Google’s Book Settlement

Is a Ripoff for Authors

Why allow a single publisher to throw out a functioning copyright system?

By LYNN CHU

To get through the 385 pages of mind-numbing legalese of the Google settlement, it might be better to be Nino Scalia, Bob Bork or David Boies. Preferably all three at once. Absent brain enhancement surgery, understanding this monstrosity by May 5, 2009, is going to be rough.

That’s the date by which every author and publisher in America is supposed to decide whether to “opt in,” “opt out,” or simply “ignore” a vast compulsory licensing scheme for the benefit of Google. Most, about 88%, are expected to “ignore.” That’s because they know their online display rights have value, and the last thing they want is to be herded like sheep into a giant contract commitment.

After Google began digitizing the University of Michigan library in 2004, the Authors Guild, the Association of American Publishers and a handful of authors and publishers filed a class-action lawsuit for copyright infringement. Last November, those “class representatives” reached an out-of-court settlement with Google that would, if approved by the federal court, permit Google to post out-of-print books for reading, sales, institutional licensing, ad sales, and other publishing exploitations, by Google, online. The settlement gives the class-action attorneys $30 million; a new, quasi-judicial bureaucracy called the Book Rights Registry $35 million (more on this later); and $45 million for owners infringed up to now — about $60 a title. It remains subject to a final fairness hearing, slated for June 11.

No one elected these “class representatives” to represent America’s tens of thousands of authors and publishers to convey their digital rights to Google. Nor are the interests of this so-called class identical. There is nothing more individual in the world than a book, an author, a publisher, and the value of a contract. The aging baby boomers now flacking the settlement don’t seem to understand that PDF scanning (how Google and everyone else digitizes books) isn’t rocket science; it’s cheap and easy. Books will be digitized without Google. But the Google settlement sets in amber today’s overhyped role of the Internet, ruled by that great and magnificent Oz — Google.

Sound like hyperbole? Consider this: Under the settlement, every rights-owner in America is supposed to hand over all their private contract data, on every edition of every work they ever wrote — and every excerpt permission ever granted to others — at the peril of losing the money Google will be making on their backs. This is a massive burden on everyone in the book industry, making us all, in effect, Google’s data-entry slaves. Indeed, in most cases such information about every permission ever granted is unlocatable. It opens a Pandora’s box of disputes and mistaken claims about who actually owns what.

Google’s erstwhile adversaries are paid off with the aforementioned Book Rights Registry (BRR), which will compete with the U.S. Copyright Office and the federal courts. The BRR expects to read everyone’s contracts to say who is owed what of Google’s revenues — net again of all its costs, which are sure to be huge. Our entire dynamic system of individual contract enforcement over time and changing individual proclivities is thus to be exchanged for a forced, immediate squabble over rights, and static databasing, right now, of determinations made by Google.

The Internet was supposed to eliminate middlemen, not pack multiple layers on. The BRR is in fact merely Google’s contract negotiation and claims department. As in Hollywood, the settlement deal turns book authors into fully subordinated, last-in-line net residuaries. This reverses the economics of books.

Book publishers today are entitled to a share of the publishing partnership because they shoulder — not lay off on authors — all the costs of editing and publication and marketing. The author’s net profit share, generally half, in books, is for his creation. The author’s share rises against the publisher when the publisher’s costs are lower, as in digital. If the author shoulders still more of those costs and burdens, the publisher’s share should be reduced again. That doesn’t happen with Google.

We already have a good system. It’s called the system of private property and free contract, designed for dispersed, autonomous individuals — not command-and-control centers. The U.S. Constitution grants authors small monopolies in their own copyrights. Author market power is talent-based and individual, not collective. This class action seeks to wipe all this out — just for Google. But U.S. law does not grant any single publisher monopoly power to herd all of us into its list.

For private gain, the Google parties now seek to destroy the health in the system that individual bargaining preserves. Disputes will be fixed in arbitration with no access to federal courts which have often shown mercy to authors. Arbitrators will be “you sign it you eat it” line-parsing bureaucrats.

Say goodbye to your rights, forever, authors, if this mess goes through.

