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Feds digging into Google Books settlement

The U.S. Department of Justice will investigate the Google/Authors Guild/Association of American Publishers book settlement to determine if it violates federal antitrust laws. I suspect that the result will be a compromise that allows future negotiations of royalties by rights holders (authors and publishers) with Google. The current agreement, which rights holders must decide to […]

GbookslogoThe U.S. Department of Justice will investigate the Google/Authors Guild/Association of American Publishers book settlement to determine if it violates federal antitrust laws. I suspect that the result will be a compromise that allows future negotiations of royalties by rights holders (authors and publishers) with Google. The current agreement, which rights holders must decide to conform with, or opt out of, by Septmeber 15, 2009, locks in all participating authors to a 63 percent share of revenue generated by Google.

The BBC provides quotes from Google’s response:

“The Department of Justice and several state attorneys general have contacted us to learn more about the impact of the settlement, and we are happy to answer their questions,” Google said in a statement.

“It is important to note that this agreement is non-exclusive and if approved by the court stands to expand access to millions of books in the US.”

The settlement applies only to books published before the agreement was announced on January 5, 2009 and stems from Google’s scanning of hundreds of thousands of books without the rights holders explicit permission.

The preemptive royalty agreement, I believe, will be the focus on the federal interdiction, since it has the primary material impact on rights holders after the close of the opt-out window. The scanning will go forward under a different agreement.

Locking participants into terms of business is similar to the behavior of a cartel, which is why that will become the fulcrum of any change demanded by the DOJ.

Here is the Google-sponsored FAQ on the agreement.

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