Our offices are high and dry, but power has not yet been restored to them. (Our building is in the zone of Manhattan affected by Hurricane Sandy’s flooding of the Con Ed plant on East 14th Street Monday night.) Our normal email service is unavailable for the moment — our server is stranded in our office. If you’ve recently sent us an email, we should receive it when the server reboots.
From what we can learn, it seems unlikely that our offices will have power tomorrow. We hope to reopen Friday.
Our apologies for the inconvenience.
Wednesday evening, US District Court Judge Harold Baer ruled that the mass book digitization program conducted by five major universities in conjunction with Google is a fair use under US copyright law. Under that program, Google has converted millions of copyright-protected library books into machine-readable files, duplicating and distributing the digitized books to university libraries. The universities pooled the digitized books into an online database organized by the University of Michigan known as HathiTrust.
We disagree with nearly every aspect of the court’s ruling. We’re especially disappointed that the court refused to address the universities’ “orphan works” program, which defendants have repeatedly promised to revive. A year ago, the University of Michigan and other defendants were poised to release their first wave of copyright-protected, digitized books to hundreds of thousands of students and faculty members in several states. The universities had deemed the authors of these books to be unfindable.
A group of large U.S. publishers agreed to drop their lawsuit against Google over its mass-digitization of millions of copyright-protected books. In a press release issued this morning, the Association of American Publishers and Google said that the terms of the settlement are confidential and won’t need court approval. The parties did lift the covers off the deal a bit, saying publishers “can choose to make available or choose to remove their books and journals digitized by Google.” The statement does not say whether Google is compensating publishers for its unauthorized uses of the books, nor does it address whether Google will continue scanning books without permission. The press release acknowledges that the settlement doesn’t affect the authors’ class-action lawsuit against Google.
“The publishers’ private settlement, whatever its terms, does not resolve the authors’ copyright infringement claims against Google,” Authors Guild executive director Paul Aiken said in a statement. “Google continues to profit from its use of millions of copyright-protected books without regard to authors’ rights, and our class-action lawsuit on behalf of U.S. authors continues.”
The press release follows.
The Guild does not support the DOJ’s proposed e-book settlement. We believe it will allow Amazon to resume its predatory pricing practices, discouraging competition in the e-book marketplace.
June 25, 2012
John R. Read, Esq.
Chief, Litigation III
Antitrust Division, United States Department of Justice
Washington, D.C. 20530
Re: United States v. Apple, Inc., et al., 12-cv-2826 (DLC) (SDNY).
Dear Mr. Read,
I’m writing to express the Authors Guild’s firm belief that the proposed settlement of the Justice Department’s lawsuit alleging that five publishers and Apple colluded to introduce agency pricing to the e-book market is not in the public interest. The settlement is flawed by an astonishing provision, specifically requiring three large publishers to allow e-book vendors to routinely sell e-books at below cost, so long as the vendors don’t lose money over the publisher’s entire list of e-books over the course of a year.
The proposal, by allowing targeted predatory pricing of e-books, would give governmental sanction to a practice long considered destructive to a free and fair market. It was precisely this practice – selling frontlist e-books at below cost to discourage and destroy competition – that helped Amazon capture a commanding 90% of the U.S. e-book market. Agency pricing, which the Justice Department believes was introduced through collusion, has allowed Amazon’s competitors to gain a foothold, driving Amazon’s market share down to 60% in two years.
The Justice Department has made clear that it intends to irreversibly reshape the literary market. Allowing Amazon to resume its predatory ways with e-books will likely accomplish that, but not in the way the Justice Department intends. The proposed settlement will almost certainly backfire and harm readers in the long run.
The Justice Department needs to rethink and revise its proposal: it can stop the alleged collusion without requiring publishers to allow Amazon to resume predatory pricing.
Comments on the Justice Department’s proposed e-book settlement are due Monday, June 25th. If you haven’t yet done so, consider writing a brief note to John Read (email@example.com) with your thoughts on whether the settlement is in the public interest. Keep it simple, if you’d like: A healthy, competitive book market is vital to our culture. It’s not in the public interest for the government to help Amazon use e-books to target traditional brick-and-mortar bookstores.
Here’s the background (for more see our earlier member alerts: E-Book Proposal Needlessly Imperils Bookstores; How to Weigh In and Letter from Scott Turow: Grim News).
The Justice Department alleges that Apple and five large publishers colluded to introduce “agency pricing” to e-books.* The DOJ’s proposed settlement would allow Amazon to resume the predatory pricing that allowed it to capture 90% of the e-book market while undermining its offline competition. (Amazon could select which e-books to sell at a loss, so long as it doesn’t lose money over the publisher’s entire list of e-books over a 12-month period.)
This summer, U.S. District Judge Denise Cote will review the Justice Department’s proposed settlement of its lawsuit alleging that five large publishers and Apple colluded in introducing agency pricing for e-books. Judge Cote’s task is to determine whether the proposal is in the public interest. We encourage you to submit your own comments on the settlement, which the Tunney Act requires the Justice Department to read, consider, address, and deliver to the court. We’ll get to the mechanics of submitting comments (it’s quite simple) in a moment.
First, here’s our view, in a nutshell: the proposed settlement is not in the public interest, because it needlessly imperils brick-and-mortar bookstores while it backs an online monopolist and discourages competition among e-book vendors and e-book device developers. The settlement needs to be rethought, and substantially modified.
Agency pricing, in which the e-book vendor acts as the publisher’s “agent,” with no authority to change the retail price of the book, was a reaction to a specific anticompetitive provocation – Amazon had been routinely selling frontlist e-books at below cost. Amazon’s predatory tactic wasn’t scattershot; it was (and remains – Amazon continues to deploy this weapon with the titles of non-agency publishers) highly targeted. When not constrained by agency pricing, Amazon chooses to absorb substantial losses on e-book editions of a specific subset of new hardcover books: those that are most likely to be stocked by traditional bookstores.
The Justice Department’s proposal, which would permit Amazon to resume using the frontlists of three major publishers for anticompetitive purposes, appears to be based on a fundamental misunderstanding of the market for trade books, particularly the interplay between the online market for print books and the e-book market. Amazon, which has long commanded 75% of the online market for print books, clearly understands that relationship well. The story of the introduction of the Kindle is largely a story of Amazon exploiting its dominance in the online market for print books to gain control of the e-book market.