On the Google Settlement

To get through the 385 pages of mind-numbing legalese of the Google Settlement, it might be better to be Nino Scalia, Bob Bork, or David Boies. Preferably all three at once. Absent brain enhancement surgery, understanding this monstrosity by May 5, 2009 is going to be rough.

That is the date by which every author and publisher in America is supposed to make a decision whether to “opt in,” “opt out,” or ignore, a vast compulsory licensing scheme for the benefit of Google. 88% of them are expected to choose the last option: “ignore.”

This will be most true of authors and publishers whose online display rights have value and so need to hesitate before being herded like sheep into an enormous contract commitment. So this group is most likely to wind up in the 88%, called “orphans.”

No one elected these “class representatives” to legislate for us, or to treat all the interests of the “class members” as identical. There is nothing more individual in the world than a book, an author, a publisher, a contract, and that contract’s value.

The aging boomers now flacking this Settlement don’t seem to understand that low res PDF scanning and gathering online data is not rocket science. It is cheap and low cost. Google does not need a special monopoly privilege for books to be found online.

The agreement also requires every author and proprietor in America to hand over all their private contract data, concerning every edition of every work they ever wrote—as well as every excerpt permission they, or others they authorized to permit for them, ever granted to others—at the peril of losing all the money Google will be making on their backs. This set-up wrests from individuals their property interest in copyright and its exclusivity granted to them by Article One Section Eight of the U.S. Constitution. The whole contraption is a massive burden upon authors and publishers. It will open a Pandora’s box of disputes and fraudulent claims about who owns what.

Google’s erstwhile adversaries now look forward to running a new quasi-judicial bureaucracy which the class action establishes, in competition with the U.S. Copyright Office and the federal courts, called the Book Rights Registry (BRR) to make determinations about who is owed what on the proceeds of Google’s uses of online display rights. The class action attorneys stand to rake in $30 million in fees on the lawsuit alone.

The split is not 70/30 as advertised. There will be another off the top by BRR of undetermined quantity—subject to no cap. They say it will be 10%, but that is not in the contract. Copyright Clearance Center, whose duties are far less complex than envisioned for BRR, takes 15% as its commission (up from 9% a few years ago), so I doubt BRR’s percentage will be kept low, given all the claims and disputes that are likely.

We already have a system to deal with online display rights. It’s called the system of private property and free contract. It honors, not tramples, autonomy, privacy, property, and choice. It was deliberately designed to be at the sole discretion of dispersed individuals—not under a central command and control operation. All authors are granted by the Constitution of the United States miniature monopolies in their own copyrights and freedom of choice to sign contracts with publishers on any terms to which they agree. The source of the market power of these individuals is their own perceived talent and value. This class action seeks to wipe all this out as to display rights—just for Google. But U.S. law does not grant any single Publisher, such as Google, monopoly power to choose to herd all of us into its list. It grants us and us alone that right to choose, as individuals.

Individual contracting permits adaptation and evolution in an organic free market process that preserves health in the system. Its rules are old and simple and proven to work: contract and copyright law. Only Congress and the judiciary can govern, or change, this system. Transactions undertaken by individuals, who know their own business, and their own interests, limit the harms so often wrought by vast schemes that contain unseen flaws in their convoluted, often intentionally obfuscating designs. When individuals are misguided, only they suffer. Others, observing, learn from their mistakes. Law adapts and evolves. Too-powerful combines often wreak havoc, society-wide, when they try to do things in one fell swoop.

One dreadful feature of this Agreement for authors is binding arbitration. Access to federal court in a time of change, technological or otherwise, is crucial. The judiciary has always been a bulwark for them against fraud, exploitation, and contracts of adhesion. The common law recognizes authors to be a dispersed, unsophisticated class easily exploited by more-powerful publishers. This built in wisdom is here thrown out of the window. Arbitration is too likely to become an old boy, smoke-filled room tilted toward the more powerful subclass in the Settlement “class”—publishers.

If slouched into unwittingly now, this Settlement fixes in amber all of today’s overhyped cheerleading about the magic and mystery of the internet presided over by that great and wonderful Oz—Google. The deal is quite simply a bad one for anyone whose work has long term value. The internet was supposed to eliminate middlemen, not pack multiple layers of them on, as this does.

