The Google Book Search Deal: Winners and Losers

The future of publishing just got a whole lot closer — seemingly overnight. This morning Google announced that it has reached an agreement with authors and publishers to settle various lawsuits over the Google Book Search program.

Google will pay $125 million to settle all claims (small change for a company with over $14 billion in cash). In exchange, Google’s Book Search program will continue and future revenues from that program will be administered by a newly created Book Rights Registry.

At first glance, this appears to be the rare settlement agreement that seemingly benefits all parties. In fact, the only entities that don’t seem to have fared so well are parties who weren’t involved in the suits.

The Winners

  • Google: It’s hard to overstate how important this agreement is for Google. Google has essentially acquired the digital rights to the long tail. At least the portion of the long tail that’s locked up in out of print books. That’s a VERY long tail.

    Google has mastered the art of turning arcane search phrases into money. In the future they’ll have a lot more content to monetize. Content that no other search engine will have access to. That’s a huge competitive advantage.

  • The Rightsholders: Authors and publishers will benefit immediately as they allocate the funds from the initial settlement, and over time as they collect revenue generated from out of print works. In the vast majority of cases, these out of print works would have never generated any additional income.

    I’ve already heard some grumbling that publishers gave too much away in this deal, but it’s hard to see how that can be the case. Google has basically created an entirely new revenue stream that publishers can use to profit on books that would otherwise not have generated a cent.

  • Libraries: The libraries that participate in the digitization program will get to keep control over their archives. Equally important, libraries will have digital access to the archives of other libraries. The academic community as a whole will benefit in ways that we can’t yet imagine.
  • The Public: The public gets easy access to millions of rare and out of print works.

The Losers

  • Amazon: Amazon’s 190,000 Kindle titles look puny compared to the millions of books Google now has access to. Granted many of those Kindle titles make up the big head of consumer demand, as opposed to the long tail. Still, Google now has the ability to monetize millions of books Amazon can’t, if for no other reason because they’re out of print. What’s more, under the new agreement Google has the right to sell printed copies of those books via print on demand. And I have a sneaking suspicion that Google still has a few more surprises in store for us. Android may turn out to be more than just a mobile phone platform.
  • Microsoft: Not long ago Microsoft had its own book search program. The company unceremoniously killed that program on the eve of BEA earlier this year. While Microsoft still views web search as an important strategic goal, it is looking increasingly unlikely that Microsoft search will ever catch up to Google.
  • Fair Use Advocates: There are many (myself included) who believed Google had a strong fair use argument to support their scanning efforts. It was hoped that a Google court victory would reaffirm those rights. By settling out of court Google avoided the issue entirely. Clearly Google has some long term goals for this content that would not have fallen under Fair Use. In the end Google was better off striking a deal with the rightsholders. Also, it’s been noted that by avoiding this issue entirely Google may have effectively locked out any future competition.

8 Responses to “The Google Book Search Deal: Winners and Losers”

  1. bowerbird says:

    well, this is among the best analyses i’ve seen…

    you got most of it right, but a few things wrong.

    first, it’s unclear whether consumers won or lost.
    it will depend on the price we have to pay to read.

    given that publishers have been whining loudly
    about the default $9.99 price that amazon has,
    because they think it’s too low!, i can’t imagine
    that they’re gonna price any access at the level
    that most consumers _expect_ e-books to cost.

    google might have given the publishers the tool
    that they’ve been so desperate to find — one that
    enables them to charge p-book prices for e-books.

    you also left out entities under the “losers” column.

    first — you hinted at this, but it needs to be said,
    directly and loud — all other digitization projects
    just took a very heavy hit, a hit that might be fatal.
    google turned this into a game only the rich can play.
    if google is the only one that can take advantage of
    this settlement, it will have raised the bar of entry
    to the point that no other project can ever clear it,
    and consumers will be victims of a clear monopoly.

    second, libraries that aren’t under the google project
    will find themselves paying huge amounts to “license”
    access to this book database… since many of these
    libraries will be public institutions — city libraries or
    those at publicly-funded schools and universities —
    this is essentially a way for google and the publishers
    to do a big pickpocket routine on the public treasury,
    meaning this is yet another way ordinary people lose…

    finally, _researchers_ will lose out because this database
    will be the sole province of google. there are _tons_ of
    innovations that might come out of the interactions of
    millions of books, and google just locked all of them up.
    and so we have yet another way that consumers will lose.

    you said it best:
    > this appears to be the rare settlement agreement
    > that seemingly benefits all parties. In fact,
    > the only entities that don’t seem to have fared
    > so well are parties who weren’t involved in the suits.

    the public wasn’t one of the parties at the negotiation table.

    -bowerbird

  2. Kirk says:

    @bowerbird

    Well now you’ve done. You’ve forced me to actually dig further into this damn agreement. It’s 141 pages long without the attachments, and there’s no Kindle version — what were they thinking???

    > first, it’s unclear whether consumers won or lost.
    > it will depend on the price we have to pay to read.