Authors’ Guild of America

The Authors Guild Legal Services Department offers the following advice, along with a recommendation that your e-rights agreement be periodically reviewable: Although electronic publishing is still an evolving industry without clear standards, not long ago, Random House announced an intention to evenly split ebook sales revenue with authors. Before this announcement, Random House had been offering authors royalties of no more than 15% of the retail price of an ebook. Many other publishers, including Harper Collins, have started to offer a 50-50 split of net proceeds also. Therefore, you should negotiate to receive no less.

Random House has now dropped its royalty offering to 25% of net, and presents the familiar baffle/grab for doing so.

“The way the market is developing, the publisher’s list price will soon no longer be a relevant basis for calculating royalties in the digital environment…  The electronic formats are not as inexpensive to produce and publish as many believe … We have made substantial investments …  in related digital infrastructure, such as the creation and maintenance of a digital archive  … The new ebook rate continues to compare favorably to the rates we pay for other formats in which books are made available.”

Reader, please note: despite the above, the Authors’ Guild remains adamant at 50/50

POETS & WRITERS NEWS reports that the statement below was mailed by the Authors’ Guild to its 7,500 members. (http://www.authorsguild.org/):

Source: Arts Wire CURRENT at Arts Wire www.artswire.com

Authors’ Guild Warns Authors

About E-book Contracts (excerpted)

NEW YORK CITY, NY — The Authors Guild has issued a statement warning authors about e-book contracts. “The Authors Guild views agreements currently being offered by NuvoMedia, whose Rocket e-Book is an early leader in the electronic book industry, to be against the business interests of publishers and especially of authors,” the statement begins.

The Guild points out that “under NuvoMedia’s arrangement, publishers and authors who sign on to NuvoMedia’s contract surrender a whopping 60% distribution fee to NuvoMedia and BarnesandNoble.com. Even worse, unlike traditional licensing agreements, NuvoMedia pays the publisher or author no advance against future earnings, thus acquiring a no-cost right to sell books electronically.”

Furthermore, author royalties remain fixed while the distributor’s share (NuvoMedia’s and the retailer’s share combined) increases. “While the distribution chain increases its take, NuvoMedia asks authors to hold the line, seeing no increase in their royalties, Paul Aiken, executive director of the Authors Guild, told PUBLISHER’S WEEKLY.

“Electronic books hold enormous potential for the literary and educational communities,” the Authors Guild states in its letter to its members. “E-books, which are distributed over the Internet, can be simply downloaded to hand-held reading devices, thereby eliminating the costs of paper, printing, warehousing, shipping, and returns. Given these savings, readers should benefit from cheaper prices for E-books, publishers should benefit from higher profit margins, and royalty rates for authors should soar”

E-books are light handheld electronic devices which house electronically delivered information. Often content can be downloaded directly from the Internet. Manufacturers include Rocket eBook, Librius, Millennium E-Reader, the Softbook, XLibris, and the Australian based e-book. Currently, they are expensive — typically $100 to $500. However, prices are expected to fall dramatically.

Barnesandnoble.com has about 500 e-book titles available and has sold about 15,000 copies, according to the Times which quotes a Barnesandnoble.com spokesman, Ben Boyd as saying that the company has been “pleasantly surprised with the pace that customers have purchased these devices and titles.”

However, the Authors Guild states that it is “particularly wary because this low-pay model is being backed by the dominant publisher and the dominant retail book chain in the United States. Bertelsmann (owner of Random House, which holds about 40% of the adult trade market) and Barnes & Noble stand to profit enormously from this arrangement. Both hold substantial stakes in NuvoMedia, and each owns 50% of BarnesandNoble.com.”

The Guild concludes its statement by expressing concern that “If NuvoMedia secures a dominant position in this emerging market and its payment scheme prevails, authors and publishers will lose out on many of the rewards of the Information Age.”

The Australian Arts Council

The ASA  advises its members to retain full control of their digital rights. This is certainly ideal, however it is not always commercially possible. For this reason it is important that writers consider viable alternatives. A right of first negotiation on electronic rights rather than an outright grant as is the current practice provides scope for negotiation as new technologies emerge. Even if a traditional boilerplate ‘one-size-fits-all’ contract is the only available option, it is recommended that writers accept no less than a 50-50 split of net proceeds on sales from electronic publishing.