, it recently signed an amended individual agreement with the University of Michigan, adding a mechanism that would give the university the right to dispute a price increase through arbitration. Any price discrepancy in the arbitrated settlement would come from Google's 37% revenue stake, not from the authors' and publishers' share. "That's a step in the right direction, but it only benefits the University of Michigan at this point," says Williams.

Then there's the privacy issue. Google has the technology to track every page and book a person reads, how long they spend on a given page and what books they purchase. Yet the agreement makes no mention of how much of this information will be collected or how it will be used. "That really flies in the face of core principal library values of protecting patron privacy," says Williams. "This agreement is completely silent on the issue of privacy."

Opposition to the deal has been escalating, with librarians, academics, consumer advocates and even a few authors urging the federal court to either scuttle the deal or at least amend it. The son and daughter-in-law of author John Steinbeck as well as musician Arlo Guthrie are among the high-profile critics. In May, the federal judge overseeing the matter extended the deadline to Sept. 4 for people to offer comments and for publishers to opt out of the deal.

In April, the Department of Justice launched its own investigation to see if the deal broke antitrust laws. And this week, opponents were elated when the DOJ appeared to step up its scrutiny by issuing civil investigative demands, or CIDs, demanding additional information from Google and other parties.

But Google has its supporters. "I think a lot of [the criticism] has been unfair and really ignores the benefits this provides," says Paul Aiken, executive director of the Authors Guild. "We're talking about bringing books to people on the Internet — making sure that books stay relevant in the online age and that people have sources for facts that go beyond what's available on Wikipedia."

Dan Clancy, engineering director at Google, dismisses suggestions the deal will give Google a monopoly. He says orphans represent only a small percentage of the overall books Google is dealing with, although he was unable to say what percentage of the 10 million books Google has scanned thus far fall into this category.

Clancy contends that the orphan-licensing agreement wasn't extended beyond Google because it was part of a class action settlement pact, and other companies weren't part of the suit. He supports efforts by Congress to pass an orphan-works bill that would give everyone similar legal protection.

On the matter of privacy, Clancy says Google will issue guidelines before the program is rolled out.

Advocates remain upbeat that the deal will get a green light. "We believe that we're on very solid legal ground to get this settlement approved," says Michael Boni, a partner at Boni & Zack LLC, which represents the Authors Guild. "So we're really not considering any doomsday scenarios at this point."

However, attorney John Briggs, who isn't involved in the case, says the DOJ clearly has concerns. "It's not routine for a settlement of a class action like this to be getting scrutiny of any sort from the Department of Justice," says Briggs, managing partner and co-chairman of the antitrust group at Axinn, Veltrop & Harkrider LLP law firm. "I think it signals Google is very much in the sight line of the Department of Justice."

Supporters warn it would be a huge blow to the publishing world if the deal is scuttled.

"I think the publishing industry is under great stress trying to figure out how to operate in a world where it's very easy to make copies of things and to distribute copies of things — which is exactly the problem that the music industry faced," says Paul Courant, dean of libraries at the University of Michigan.

"I think it would be very bad for publishers and authors and the digitization of information going forward if the settlement is not accepted, even if it has to be adjusted in some way, shape or form," says Carolyn Reidy, chief executive of Simon & Schuster, who was a party to the agreement.

The federal court hearing is slated for Oct. 7.

• Janet Morrissey
• Google almost wrapped up the Web rights to books over the ages. But the Justice Department — and Arlo Guthrie — are saying whoa