James Grimmelmann, The Amended Google Books Settlement Is Still Exclusive, CPI Antitrust Journal, January 2010:

The deal that Google would get under the proposed amended settlement in the Authors Guild case is exclusive in one very important sense. Many out-of-print books are so-called “orphan works”: they’re in copyright, but their copyright owners can’t be found. If you or I start printing new copies of these books, we’d be copyright infringers, subject to statutory damages of up to $150,000 a book—or even jail time. Google, on the other hand, will be authorized to sell online copies of these books. That’s exclusivity: permission to do what is forbidden to others.

Some pro-settlement commentators have challenged this view. They believe that the market for electronic editions of orphan books is open to Google’s competitors. They make three principal claims: first, that the settlement creates no new entry barriers; second, that it explicitly enables the new Book Rights Registry to issue licenses to competitors; and third, that competitors could reasonably expect to obtain class-action settlements substantially identical to Google’s. All three of these propositions are wrong. In this essay, I will explain why.

Here is an ungated PDF version for those of you who, like myself, are not subscribers to the CPI Antitrust Journal. This, by the way, is the journal formerly known as Global Competition Policy; it ran a special issue on the settlement in the fall.

Your view means that the Amended Notice is materially false and misleading to class members.You do not say this exactly in your article, but your position and interpretation mean that the statement in the Amended Notice that the Amendments require Google to license e-publishing rights to competitors, is a material false statement on an essential point in the settlement.

Misleading people is one of Google’s basic strategies.

Fran

Jerome I know we live in interesting times, but.. could any self respecting judge buy this utterly .. lawless settlement? Who needs laws and contracts , if things can mean anything that suits ‘me’?

James

The Statement of Interest filed by the US Dept of Justice Feb.4th agrees with your analysis and conclusions about the Amended Settlement Agreement, and competitors’ access to the scanned books. And DoJ agrees e book sellers should NOT be encouraged to scan first and the flip a class action case, like Google has been doing here, to get e book resale rights.

James, I have belatedly turned to this very interesting article. I like in particular that you referred to this as the Authors Guild settlement rather than the Google settlement. I have long thought that Google has been unfairly blamed for many of the most odious features of the settlement, when I suspect they have been included at the insistence of the plaintiffs. I bet, for example, that Google would prefer to give away copies of orphan works (as they do with public domain works) rather than having to sell them.

One question, though. You conclude: “It’s possible to argue — though I think incorrectly — that making Google the exclusive seller of unclaimed out-of-print books is automatically superior to having no one sell them.” Can you amplify why you think this is incorrect? I have always felt that something is better than nothing, especially in a case like this where there is no likelihood of an alternative in the foreseeable future. Why is this view incorrect?

The key word in there is “automatically.” This argument, made by a number of the pro-settlement antitrust commentators, takes the form of a quasi-logical proof: this settlement increases the number of sellers for certain boosk from zero to one, so it must be better than the status quo. The certainty is unwarranted; there are cases in which one is worse. If you’re really deeply concerned with copyright’s incentive function, then allowing a single unauthorized seller can be much worse than allowing no sellers at all. I don’t want to say that it’s “never” superior; I’m just saying that “always” is also unwarranted.

Peter I agree , Much of the worst features of the settlement reflect the needs of authors collection society(s). Their biggest need is to be officially recognized :be granted the exclusive title of representative of the whole class. The next biggest need is to collect payments for unknown authors, money that can then be redistributed to the costs of management and to pier review awards and recognitions to ‘undervalued’ authors.

Ok, fair enough. I can see that having an exclusive seller of unclaimed books who was charging $500/book and imposing all sorts of restrictions and limitations on the books might be undesirable. Still, there are probably some people who would be happy with access at any price or under any terms, so for them having one seller is a plus. For the rest of us, we are no worse off than we were before, so it is hard to see how we have been harmed.

So I guess I would be interested in hearing what you think might be cases where having one seller is worse than having no sellers.

And more to the point, do you think that the Authors Guild settlement represents one of those cases? Would the access provided by the settlement be worse than no access at all?

There is a bit of an issue about what “unclaimed” status really means in an mandated arrangement. Statutory societies tend to sit on large amounts of money that cant be delivered. Statutory societies are not good at finding people who are not members. Their fixed transaction cost ,in Australia, is around $50 and thus at a service fee of %25-%30, royalty payments of less than about $150 are “uneconomic to deliver” and after the statutory 6? years these undelivered moneys are either absorbed or redistributed to the known members.

These societies are in a paradoxical situation; Successful delivery of a royalty payment to an individual results in a service payment to the society of %25, Failure to deliver results in the society keeping %100. There is a strong incentive for them to collect royalty payments, that to an outsider make no sense:

“its where the future is”

peter

The settlement involves the creation of a lot of extra management. Management is a cost of production, it is not in itself productive labour. Management and its costs needs to be carefully controlled or the results will be Sub-prime. The peter principle is always at work in all public and private groups. The propensity of the talk of all professional groups to turn to talk of monopoly is as old as Adam Smith. The opportunity (and other) costs of monopoly are well known.

Innovation tends to come out of the unknown.

Under The Australian Artists Resale Royalty Act 2008. Individual artists have an individual right to refuse consent to collection of the royalty on a case-by-case basis— (Clauses 22/23). These clauses have the effect of requiring the agency to advertise every single individual resale collection that it intends to make ; in order to allow the right-holder the freedom to say no (there is a time limit ,21 days). The number one KPI in the draft contract is exactly about these two clauses, and failure; 3 strikes and your out.

Google publishes lists of names for a living.

Settlements for claims of libel or plagiarism sometimes include a requirement that the book is no longer distributed (ie taken out of print) If Google then comes along and produces new copies without the author’s permission, that settlement is breached. In such cases, 1 seller is definitely worse than 0.

This conflict between the GBS and libel laws is very typical of the productions of the statutory arts world. Statutory collection societies are mostly direct products of statutory National Arts Councils , these councils whilst publicly funded are for all practical purposes autonomous; independent statelets not subject to the same laws as the rest of society. They are normally surrounded by an event horizon, they are opt-in not opt-out. If this screen is lost the autonomous statutory world looks singularly naked in the normal world.