Google’s Settlement with Publishers: Looking Down the Road January 25, 2009Posted by Bill Rosenblatt in Law, Publishing, Rights Licensing, Services, United States.
I will be speaking at the O’Reilly & Associates Tools of Change (TOC) conference on Tuesday February 10 in NYC. (TOC has quickly become the leading conference on publishing technology; it has filled the hole left by the demise of the lamented Seybold conferences.)
The panel is on Google’s lawsuit settlement with the publishing industry. John Kreisa, an executive from Mark Logic, the makers of XML server software, will be joining me. We will be discussing the settlement’s effect on online business models for book publishers and how publishers can build content infrastructures to take advantage. I’m publishing a white paper for the occasion; here it is.
The publishing industry’s litigation with Google was settled last October after three years. The litigation was all about copyright in the digital age. The settlement, in contrast, is all about a set of business models that publishers and Google intend to implement, both immediately and in the future.
The first set of business models (Section IV of the settlement agreement) is technologically straightforward: it’s essentially online e-book sales with contextual advertising. It’s books and page images, and it’s roughly the same thing as Amazon.com has been doing for years.
The far more interesting part is Section IV.7, where the parties list several hypothetical future business models. Some of them — such as custom publishing and compilations — require that Google use content that is logically structured and not just page images (hence the motivation for XML technology). These business models also require that the independent Book Rights Registry (BRR), which the settlement will establish with about US $30 Million from Google, keep track of rights to pieces of content that may be smaller than entire books.
This has a boatload of implications, and I wonder just how far Google has thought through them. The libraries that currently feed Google with text from scanned books can’t possibly supply the content that Google would need to implement these business models — i.e., logically structured content in XML. Publishers will have to supply it themselves. Many will not be able to do this without building new content infrastructure or engaging a service.
This is a big deal. The “other side” of my consulting practice is in helping media companies plan out such infrastructure, along with attendant process and organizational changes; it’s not a trivial thing to do.
An even bigger question is about motivation. The BRR can do business with any entity, not just Google, that wishes to offer services based on publishers’ content. So it could well be motivated to track rights to things other than entire books.
But will Google really go into the business of selling content at the level of chapters, sections of chapters, individual entries in reference publications, or other smaller units of content? This will put Google into the rather curious business of making money from certain types of digital content while not making the same money from others.
Google can rationalize its 30% revenue share on e-book sales because they’re “just books” (online versions of “legacy” print publications) and because Google is supplying the viewer application and (<ahem>) the DRM. But if Google starts selling content in standard online formats that can be viewed in web browsers or other widely available readers, then it starts to feel different.
Net neutrality begins to come to mind. Book content will have gone from being unfindable (legally) online to being content that Google is motivated to push as “premium.” Google may not actually cook its search engine rankings in order to favor content from which it makes direct revenue. But consider that the BRR can clear rights to the same content for any service provider that wants to use it. Google will be in competition with those service providers, which may have no “neutrality” issue.
Will Google be tempted to use “extra methods” to draw traffic to content licensed from book publishers? Or will it decide that it’s just not worth the effort to build the infrastructure necessary to launch these new content business models at all?
Well, if Google doesn’t want to, then someone else will. The beauty of the lawsuit settlement is that it envisions an online content management and rights clearance infrastructure that could make it easier than ever to launch new business models based on publishers’ content. If this happens, then fears of Google taking over the economics of the publishing industry may not be well-founded after all. Instead, the publishing industry will truly be the better for it.