The Revenge of the Epigoni

As we all now know, this is no settlement agreement. It’s a massive non-negotiable publishing agreement glued to a permanent, non-terminable, pseudo-agency whose function is to take all Google money and eat whatever of it that it likes. The Registry a/k/a Book Rights Registry (“BRR”) poses as a kind of agent or union. It’s not. Functionally, it is Google’s contracts and claims department, except you pay for it.

Not only that, those costs and overhead are unlimited, decided by it in its sole discretion, no oversight or approvals from you. There is practically no accounting. Just a blank “net” check, subject to limited once a year audit by the Registry, not you. This net check is to be spat into a pool, then calculated upon in impenetrable ways, as only the Registry determines, after it gets to squat on it for an amazing 5 year accounting period, gathering interest, free to move cash in and out of senior and junior subordinated tranches like some kind of drunken CDO. Through all this, it gets to spend as much “orphan” money as it wants, basically for whatever it wants, such as to top off the registrant group account for money it siphoned off them for its expenses.

Then, this Registry gets to rewrite all your book contracts, like the dictat that your publisher shall henceforth receive 35% of your money on all books published before 1987. This will tend to extend publisher licenses into infinity, making your out of print reversion rights meaningless, all because you didn't happen to have a reversion letter in hand at the time they decided to start to pay this, after which, you'll never be permitted to get your rights back. (Publishers tend to sit on reversion requests, clinging to them illegitimately, since a publisher's idea of utopia is pure passive rent-seeking, diverting a technological windfall that should come to you, to themselves. Now, they might have paid for this privilege up front. Or they may not have.)

Then you’ll be forced into insider-controlled arbitration. Whatever pin-dancing interpretation of paper some publisher plunks before them goes, according to this. No fair, author-friendly federal court who knows copyright law, rather than what the old-boy industry insiders currently prefer, for you! That means all copyrights published prior to 1/5/09. Don’t like that? Go talk to the “arbitrator.” You might still try to get into court, based on the gross unfairness of it all, but then you’ll have to mount the hurdle of having to fight about what effect, exactly, this 335 mucus-filled hairball has on your 10 page publishing contract from the 1970’s. That legal issue alone forms a ten mile high barrier-to-entry to court.

Which obviously was the point of the whole exercise to begin with.

Signing a publishing or agency contract is an individual decision, governed by law. Law of agency, law of copyright. My rule is, sign nothing you don’t understand. That goes for a 1 page document and 335 times that for 335 pages. All this does is confiscate your property, and try to make somebody else into you. A kind of Frankenstein of everybody who ever wrote a book, all glued together. The desperation of these parties for you to “sign,” in itself, is a signal to hold off. We’re just at the start of the digital era, remember? Your price will only go up, not down. Don’t fork over all your bibliographic and file data and contracts into a Borg, not, at least, before you know what it all means, in crisp clear detail. Furnishing them with any data at all is only likely be used against you, mostly to force you into disputes with all the others out there gripping pieces of paper you or somebody else once accidentally signed, who’ll be trying to grab whatever is being spit out of the Borg before you get to it.

This is not a rational system. It’s directly out of Hieronymus Bosch, with the same kind of promotional campaign too. Garden of Earthly Delights indeed.

It’s like their chant about how Google is “innovative.” Just like the financial innovation that brought us the crash, I’d say, and equally structured by cows.

There are other questionable groupings buried in the appendices, like the assumption that the anthologist of an anthology is worth 80% of all display revenue and the contributors worth only 20%. That violates all conventional assumptions about anthologies, where the anthologists’ copyright is usually thought to be worth no more than 50% of the value of the anthology, sold as a physical book, with the contributors splitting the other 50%, or whatever other formula is acceptable to all. If anything, contributors are worth considerably more than 50% of an anthology. People can waive stuff in exchange for an up front flat fee, but that's their decision, or that of an agent who knows their mind. Online, really it's only the contributors who matter, with the value of the anthologist's subgrouping now mostly merged into the larger collectivity.

This entire litigation is nothing but a data demand of all of us. For data that Google already digitally has, can analyze with scripts in 5 minutes for every detail that it wants, and has no need for us to give to it again. They just want you to log in to "agree" to their 335 pages—and, to give them more valuable data, like, the contact data of everyone with any kind of claim at all, so they can use this information against actual authors and publishers by obtaining "permissions" to publish whenever they feel like, from bogus claimants. The court needs to order all registration and opt out data given in response to this class action solicitation to be used strictly for purposes of the litigation and afterwards expunged. Any later use or monetization of this data ought to be conditioned on the express approval of each specified use, by its owner.

