Google Argues for Approval of Book Search Settlement

Even if the institutional subscription is a monopoly, the new product is worth it, plaintiffs add

Norman Oder -- Library Journal, 02/12/2010

• Response to various objections
• Fairness hearing February 18
• Creating "the greatest library in history"

Faced with an onslaught of doubts filed by critics and opponents of the Google Book Search Settlement, notably the Department of Justice, Google on Thursday filed a brief arguing for approval of the deal, which faces a fairness hearing in federal court in New York on February 18. And the plaintiffs, represented by the Authors Guild and Association of American Publishers, also filed two memoranda.

One key argument, made in a supplemental memorandum from the plaintiffs, essentially reprises the contention that, even if Google has a monopoly, the creation of a desirable new product is worth it:

In sum, granting Google the right to include unclaimed works in the Institutional Subscription serves the pro-competitive goal of making a desirable new product available to libraries, universities and other institutions and has no anticompetitive exclusionary effects on other potential competitors. It is indisputably more pro­competitive and output­ enhancing to have one seller rather than none.

Harvard University Librarian Robert Darnton would disagree.

Below LJ excerpts the documents regarding several issues of interests to the library world. Some of the arguments likely will prompt arguments in court, such as whether Google's library partners can adequately police institutional pricing, whether Google is creating a true "library," and the role of academic authors (like the University of California's Pamela Samuelson), who may differ in their interests than the commercial authors of the Authors Guild.

From Google's brief (embedded below)

Justifying the settlement:

The purpose of copyright law is to promote the creation and distribution of expressive works. The Amended Settlement Agreement (ASA) advances this purpose as much as any case or agreement in copyright history. Google will make available to the reading public books that otherwise would be available only to those with access to the most rarefied university collections. It has negotiated the terms of that access with representatives of authors and publishers. The ASA embodies the reasoned agreement of these parties as to the best way for authors and publishers to make their books available to the public and to profit from the distribution of their works.

Creating “the greatest library in history”:

No one seriously disputes that the ASA advances these dual purposes. No one seriously disputes that approval of the settlement will open the virtual doors to the greatest library in history, without costing authors a dime they now receive or are likely to receive if the settlement is not approved. Nor does anyone seriously dispute, though few objectors admit, that to deny the settlement will keep those library doors locked while inviting costly, fragmented litigation that could clog dockets around the country for years.

 Regarding objections:

Competitors such as Amazon raise anxieties about Google’s potential market position, but ignore their own entrenched market dominance. Anxieties about what might be best for a particular objector should not become fatal to what is undoubtedly extraordinarily good for all class members and for the general public. The ASA should be approved because it complies with the letter of the relevant laws and advances their purposes beyond measure. The benefits of approval are bounded only by the limits of human creativity and imagination. The costs of disapproval are equally large.

 Google’s lack of monopoly:

Google is a new entrant and currently has 0% share in any book market. It does not have monopoly power and there is no “dangerous probability” that it will acquire such power. Most objectors’ Section 2 arguments assume some unique value of so-called “orphan works” in the new institutional subscription product, but this argument is pure speculation. It assumes there will be some substantial percentage of books that remain unclaimed; that these books will have significant value to institutional customers—despite the fact that they are out-of-print today; and, critically, that no competitor will be able to provide a competitive alternative even though the ASA lowers the costs of doing so relative to the costs Google incurred.

 The new product of institutional subscriptions:

The ASA also increases output by facilitating the creation and offering of an entirely new product: the institutional subscription. The institutional subscription enables those at participating institutions to fully view all commercially unavailable books that are available for purchase under the settlement, and all Commercially Available books whose Rightsholders elect to be included in the subscription. An institutional subscription of this scope would not exist without the ASA. The addition of a market option that otherwise would not exist is not merely procompetitive; it is a significant advance in making information available to people throughout the country who do not have access to major university research libraries.

 On pricing of institutional subscriptions:

There are, moreover, additional checks on any potential competitive effects. To begin with, the Registry, not Rightsholders themselves, is involved in reviewing and approving the blanket price. The ASA specifically creates a fiduciary responsibility of the Registry to each Rightsholder, and prohibits the Registry from “coordinating Rightsholders for purposes of representing them as a subgroup regarding any matter under this agreement.” This means the Registry could not, for example, represent the interests of large publishers where they are inconsistent with interests of other Rightsholders.

