Google's Position

Google was founded with the objective of organizing the information on the Internet. It took an entirely new and dramatically more effective approach to indexing website content, ultimately leading to its domination of web search.

As it has grown, Google has expanded its vision. It's pioneered contextual advertising, to great economic success. It's driven disruptive innovation in countless existing product categories, from productivity software and email to cell phones. And it's launched ambitious project after project serving its mission to "organize the world's information and make it universally accessible and useful."

Along with Google Street View, 1-800-GOOG-411, and others, Google Books is one such ambitious project. It is Google's attempt to pursue this mission in the offline world.

Financial Benefits

Google stands to benefit from this program in a number of ways. First, the project generates revenue. Google displays ads next to book previews and full content. It sells digital copies when it can, splitting the revenue with the author or publisher.

Indirect Benefits

Next, Google enjoys indirect benefits from the program. By expanding its search index to cover the offline world, it strengthens its authority and value to users. This increases user engagement, which drives additional ad revenue, and provides a competitive advantage over other search engines. It brings Google closer to obtaining a monopoly over the world's information. While problematic from a regulatory perspective, such a monopoly is still extremely desirable and lucrative.

Book Rights Registry

To achieve its goal of building a comprehensive index of the world's 130 million books, Google will need to secure access to copyrighted works. While it has been able to negotiate agreements with libraries and other sources of books, the sheer number of copyright holders makes it nearly impossible to obtain explicit permission to reproduce and, if possible, sell their work from all of them. Furthermore, for so-called "orphaned works" for which the copyright owner cannot be located, the situation is even more complicated.

Google contends that this process needs to be streamlined in order to make the project feasible.

The company's proposed settlement with the Authors Guild and other organizations would have given Google the right to scan and distribute any copyrighted works as long as the rights owner did not opt-out. It would have established an independent non-profit Book Rights Registry to locate and keep track of rightsholders and their wishes.

Google's objective with the Book Rights Registry is to create a single clearinghouse for rights and payments, a move that would dramatically simplify the process of securing permission. Google would then have access to all orphaned works, which experts estimate comprise half of all books.

This type of copyright clearinghouse is not without precedent. Under U.S. law, some forms of media have statutory licenses, meaning that rightsholders are compelled to license their works at rates set by the U.S. Copyright Royalty Board. For example, companies can stream music on the web without having to negotiate deals with individual music publishers.

Settlement Rejection

Google unsuccessfully attempted to use the settlement to create such an arrangement. Judge Denny Chin rejected the settlement on grounds that only Congress could create such a clearinghouse through legislation. While Google could create its own, it could not compel rightsholders to participate by requiring them to opt out.

Google is uninterested in a settlement that would require it to secure explicit permission from rightsholders. Its primary motivation for agreeing to pay $125 million to publishers as part of the settlement was to secure automatic access to all copyrighted works. It does not need the settlement to negotiate opt-in deals with rightsholder.

Google is now strongly incentivized to lobby Congress for legislation on orphaned works. Such legislation would support competitive book scanning efforts in addition to Google's, but may be the only remaining option for the project to achieve the desired scale.