Theoretically independent of Google, BRR in fact is Google’s contract negotiation and claims department—spun off like Enron’s Raptor—and outsourced in such a way that all those costs will be paid not by Google but the rightsholders. This is backwards. BRR is entirely beholden to Google, nonprofit status being a guarantee of nothing. It will sit on all the orphan money, then, if unclaimed after 5 years, pass it out to charities that Google and BRR chooses. Fraudulent “owners” will surely swarm like flies. Buried deep in the fine print, there is also language that the money can be divided like pirate’s booty among those (Google-preferred) rightsholders who choose to cooperate and sign on to the Settlement. This is a racket.

Google’s “confidentiality” is protected at every turn in the Agreement. Even Google’s precious copyrights to its mere digitizations are carefully reserved, whilst it tramples those of real creators. Under the Agreement, the burden is shifted to all of us, authors, and publishers, to keyboard in to Google and BRR, all our private authorship or ownership data. Google will then own and control everyone’s sales, view, hit, and access data, and who searches, prints, and views which pages of all of literature, plus all owners’ rights information. This is an Orwellian advantage for Google to wield over every other print or online publisher in the world.

Section 3.8 of the Agreement is a “most favored nation clause” requiring BRR to heads up Google on author data and competitor terms, should BRR ever dare consider doing a deal with a Google competitor. The Agreement is jam packed with BRR’s duties to Google. But Google’s duties to BRR are minimal—mainly, to hand BRR a “net” lump sum, after a multiplicity of unreported off-the-tops have been siphoned off.

BRR’s right to audit Google is a joke—it is a formbook single author audit clause relating to a single title and single book publisher, wrongly pasted into a complex collective bargaining agreement. It imposes a gag order on BRR’s accountants regarding all Google information other than whether BRR is due more on “net,” on the bottom line. It limits BRR from auditing Google on behalf of potentially millions of authors and publishers to just one audit a year. Ordinary publishers by contrast have to suffer as many audits as all authors might care to bring, individually.

It is advertised by this Settlement’s promoters that authors will get 70% less a small cut for BRR. That’s not true. There is much, much more if you read the fine print: cumulative “discounts” (up to 40%), sales commissions, agency commissions, all at the discretion of Google. Recipients will have no clue about these off the tops or how they relate to each category of sale, because the “net” BRR receives will money launder all that data. You personally will have no rights of audit.

There are curious features in the Agreement like fixed percentages of titles that are supposed to be displayed at particular fixed prices. [See 4.2(c)(ii)(1)]. But what is the sense in that? If Google is displaying people's property anyway, why not just let Google price them as it sees best? And, why not have BRR keep the money indefinitely until the owners can be located? Say, for 20 years—about the same period as adverse possession.

Permissions people find owners every day, at low cost. This Settlement Agreement imposes the obligation only to "attempt" to find the owner on BRR. That's weak. But then, who imposes strong obligations on themselves? Getting authors their money may well prove less interesting to BRR than dispersing it, a mere five years hence, to BRR, and Google's, favorite charities. Or of course, eating it themselves, in "expenses."

A 30% off the top for Google as its pure profit to exploit other people’s property is ridiculously high. This is a percentage such as motion picture distributors typically demand for their high cost operations to market and distribute complex products like films. The figure bears no relation whatever to the real economics of online publishing, either today, or as competition will ultimately sort out in the future, if competition is not permanently squelched by this Settlement. Online publication is in flux. To fix such a high rate as 30% as Google’s value forever viz a vis all authors' and publishers' content in the world—for scanning—is absurd.

The market has had no chance to reach market equilibrium on the value of online publication. If this deal goes through, all market pressure from all the individual contract negotiations that should under the copyright law be occurring with Google, will be eliminated.

Certain special interests—textbook and periodical publishers—got blanket exemptions from this Settlement. Yet what could be more in the public interest than to liberate students from having to purchase heavy, over-priced, politicized, government-subsidized textbooks to let them read for free, online?

This ill-conceived Agreement is being rammed down the throats of all rightsholders in America by private parties pursuing private interests. It strips individuals of the right to negotiate their own deals, all to privilege a single would-be book monopolist, now perilously close to achieving its, really quite dastardly, plan.

Authors are not an amorphous “class” with identical interests, submergible into a massive, totalizing “class.” Only Congress has any right to legislate this vast a change to our system of private individual property, freedom of contract, and copyright.