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Copyright Irony, Of Royalty Boards and Google Book Deals

Earlier this week Live365 filed a law suit arguing that the Copyright Royalty Board is unconstitutional. Today is the deadline for authors to opt-out of the class in the Google Book Settlement. The idea that this Settlement ought to approved is more than suspect. Others have noted the myriad issues the settlement raises. As Pam Samuelson has put it “Exploiting an opportunity made possible by lawsuits brought by a small number of plaintiffs on one narrow issue, Google has negotiated a settlement agreement designed to give it a compulsory license to all books in copyright throughout the world forever. This settlement will transform the future of the book industry and of public access to the cultural heritage of mankind embodied in books. How audacious is that?” The nature of the class, whether class action (which I usually see as better suited to resolving tort rather than property claims) is the correct approach, the way in which this class purports to operate, and the anti-trust issues alone should make it clear that this deal, although possibly offering benefits, should be slowed down and put under further scrutiny.

It is ironic that one one hand Live365 has been able to raise a Constitutional challenge to a copyright royalty issue, and on the other hand what is surely a turning point in copyright history and the question of how society governs access-to-knowledge is subject to a private deal between private parties who have little concern for society’s claim to access and use the works in question. To be clear, I am not arguing that it is improper to figure out a possible payment system. Samuelson’s work on mapping the public domain is clear about reasons we may need and want to have certain groups build, maintain, and charge money for information repositories. The questions that concern me are what will that system look like? Will it allow innovation and competition in the provision of the similar services or will it hinder such efforts? Is this service a natural monopoly? Will the incumbents after the deal is done be able to extract rent? What about the different uses that are conflated here (e.g., higher educational uses, research uses, social networking uses, and more)? What about the spillovers that could come from a more open system such as empirical research on the data in the works and computer science work on the way language operates?

I have begun a close read of the 140 page contract and its appendices. I urge all of you to take a look at the contract. It reminds a little too much of entertainment deals I have read in practice. Some clauses are opaque; some bizarre. All protect one party and ignore others. In a Hollywood or other publishing arena that may be O.K. When talking about the modern Library of Alexandria, it is not.

To whet your appetite about why one should not accept the deal at face value look at this statement of objectives:

The economic terms for Institutional Subscriptions of Books will be governed by two objectives: (1) the realization of revenue at market rates for each Book and license on behalf of Rightsholders and (2) the realization of broad access to the Books by the public, including institutions of higher education. Plaintiffs and Google view these two objectives as compatible, and agree that these objectives will help assure both long-term revenue to the Rightsholders and accessibility of the Books to the public.

My initial comments are at the Public Index in Section IV. But in brief, the assumption that the objective of market rates and the realization of broad public access are compatible is on the surface semi-plausible but facile. The following sub-clauses make it clear that broad public access is not the animating force on the deal. Intense control over access and the ability to price discriminate (including a ban on k-12 access unless the Registry (publishers) agree) are the goals. Again if others read the sections and can show where I err, I am all ears.

As a general matter, if anyone can share why class action was wise and/or a good fit here, please share your insights.

Last, I suggest that this deal is so important that Congress has to be involved. As private re-writing of the Copyright Act is not the correct way to proceed. It will likely take away the chance for copyright to roar into the twenty-first century with a winning solution for authors, publishers, and society at large and instead will repeat history with the system being captured and benefiting only a narrow class of stakeholders.