The document is also filled with massive exonerations of Google and the Registry, indeed, waivers of “all claims” of yours whatsoever relating to uses of your copyrights, in any way relating to this agreement. You need to worry about that, big time.

There is also a $40-$50M cap on Google’s liability for maliciously or negligently trashing the entire value of your copyright. And if you’re angry about it, the Registry gets to dilute your damages claim with anyone else’s, in any “class” that, in the Registry’s mind, vaguely resembles yours.

Pardon me, but, has anybody in the room read the U.S. Constitution lately, or noticed that we do not live in a communist state in which individuals are nothing but a collectivity to be squashed like bugs by self-appointed vanguards of the proletariat? Normally I hate histrionic right wing analogies to communism, but if this isn’t just that, then nothing is.

That said, if you’re deluded enough actually to sign such a thing, go ahead. Be my guest. I’ll support your effort to sue your way out of it later, on grounds of compassion and fairness, but to the extent assumption of risk still exists in our society (another interesting legal question) the result is likely to be Kafkaesque.

Copyright, people do not seem to grasp, is not a thing-y. It’s not something people hand over like a clunker for cash. (Or rather, plenty are clunkers, but then, after handing over its cash, who is it who pours the silicon disabling fluid into the engine block so it gasps for breath and never starts up again? The publisher, that’s who....sorry publishers! I'm just kidding of course, really, we all know it was all that hopeless book's fault!) A copyright is a right to own and license others to exploit your work. Infringement is your legal right to sue for harm to that business enterprise, an event can occur at any time, over a course of time.

A few uses, and only a few, will be paid upon. The rates aren’t very attractive, particularly given the 80% yield at lulu.com and scribd.com, and 90% at myebook.com. And that’s only what they’re paying today. The digitization of world literature Google stole is treated as if it were Google’s exclusive, permanent property, to do anything it likes with, without reporting to anyone anything about it. No payment will be made for the highest-value exploitations of the derivative work, notably ad revenue found on general search. Who cares whether you navigated first to the dopey Google Books subdomain in your “find” on the title or author of the book? Who will do that? Practically nobody, that’s who. Whoever negotiated Section 3.14 needs to have their head examined.

Ads are the driver of Google revenue, which was $21 billion last year. To display any ads with a book, under industry custom, requires author approval. This is in many contracts explicitly and a term implied in them all, as I see it. Ads affiliate an author or his work in potentially very unacceptable ways. Online ads are more intrusive and affiliational than ads in periodicals. Could you sue Google, or your publisher over that? Would Google be immunized by the lingo in the 335 pages about all claims waived from acts or omissions of the settlement agreement? (Think on that for awhile.) Would your publisher? Restrictions of your publisher in your book contract extend to all publisher licensees. So is Google your publisher’s licensee? What if your publisher never registered? What if you never registered? What if you both didn’t? What if you both did? What if either or both of you did, but without reading or understanding the fine print? How “deemed” is this thing upon you if a court “approves”? Is it law? Is it a contract? The sheer brain-puzzlers of this contraption are truly a marvel to behold.

Publishers generally need approval from the author for all new publications as to which there was no meeting of the minds when they signed their book publishing agreement. All rights not specifically granted are reserved to the author. That’s copyright law.

Having attempted to turn copyright upside down all for Google, Google then dispenses with the inconvenience of ever having to account to owners again. Its net checks into the anonymous slush fund pool the Registry gets to squat on for 5 years, carry no particular, nor regular, accounting obligations to you. Nor has the Registry any serious audit right against Google, since the audit is limited to a pathetic single-author to single-publisher formbook once-a-year clause—grossly inadequate for millions of owner accounts. Does the Registry rationally care about anything apart from getting its hands on that big fat net? No.

The Registry owes Google a million and one obligations to Google in the agreement. But extremely few, really none, to you, not even standard agent-principal fiduciary duties, such as to account accurately, and in detail on sales, exploitations, views, accesses, for precisely which publication, and how that was calculated, and with what off the tops, going to whom, on what date, and for what. Owners, then, in their turn, have no audit rights against the Registry. Got a problem with that? Only Registry decides. Then, if you’re mad, its “arbitrator” will step in. No court for you. The Registry can’t be terminated, ever, and will serve as your judge and jury too. You get to approve nothing. There are no escrow accounts for “your” money. No individualized accounting with trackable amounts or publications and charges, at all.

