After Google Book Search: Rebooting the Digital Library

“After Google Book Search: Rebooting the Digital Library” 
University of Chicago Law & Economics, Olin Working Paper No. 559

RANDAL C. PICKER, University of Chicago – Law School

The rejection of the Google Book Search settlement means that we are at a point of rebooting how we design our digital library future. There were many criticisms of GBS and the settlement but perhaps chief among those was the risk that approval of the settlement would have locked in a single approach to digital libraries. Google would have received unique access to the so-called orphan works and that would have provided it what may have been a decisive advantage against digital library competitors, both private and public. As we move forward on the orphan works, we need to do so with two principles in mind. First, we need to enable broad competing uses of the orphan works while, to the greatest extent possible, respecting the rights of the orphan works holders. Second, we should not repeat the mistake of the GBS settlement by somehow tilting the table in favor of digital library monopoly, either public or private.

We should want to foster a rich digital library ecosystem. GBS makes clear that we can have large-scale private digital libraries. That is an important development and one that we should seek to enable. If we create use rights for copyrighted works for digital libraries, we should be sure to make those privileges available to both public digital libraries and private digital libraries such as GBS and its successors. Our existing statutory safe harbors for libraries favor noncommercial libraries and archives. The emergence of GBS suggests that that is too narrow a conception of what libraries can be in the digital age and we need a statutory scheme that supports that.

Source: LSN: University of Chicago Law School, Law & Economics Research Paper Series Vol. 13 No. 4, 06/27/2011

 

The Mediated Book

“The Mediated Book”

U of Chicago Law & Economics, Olin Working Paper No. 463

RANDAL C. PICKER, University of Chicago – Law School

Text in hand, we have read books by candlelight, oil lamp and Edison’s incandescent bulb, maybe even the occasional CFL. But even as light itself has changed, the book has remained constant. Until now. With the rise of Google Book Search and ebook readers like Amazon’s Kindle, we have entered the era of the mediated book. We will still browse and read books, but we will do so through a screen.

This is more than just a change in medium. Digital texts are inherently on-demand works, that is, works that can be produced at the instant that a consumer wishes to interact with the text. Physical books historically have been printed in batched runs in advance of demand. This fact of production matters relatively little for the texts themselves, as we typically want books to be fixed, reliable artifacts.

This changes matters for how we finance books. On-demand texts can be financed through advertising. Printing in advance means that embedded advertising has little chance of being relevant at the point of reading. Mediated texts can be updated instantly with new, continuously timely advertising. That advertising also can be personalized for individual readers as the interaction between the mediating device and the reader will create a rich information stream to enhance the relevance of this advertising. That process of course will raise standard privacy issues.

The short history of 20th Century advertising expenditures in the United States is characterized by two facts. First, overall expenditures as a percentage of GDP are relatively constant over time, bouncing around over the last sixty years between 1.5% and 2.5%. The emergence of new advertising platforms – say radio in 1927; broadcast TV in 1949; cable TV in 1980; and the Internet in 1997 – hasn?t altered that essential fact. The emergence of another new platform – advertising-supported books – isn’t likely to expand overall advertising expenditures much if at all. Second, print?s advertising market share has declined steadily, from roughly 55% of advertising dollars in 1935 to a little under 21% in 2007.

Mediated content accounts for a large chunk of that decline. Now books and of course print more generally will be mediated too. And we will get a nice test. Does the decline in the role of print as seen in advertising dollars reflect the decline of words relative to images and sounds? Or is this a story not of content but of technology, in which a mediated platform is a better advertising platform? The rise of the new mediated books will change how we finance books and will change our understanding of the relative roles of content and technology in driving advertising.

 

Source:  LSN Cyberspace Law Vol. 14 No. 32,  05/26/2009

The Google Book Search Settlement: A New Orphan-Works Monopoly?

“The Google Book Search Settlement: A New Orphan-Works Monopoly?”

U of Chicago Law & Economics, Olin Working Paper No. 462

RANDAL C. PICKER, University of Chicago – Law School

This paper considers the proposed settlement agreement between Google and the Authors Guild relating to Google Book Search. Google boldly launched Google Book Search in pursuing its goal of organizing the world’s information. Even though Google was sensitive to copyright values, the service relied on mass copying and thus Google undertook a substantial legal risk in setting up the service. That risk was realized with the lawsuits by the Authors Guild and the Association of American Publishers. The October, 2008 settlement agreement for those suits will create an important new copyright collective and will legitimate broad-scale online access to United States books registered before early January, 2009.

The settlement agreement is exceeding complex but I have focused on three issues that raise antitrust and competition policy concerns. First, the agreement calls for Google to act as agent for rights holders in setting the price of online access to consumers. Google is tasked with developing a pricing algorithm that will maximize revenues for each of those works. Direct competition among rights holders would push prices towards some measure of costs and would not be designed to maximize revenues. As I think that that level of direct coordination of prices is unlikely to mimic what would result in competition, I have real doubts about whether the consumer access pricing provision would survive a challenge under Section 1 of the Sherman Act.

Second, and much more centrally to the settlement agreement, the opt out class action will make it possible for Google to include orphan works in its book search service. Orphan works are works as to which the rightsholder can?t be identified or found. That means that a firm like Google can?t contract with an orphan holder directly to include his or her work in the service and that would result in large numbers of missing works. The opt out mechanism – which shifts the default from copyright?s usual out to the class action?s in – brings these works into the settlement.

But the settlement agreement also creates market power through this mechanism. Absent the lawsuit and the settlement, active rights holders could contract directly with Google, but it is hard to get large-scale contracting to take place and there is, again, no way to contract with orphan holders. The opt out class action then is the vehicle for large-scale collective action by active rights holders. Active rights holders have little incentive to compete with themselves by granting multiple licenses of their works or of the orphan works. Plus under the terms of the settlement agreement, active rights holders benefit directly from the revenues attributable to orphan works used in GBS.

We can mitigate the market power that will otherwise arise through the settlement by expanding the number of rights licenses available under the settlement agreement. Qualified firms should have the power to embrace the going-forward provisions of the settlement agreement. We typically find it hard to control prices directly and instead look to foster competition to control prices. Non-profits are unlikely to match up well with the overall terms of the settlement agreement, which is a share-the-revenues deal. But we should take the additional step of unbundling the orphan works deal from the overall settlement agreement and create a separate license to use those works. All of that will undoubtedly add more complexity to what is already a large piece of work, and it may make sense to push out the new licenses to the future. That would mean ensuring now that the court retains jurisdiction to do that and/or giving the new Registry created in the settlement the power to do this sort of licensing.

Third, there is a risk that approval by the court of the settlement could cause antitrust immunities to attach to the arrangements created by the settlement agreement. As it is highly unlikely that the fairness hearing will undertake a meaningful antitrust analysis of those arrangements, if the district court approves the settlement, the court should include a clause – call this a no Noerr clause – in the order approving the settlement providing that no antitrust immunities attach from the court’s approval.

 

Source:  LSN Intellectual Property Law Vol. 2 No. 51,  05/07/2009