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Competitive Internet Advocate: Google's $125 Million Book Deal Is Sneaky, Dangerous

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October 31, 2008

Competitive Internet Advocate: Google's $125 Million Book Deal Is Sneaky, Dangerous

By Michael Dinan
TMCnet Editor

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Days after Google (News - Alert) settled a bitter, three-year-old lawsuit brought by authors and publishers, the chairman of a Web-based consumers’ forum that advocates for Internet competition is decrying the landmark deal as ill-gotten and monopolizing.

 
According to Scott Cleland (News - Alert) (pictured left), chairman of NetCompetition.org, Google’s agreement to establish a so-called “Book Rights Registry” and pay $125 million to resolve existing claims against the company amounts to a small fine and a doorway to total power over all digital publishing.
 
The settlement – in which Google lands a 37 percent sales commission for all digitized book sales or views – makes the Internet search and ad king the largest electronic publisher of digitized books in the world, and ensures competitors will have little chance of catching up, Cleland writes.
 
“As physical book publishing follows the economics of newspaper publishing, publishers will less and less be publishers and more and more agents and editors for authors,” Cleland said. “Like movies (that) bypass the theatres and go directly to DVD or online streaming, most books will bypass physical publishing and go directly to Google Book search. In other words, this agreement formalizes the path for the demise of book publishing and the rise of e-book distribution.”
 
The Authors Guild and individual authors had filed a class action suit three years ago against Google, and the Association of American Publishers had filed a separate lawsuit on behalf of five large publishers.
 
The new agreement is subject to approval by the U.S. District Court for the Southern District of New York.
 
Officials from Google say their settlement is designed to expand online access to millions of in-copyright books and other written materials in the United States from the collections of some major U.S. libraries participating in Google Book Search. The tool works like a Web search, linking search terms to results. If a book is out of copyright, or with a publisher’s permission, users can see a book preview and, in some cases, the entire text.
 
Under the agreement, U.S. copyright holders can register their works with the registry and get paid through institutional subscriptions, book sales, ad revenues and other possible revenue models, as well as a cash payment if their works have already been digitized.
 
Yet, according to Cleland, the new landscape of digital book publishing has only unfolded because Google aggressively and continuously broke the law.
 
“Crime does indeed pay – if you have Google’s willingness to break the law and their market power to profit off of their law-breaking,” Cleland writes.
 
For Cleland, the deal does four things: makes Google the de facto gatekeeper of most of the world’s online books; establishes a so-called “new model” for Web-based content distribution; sets a dangerous precedent that leveraging market power to extract a monopoly; and makes Google a media distribution platform that eventually will overpower and eliminate traditional competition.
 
Given that criticism, it’s hard to reconcile the seemingly positive reactions from officials with the organizations that filed the class-action suits.
 
According to Roy Blount Jr., president of the Authors Guild, the agreement makes sense because it rewards authors’ hard work.
 
“As an author, well, we appreciate payment when people use our work,” Blount said. “This deal makes good sense.”
 
Richard Sarnoff, chairman of the Association of American Publishers, called it an historic settlement is a win for all sides.
 
“From our perspective, the agreement creates an innovative framework for the use of copyrighted material in a rapidly digitizing world, serves readers by enabling broader access to a huge trove of hard-to-find books, and benefits the publishing community by establishing an attractive commercial model that offers both control and choice to the rights-holder,” Sarnoff said.
 
Sergey Brin, co-founder and president of technology at Google, said his company’s mission is to organize the world’s information and make it universally accessible and useful.
 
“Today, together with the authors, publishers, and libraries, we have been able to make a great leap in this endeavor,” Brin said. “While this agreement is a real win-win for all of us, the real victors are all the readers. The tremendous wealth of knowledge that lies within the books of the world will now be at their fingertips.”
 
Cleland isn’t buying that.
 
“Competitors take note,” he writes. “Google understands the long term business implications of the settlement much better than the publishers.”
 
Google did establish what it calls a “joint” public FAQ section online about the settlement, but the questions posed there are essentially softballs the company lobs at itself, such as “What will the settlement offer” and “What is included in an Institutional Subscription (to the registry)?”
 
For Cleland, Google simply sees that being more willing to steal the property of others than competitors is a way to win first mover advantage and to establish dominant market share in a new segment.
 
“The supreme irony of this extreme new media concentration dynamic, is that the people who purportedly are very concerned about ill effects of traditional media concentration, have not even noticed that the winner take all economics of the Internet is hurtling us toward one omni-platfrom of media distribution,” he writes. “The ultimate in new media concentration – Googleopoly.”
 
Don’t forget to check out TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP Communications industry. The library offers white papers, case studies and other documents which are free to registered users. Today’s featured white paper is The Compelling ROI Benefits of Contact Center Quality and Performance Management Technologies, brought to you by Voice Print International (News - Alert).
 

Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael’s articles, please visit his columnist page.

Edited by Michael Dinan


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