What in fact we are looking at, in essence, is a security. Its aggregation structure is identical to a CDO. As a business proposal, it may violate securities laws. The general public is certainly not a sophisticated buyer of this operation. Who is?

The traditional pre-electronic high cost print publishing net split between authors and publishers throughout history has been 50/50. 50/50 is economically irrelevant to all electronic “publications.” The value of the publishing partner in an electronic publication is undetermined at present because we are just in the beginning of the development of this market. Market equilibrium in a few years may be 10% to 20% based on current e-business models—or less. And way less is suggested by the actual costs of scanning, $10 per book, plus online merchant cart. A proper electronic publisher share may be equivalent to a 2% Visa fee for credit card services. Even today.

What Google is trying to do here is to exploit the rampant fuzzyheadedness in the author and agent community about partnership economics. The industry has long been in market equilibrium, staffed by clerks. Clerks and industry trade groups are ill equipped mentally to deal with Google. Publishing lawyers at large publishers aren’t so well equipped, either, since they operate in a narrow and to date rather routine field. We are dealing with the Borg here after all. For that we need the full force of the law. By that I do not mean a rabble of muddle-headed wannabe regulators, but the U.S. Constitution, and the good old Anglo-Saxon (plus a dash of Continental/Roman) common law.

What we are looking at here are the workings of the feeble epigoni of the law and econ movement. Not the greats of that movement itself—but their noodle-headed wannabe imitators. Mostly ex-social engineers who belatedly saw the light then went through the motions.

A few bullet points to remember:

• Authors’ claims against Google for accounting and payment on exploitations not mentioned are unclear and may well be fatally compromised by this agreement.

• The Registry’s existence absolutely guarantees a big increase in disputes over control and money, so its costs will be high, all to be borne by registrants and orphans rather than the profiteering thief, Google.

• A database of claimants will be gathered. This solicits false claims. The dbase can then be used and sold to give impunity to any publisher seeking “permission” from claimants other than the true owner.

• The Copyright Office, and Congress, has never chosen to impose a registration requirement as a condition of author copyright ownership, only as a condition for litigation in federal court.

• Lawmakers will have a much better understanding than the plaintiffs, of why no registration is better than a rule of registration for ownership, and way better knowledge of regulatory mechanics. (Well, yes, maybe even they no longer have decent legislative skills either, what with the general dumbing down of the society. If so, then we’re doomed, but we can’t do anything about that.) The plaintiffs want everyone to register with them only so that they can exercise control over you, all for themselves. They would seem to have no sophisticated understanding of the economic incentives of the copyright clause of the Constitution or its inherent respect for all of the individual rights of privacy, property, and contract. They think unions are the best idea. Heady with “we got the powa.”

• If Google sells data on all online reader habits from the “research corpus,” this will be reported to no one. No royalty of Google’s net revenues from this or any other clever use of our derivative work will be paid. If Google crunches all cookbook recipes, makes new derivative works and publishes them without seeking any approval, this will be reported, paid and accounted to no one. Google might do so untraceably through “partner” entities. Google now, according to this, owns the digitizations, alone, exclusively, and will exert that ownership as if it were an individual “reading” the derivative work.

• To price fix a single set net rate, before internet interactivity has scarcely historically begun, is economically irrational. It sets up a vast rip off of creators.

• To eliminate all individual owner bargaining over price to insert a Registry as a permanent, non-terminable middleman, relieves all market pressure on Google to negotiate with respect to the varying value of individual rights. It also, insanely, relieves it of all publisher costs, placing these costs all on authors in such a way as to exaggerate those costs by ginning up massive disputes and confusion. The effect is to make Google sole and exclusive owner of all of world literature in digital, a vastly valuable form, under a cretinous set-up with unascertainably malign effects on the owners of copyrights.

• Publishers are induced (I’d say, personally, veritably bribed) to cooperate because they acquire on net more than they probably would otherwise, of the value of the data asset to them, that is, copy and access sales. This is why they want this structure. The big loss is in the destruction of the value of the authors’ reserved rights (rights reserved from most publishers).

• To repeat. The economic value of the derivative work of the digitizations is in no way covered by sales of copies or accesses of books and a tiny, unaccountable shred of ad revenue. All derivative works require author permission for each specified use, when that use is proposed. Digitization permits many new, now unimagined uses. Possession is 9/10s of the law. This gives Google exclusive possession. Fairness demands this be either free to all or, as copyright sensibly has it, to none, without informed consent.