    I would argue that expanding access to millions of out of print books is a huge win for consumers. Especially when consumers will have access to these books through their local libraries. Suddenly rare books are no longer a special order that you have to wait months for.

    > given that publishers have been whining loudly
    > about the default $9.99 price that amazon has,
    > because they think it’s too low!, i can’t imagine

    Remember, these are out-of-print books. The $9.99 Kindle editions are front list. Publishers want to charge as much as possible for those books while they’re new and there’s still a demand.

    Backlist is worth much less. And out-of-print backlist is theoretically worth the least. These are books they couldn’t justify keeping in print because there was no way to make money from them.

    Also, when we talk about these books we need to talk about the rightsholders. That may not always be the publisher. In many cases rights revert to the author when the book goes out of print. In those cases the author would be setting the price.

    Unfortunately I can’t give you specific pricing right now because that’s one area that is still under negotiation. However, the formula for pricing is included in the agreement (start at the bottom of page 48 for some fascinating reading).

    For consumer purchases (which seems to be what you’re most interested in) there will be two pricing categories. A Specified Price and a Settlement Controlled Price.

    The Specified Price is just what the name implies. The rightsholder names the price and that’s what Google will charge.

    The Settlement Controlled Pricing will is an automated pricing structure that will be controlled by a Google created Pricing Algorithm. The goal of the algorithm will be to maximize value for the individual books, while providing the public with reasonable access. Basically the algorithm will dump books into various pricing bins based on some formula that only a certified Google genius could understand.

    And this is the part where I can kind of, sort of, answer your question. Those pricing bins are: $1.99, $2.99, $3.99, $4.99, $5.99, $6.99, $7.99, $8.99, $9.99, $14.99, $19.99 and $29.99.

    And the allocation to those pricing bins will be: 5% ($1.99), 10% ($2.99),
    13% ($3.99), 13% ($4.99), 10% ($5.99), 8% ($6.99), 6% ($7.99), 5%
    ($8.99), 11% ($9.99), 8% ($14.99), 6% ($19.99) and 5% ($29.99)

    So, from the looks of it 51% of the books will be available for consumer purchase for $5.99 or less. Or rather, 51% of the books that are priced under the Settlement Controlled Pricing method.

    > you also left out entities under the “losers” column.
    >
    > first — you hinted at this, but it needs to be said,
    > directly and loud — all other digitization projects
    > just took a very heavy hit, a hit that might be fatal.

    Possibly. Google definitely seems to have gained a big advantage here. Although they also seem to have forged a deal that many thought would be impossible. And that deal might be used as a framework for future efforts.

    Right now there’s no telling what the future will bring.

    > second, libraries that aren’t under the google project
    > will find themselves paying huge amounts to “license”
    > access to this book database… since many of these
    > libraries will be public institutions — city libraries or
    > those at publicly-funded schools and universities –
    > this is essentially a way for google and the publishers
    > to do a big pickpocket routine on the public treasury,
    > meaning this is yet another way ordinary people lose…

    Some institutions will undoubtedly have to pay a fee. That fee will be based on the size of the institution. But I don’t think it’s as bad as you make it out to be. The agreement also mentions a Public Access Service (see page 60).

    > finally, _researchers_ will lose out because this database
    > will be the sole province of google. there are _tons_ of
    > innovations that might come out of the interactions of
    > millions of books, and google just locked all of them up.
    > and so we have yet another way that consumers will lose.

    This I disagree with entirely. Researchers may benefit the most from the availability of these books. Further, Google is making an effort to provide access in a way that will allow researchers to perform computational research on large collections of books (limited at first, and understandably so given the computational overhead that could be involved in that sort of research).

    Yes, there will be fees associated with such access. But I doubt the Google fees will be so much that they would have a negative impact on the budget of any serious researcher.

  3. Slow 2 Dance says:

    Google gives you no opportunity to pull your books once they are submitted and they do not respond to e-mail about the problem. How does one get their titles back from Google before this goes into effect?

  4. Kirk says:

    Google does give you an opportunity to pull the book. Please read the agreement.

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  2. […] The Google Book Search Deal: Winners and Losers | Medialoper – “The Losers: Amazon: Amazon?s 190,000 Kindle titles look puny compared to the millions of books Google now has access to. Granted many of those Kindle titles make up the big head of consumer demand, as opposed to the long tail. Still, Google now has the ability to monetize millions of books Amazon can?t, if for no other reason because they?re out of print. What?s more, under the new agreement Google has the right to sell printed copies of those books via print on demand. And I have a sneaking suspicion that Google still has a few more surprises in store for us. Android may turn out to be more than just a mobile phone platform.” […]

  3. […] Furtado (a quem tiro mais uma vez o chapéu): Olivier Ertzscheid, Sara Lloyd, James Grimmelmann, Kirk Biglione, Paul Courant (o título diz tudo: “The Google Settlement – From the Universal Library to the […]

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