From Publishers Lunch - Saturday

New Google Settlement Drops Foreign-Language Works, and Gives Orphans a Fiduciary

Bowing to pressure from foreign governments and the Department of Justice, the revised Google Books Settlement agreement presented to the District Court shortly before midnight on Friday limits the scope of the scheme to works registered with the US Copyright Office and books published in the UK, Canada and Australia. As part of that change, the named plaintiffs have been expanded to include authors and publishers from those countries, and British, Australian and Canadian rightsholders will gain representation of the Book Rights Registry board. The plaintiffs indicate in a written FAQ that "after hearing feedback from foreign rightsholders, [they] decided to narrow the class to include countries with a common legal heritage and similar book industry practices."

Expressing a less expansive view than he did a year ago when announcing the first settlement agreement, Bertelsmann's Richard Sarnoff speaking for the AAP underscored tonight in a conference call that "the settlement is not about setting up the digital future of publishing; it's about not leaving old books behind." He also noted that "we feel we have addressed [the Department of Justice's] key concerns with the amended settlement we have presented to the judge."

"Ninety-five percent of foreign languages works are out" of the agreement, Authors Guild executive director Paul Aiken said, meaning "the lion's share of the potential unclaimed works are now out of the settlement."

Google Books engineering director Dan Clancy noted in that phone call "Google is still very excited about this agreement," though he writes on the company's blog "we're disappointed that we won't be able to provide access to as many books from as many countries through the settlement as a result of our modifications, but we look forward to continuing to work with rightsholders from around the world to fulfill our longstanding mission of increasing access to all the world's books." Clancy also promised to "reach out directly to those international rightsholders" and add their works "through direct relationships with them."

The new agreement also provides the now much smaller body of orphan works with an independent, court-approved fiduciary "who will represent rightsholders of unclaimed books, act to protect their interests, and license their works to third parties, to the extent permitted by law." Related changes address the initial concern that rightsholders were potentially unjustly enriched by profiting from monies earned by unclaimed "orphan" works. (Alterations to this part of the agreement are also aimed at the numerous challenges from state governments contending that the original agreement violated their unclaimed property laws.)

The Book Rights Registry is also now specifically required to actually "search for rightsholders who have not yet come forward." After five years, a portion of unclaimed revenues will be used to help locate those rightsholders--and no money will ever go to support the BRR's administrative functions or be disbursed to other rightsholders.

As promised before Congress, Google will let third parties sell access to all settlement works, including the orphans, though Google will host and serve those titles. Or at least they will do so in principle; it remains to be seen whether other retailers will find the final offer appealing. The basic revenue split going to rightsholders remains the same, and Google promises "retailers will keep the [unspecified] majority" of the remaining 37 percent share. Clancy said in the phone call retailers will get "at least a majority" and "it may be more than that."

While the retailer's share would be far lower than what Google plans to provide on new books sold under their Edition program, Clancy said "we still think that this allows them to complete their holdings and would still be attractive." Google's offer to potentially allow third parties to sell institutional subscriptions as well did not make it into the revised agreement. "It wasn't clear that that would be something that would end up working out," Clancy explained, adding "we're still open to talking to people."

But the wide-open menu of potential new revenue models to be negotiated at a later date has been narrowed in scope in the new agreement, limited to print-on-demand, file download, and consumer subscriptions.

The new settlement also accommodates rightsholders who want to make their books available for free--as some scholars filing with the court requested--"under Creative Commons or other licenses." Other revisions with the public in mind allow the Registry increase the number of free terminals at a given public library building, and on the privacy front Google promises to "not share any private information with the Registry without valid legal process."

Finally, as expected, the noxious the "most favored nation" clause that limited the Registry's licensing of unclaimed works has been removed, and the Registry "is free to license to other parties without ever extending the same terms to Google." The pricing algorithms have also been adjusted, taking into account some of the concerns over price controls.

Click here for an overview of the changes, or go here for a complete redlined version of the new agreement.