Google Settles Book Search Suits for a Song

Search engine giant Google has settled two copyright lawsuits over its Google Book Search program for US$125 million.

In two separate lawsuits, the New York City-based Author’s Guild and McGraw-Hill sued Google in 2005, alleging it had violated copyright laws through its scanning and online distribution of copyrighted and out-of-print books.

The settlement will allow Google to make millions of books searchable and printable online. Tuesday’s deal must be approved by a judge in a Manhattan federal court.

Google stock was up 6.25 percent to $349 per share in mid-day trading.

Good for Google’s Image

The settlement will be good for Google’s image, suggested Colin Gillis, an equity analyst at Canaccord Adams.

“It’s good from a perception angle,” he told the E-Commerce Times. “[Google] is no longer being sued by millions of copyright holders.”

At the same time, Gillis wondered whether the publishing industry settled for too small an amount.

“It’s not a big number,” he said. “It works out to about $60 per book, depending on the revenue split you get per book. A lot of people might say that’s not a lot of money to have your copyrighted material seen by millions of people.”

However, the Association of American Publishers maintained that money was never really the issue in the suits.

“The issue was ensuring the respect for copyright, which requires the permission of the rights holder,” Allan Adler, vice president of legal and government affairs at the association, told the E-Commerce Times. “When all five holders filed the lawsuit, they didn’t seek compensatory damages. They just wanted the rights holders’ copyrights vindicated.”

Protecting copyrights in the digital age is of paramount importance to the publishing industry, he said. “When you talk about the world of digital networks, where literary works can be instantly reproduced and distributed at the touch of a button, there is a great deal of sensitivity around copyrights.”

New Books Registry

About $35 million of the settlement is earmarked for the creation of a registry program to compensate copyright holders. Another $45 million will go toward compensation for authors whose books were already scanned without obtaining their prior permission. Authors and publishers get the final say in whether copyrighted material under their control can be used by Google Book Search.

Also as part of the settlement, Google will keep just under 40 percent of the revenue from online book sales and associated online advertising. The rest of the revenue goes to the books registry.

Now, millions of books will be available for the public to buy online, in whole or page-by-page format. U.S. libraries will also have free access to the Google Book Search database.

“We think the agreement that was reached was a fair and balanced way of moving forward from the litigation, and probably gives more benefit for all of the parties than would have been obtained through a legal decision,” the Association of American Publishers’ Adler said.

A Niche Play for Google

It’s not clear, at this point, just how big a business the books program will be for Google, said Canaccord’s Gillis.

“They’ve got to get the pages up and see what kind of page views and revenue it generates,” he said. “It won’t be on the scale of paid search or anything like that. This is old, historical content. It’s a niche play. It’s a completeness-of-the-index play.”