• Publishers are especially dumb to have let the lion’s share of ad revenue slip through their fingers. This is all because of a misbegotten analogy in their minds to ads in periodicals. That is not the point in this medium. Evidently they have no clear economic understanding of the medium. Then again, who does? We’re just all beginning to get a grip, which is why we need individuals, over time, to feel their way. People see, they learn, they imitate, they embark on differing paths. That’s how economics works. Like an ecology. Not like a Borg. Anyway, publishers are not particularly good bargainers, or licensors. They’re publishers. Not licensors.

• No reporting or data due TO owners, nor approvals, nor accounting is a fatal flaw. One must have per copy, per access sales accounting at all times about specific, understood types of publications. NEVER pro rata nets with unlimited discretionary off the tops in unknown intermediaries.

• In short, Google will own and use digital world literature while paying only on certain uses, i.e, unit book sales and subscription access, not all. This reverses copyright.

• Note how, under the agreement, all data moves only in one direction—into Google. Owners receive no reporting, accounting, or disclosure, even from the Registry. The Registry is nothing more than Google’s special purpose entity, a money laundry to excise the necessity for any individual accounting. The books then get to be cooked at two levels, Google and the Registry, all masked by undefined nets.

• The flip into reverse of copyright implies that Google now owns all authors’ reserved rights in the “corpus” and need only pay on uses specified in the agreement. Sorry if I’m being repetitive, but the point is important. The Registry’s right to negotiate other matters is couched in limiting language, not language of generality.

• Collectivization here is unwise. This doesn’t create power, it destroys it. Power, and mass intelligence, in this area, comes from individuals acting for themselves, in their own interests as each of them sees it. Collectivization reduces this Registry to a single voice with no real power, that is, market power, against the entity which in economic reality in this structure is its true client: Google.

• This is a derivative work, a very large digital anthology or compilation. Being able to read parts of everything in the world, online, will tend to diminish book sales. An always and everywhere available online library is just one more reason not to bother buying a book in any form again except as interior decoration. In an ADD world, reading at 8 hours at a stretch might be endangered. Unless of course people decide they like doing that, which, in fact, they do. In which case it is in fact important to the author it not be online, especially not without permission.

• To help book sales, online is nothing but a publicity tool. For publicity, online must be used wisely and flexibly, gauging, in the moment, all your online publishing choices. Not under rigid pre-planned structures to one vendor.

• The Registry’s duties are all owed to Google. The sole mention of the word fiduciary in the agreement, are all references to BRR’s board of directors’ fiduciary duty to BRR to pay all its expenses out of owners’ funds. To read this passage is to wonder if you are reading some kind of a joke. There are far too many such hilarity-inducing moments in this document.

• The agreement is written entirely to free BRR from any and all obligations or liabilities to owners. BRR purports to represent, simultaneously, two groups of individuals whose interests may be diametrically opposed—authors and publishers.

• Sec 3.8 gives the Registry the power to reduce the 37/63 net deal to the owners at any time, then give to Google that same new, worse-for-the-owners, better-for-Google, deal. Without telling you much less seeking your approval, informed or otherwise. This is the most knee-slapping example of obscurantist rape, of what they clearly all regard as the “stupid little people,” I think I have ever seen.

• Literal line readings of old documents by Registry bureaucrats will wipe out the assumption of author control over a work. Frantic clawing through contracts of adhesion signed years ago without benefit of counsel will supplant the simple just assumption that the author owns her work.

• Once, Google said it thought digitization was “fair use.” Now, the plaintiffs want Google to have its cake and eat it too. Because they’ll be sharing it, you see. So now, digitizations are not to be “fair use,” but more closely protected than the formula for Coke. The agreement enswaddles the “research corpus” with confidentiality and obligations galore, to alert Google whenever a competitor draws near. Its $10 per book scans are now Google’s inviolable, exclusive, protected, personal property, with libraries and the Registry on guard to serve as their spies.

• Neglect of the class is an inherent flaw of class actions between plaintiffs’ and defendants’ attorneys. The Authors Guild and the AAP are trade groups. They chose themselves to serve as “class” representatives. Nice deal. Other writers’ groups, like the National Writers Union, complained of being elbowed out at the Columbia U “seminar” Google rollout. Was anybody listening?

• Orphans are subject to larceny by other sub-groups. That’s just illegal. Isn’t it? (Excuse me while I consult counsel…)

• All data in this moves only one way, from owners into Google. Nothing but an indecipherable sure to be tiny check will come to you.

• All Google competitors will copy this overreaching structure. I can already see a kind of frantic Google-envy amongst publishers, elbowy efforts to pack contracts with ever more loony, adhesive phraseology.