Google will be setting the institutional subscription price, subject to review and approval by the Registry. Finally, Google has now signed agreements with its library partners, such as the University of Michigan, which allow those universities to challenge through arbitration whether the institutional subscription price tiers meet the “broad access” objectives.

On harm to libraries:

Some objectors argue that approval of the Settlement Agreement will harm libraries, some even contending that “there will be little need of libraries in the future” if the settlement is approved.This could not be farther from the truth, as is reflected by the outpouring of support from libraries large and small. Anne Kenney, University Librarian of Cornell University, explains that “most of the Library’s holdings, most of which have been out of print for decades and are of little commercial value, will not just be indexed, but will also be available to readers across the country,” and that “[t]he potential benefit of this to researchers is inestimable.”

Smaller libraries, too, support settlement approval: Abilene Christian University, a university whose library offers 1.6 million volumes (to Cornell’s more than seven million), supports settlement approval because “[u]nfettered access to information is the cornerstone of higher education, and the new access models created by the settlement will be of extraordinary value to research at our institutions, lessening inequalities among educational institutions asinformation becomes available to all students everywhere.”

On the role of library organizations:

And, while they urge Court oversight following approval, settlement approval is supported by the American Library Association, the Association of College and Research libraries, and the Association of Research Libraries, representing over 139,000 libraries in the United States. As discussed in Plaintiffs’ briefs, far from harming libraries, the ASA provides substantial benefits for libraries large and small through the free Public Access Service and the offering of Institutional Subscriptions.

From the plaintiffs' memorandum of law

On public access to books:

This level of public access to books is without precedent. As the American Library Association stated in its amicus brief, the value of a searchable database of millions of books to the reading and researching public is undeniable and the demand by libraries for subscriptions to such a database would be extremely high. The benefit to society of enabling anyone, anywhere in America, from the inner city to a rural village, to walk into a public library, sit at a computer terminal and have full Internet access to a multi-million book database is inestimable. No longer would the world’s great literature and vast research resources be kept from the public, accessible only to certain students, faculty and alumni. The ASA also brings tremendous benefits to blind and reading disabled Americans, who will have access to the database

From the plaintiffs' supplemental memorandum responding to objections

On input from academic authors:

It would not have been appropriate for the Registry or the parties to presume that academic authors have different views with respect to copyright infringement or their rights to control their books. Similarly, the views of some academic authors as to the presumed desires of others should not result in determining how all academic authors might choose to use their works. Each such author has the right and ability, under the Amended Settlement, to make that choice for herself or himself.

On pricing of institutional subscriptions:

As in BMI, the pricing of the Institutional Subscription should be subject to review under the rule of reason, not the per se rule, because it is ancillary to the creation of a desirable new product that Rightsholders could not individually create. The creation of the Institutional Subscription will increase consumer welfare, and the Registry’s ability to monitor Google’s pricing strategies is a reasonable safeguard to induce Rightsholders to allow their intellectual property to be used in the Institutional Subscription. Thus, those provisions are not anticompetitive.

On a monopoly in “orphan works”

Most of the remaining antitrust objections are based on the unsupported assumption that because the Institutional Subscription will include so-­called “orphan works,” it will constitute a separate market in which Google will face no competitors. This argument relies on unsupported and illogical speculation that the subset of out of print books whose Rightsholders cannot be located by the Registry, and never come forward to claim their share of whatever revenue is generated, is so uniquely valuable and desired that other subscription products will be unable to compete with the Institutional Subscription.

Even if Google would have a monopoly, objections that it would engage in “price-­gouging,” ignore Google’s strong incentives to keep the price of the Institutional Subscription low. Separately, these objections have no basis in antitrust law, because Section 2 does not prohibit a monopolist from charging a high price.

On privacy:

Some objectors argue that the Settlement should not be approved because it does not contain terms that adequately protect the privacy of users of Google Book Search. Plaintiffs agree that maintaining the privacy of sensitive user information is important with respect to consumer products available on the Internet, particularly information about the reading habits and preferences of users. Plaintiffs support the efforts of privacy advocates to improve privacy policies for web users. 

The determination whether the Settlement should be approved, however, turns on whether the Settlement is fair, adequate and reasonable to members of the Class as copyright owners, not as users of Internet-­based products.