Inside Google

Google Inc. and groups of authors and publishers are working to modify a $125 million settlement to create a digital library following criticism from parties including the U.S. Justice Department, the groups said.     

The groups today asked U.S. District Judge Denny Chin to postpone an Oct. 7 hearing where Google planned to seek approval of the settlement. In a federal court filing in Manhattan, the groups said they are working with Google to address some of the concerns raised in hundreds of filings in the case.     

“The parties, after consultation with the DOJ, have determined that the settlement agreement that was approved preliminarily in November 2008 will be amended,” the groups said in the four-page filing.     

The Justice Department said in a Sept. 18 filing that the agreement may not have given enough notice to rights holders, may limit price competition, and may give Google too much control in the market for the digital distribution of books. An antitrust investigation is continuing, the department said.     

Google, based in Mountain View, California, doesn’t oppose the postponement request, the groups said. Gabriel Stricker, a Google spokesman, said in an e-mailed statement that the company won’t be filing its own request for a delay.     
 
“We are considering the points raised by the Department of Justice and others, and we look forward to addressing them as the court proceedings continue,” Stricker said.     
 
Publishers, Authors     

“It is because the parties wish to work with DOJ to the fullest extent possible that they have engaged, and plan to continue to engage, in negotiations in an effort to address and resolve the concerns expressed in the U.S. Statement of Interest,” the groups of authors and publishers told Chin in their filing today.     
 
The Open Book Alliance, a coalition that includes Amazon.com Inc., the world’s largest online retailer, Microsoft Corp. and Yahoo! Inc., said the postponement “is a huge victory” for groups and companies including those that opposed the accord.     

“It’s also an enormous loss for Google, which has been saying for months that no changes were necessary,” the alliance said in a statement. “Now, that settlement, as we know it, is dead.”     

“Google and the authors and publisher groups are back at square one,” John Simpson, an advocate at Consumer Watchdog, a group in Santa Monica, California, said in a statement.     
 
Most-Favored Nation     
 
One possible change is the elimination of a provision that gives Google “most-favored nation status,” which means publishers pledge not to strike more favorable deals with Google rivals. The Justice Department said that provision discourages potential competitors.     

Google was sued in 2005 by authors and publishers who said the company was infringing their copyrights on a massive scale by digitizing books without their permission. Google said a settlement struck last year will “bring back to life” millions of books sitting unread on library shelves or out of print.     
 
Under the agreement, Google, the publishers and authors groups would set up a Book Rights Registry to compensate copyright holders whose works were scanned. It also would seek to identify the rights holders of so-called “orphan works” whose owners aren’t currently known.     
 
The Justice Department said Google would have too much control over the use of the orphan works, and said Google and the publishers could address concerns by limiting future rights to the works and appointing a “guardian” for the them.     

Chin had given Google and the book groups until Oct. 2 to respond to the more than 400 submissions from individuals, groups and countries who object to the deal, support it, or just wanted to point out a legal issue.     

The governments of Germany and France have joined authors in the U.S., Japan and Europe to oppose the settlement, saying it doesn’t give copyright owners enough choice about how their content is used.     

Larger Fight     
 
The settlement has become part of a larger fight over the future of digital books. Sales of electronic titles more than doubled to $61 million in the first six months of 2009, according to the Association of American Publishers in New York. Total U.S. book sales rose just 1.8 percent over that period.     
 
Amazon.com, maker of the Kindle e-book reader, argues in its court filing that the agreement would give Google unfair control over a vast database of books.     
 
Sony Corp., which makes a digital-book reader that competes with the Kindle, works with Google to offer digital books and supports the settlement. Groups including the National Federation of the Blind and the United States Student Association say the digital library would give individuals with disabilities, people who live in poor neighborhoods and community college students access to top-notch libraries like those at Harvard, Princeton and Columbia universities.     
 
Library Groups     
 
The American Library Association and other library groups say the agreement would give “unprecedented” access to digital books and simplify how digital rights are managed.     
 
Still, the library groups expressed concern that Google would have too much control of digital books and said they are worried about protecting user privacy.     
 
The case is Authors Guild v. Google Inc., 05-cv-8136, U.S. District Court, Southern District of New York (Manhattan).