What the Google Settlement would have cost

When discussing the rejection of the settlement agreement by Judge Chin, Scott Turow, the head of the Author’s Guild, had this to say:

“Regardless of the outcome of our discussions with publishers and Google, opening up far greater access to out-of-print books through new technologies that create new markets is an idea whose time has come,” said Mr.Turow. “Readers want access to these unavailable works, and authors need every market they can get. There has to be a way to make this happen. It’s a top priority for the Authors Guild.”

This is either deeply disingenuous or deeply ignorant. Mr. Turow, let me introduce you to Kindle Direct Publishing. And PubIt. And Smashwords. And iTunes Connect. These are places where authors can monetize their backlist. You’re right–the time has come for this one. In fact, it’s already here, which is why it is happening at an incredible pace.

So, how’d the Author’s Guild do on negotiating the royalty rate? Let’s see.

Kindle: 70%.
PubIt: 65%.
Smashwords: 85%.
iTunes Connect: 70%.

And the Author’s Guild got us…. *drumroll*

70%! Not bad, Author’s Guild.

Except, wait. That’s 70% of net. There are costs that will be deducted–like the cost of the transaction and financial services fees, so this is at least something less than 70%. Still, it’s not terrible.

But the terms that are most damaging to authors are buried after the royalty rate. Those are the terms that allow Google to set any price it wants, so long as it pays you the royalty on the List Price you have set internally. Yes, you can set your price to any price point. But Google has the right to discount off the price that you set.

Why is that worrying? Because in order to get Amazon’s 70% revenue, you have to let Amazon match prices online. So if Google had rights to your backlist titles, and you put your books up on Amazon, and Google lowered your price (as it was allowed to do), Amazon could match that price lowering. And if Google lowered its price below $2.99, Amazon would match… and you’d get bumped from the 70% royalty to the 35% royalty.

How much does that hurt? Just ask Lee Goldberg, who through a technical glitch had his prices on Kobo slashed to 99 cents, and therefore his prices on Amazon cut to $0.99 from $2.99. He’ll lose thousands in a week.

So if you were a member of the class of the Google Books Settlement, and you think there’s a chance you might bring out those backlist titles on your own, breathe a deep sigh of relief. If the Settlement had gone through, it could have cost you 35% of your revenue through Amazon forever.

One of the reasons I opposed the Settlement was because it makes no sense to set terms over electronic distribution forever when the landscape is changing on a monthly basis. We didn’t know what Amazon’s new terms would be when the settlement was negotiated. We don’t even know what its terms will look like in 6 months. But in light of the massively changed digital environment, if the Authors’ Guild truly represents authors, they need to back away from any settlement that purports to give an author’s backlist to a third party for the life of the copyright.

So look at what Goldberg is losing because someone is cutting the prices to his books: he’s losing thousands in one week because of an error. Now multiply that by the backlist of every author covered by the Google Books Settlement, times the number of authors, times the number of weeks until the work goes out of copyright. Add in corrections for decreased sales over time, if you want, but I think you see the problem quite quickly: This is a massive loss, and had the settlement gone through it would have required authors to preemptively set their prices on the Google Books Site so prohibitively high, to prevent Amazon from price-matching a discount, as to render the Google Books site useless.

Courtney Milan writes historical romances, which might lead people to think that she could be cool. In reality, she's about four different kinds of geeky. At present, this blog is where Courtney applies semi-dormant geek skills to publishing.

5 thoughts on “What the Google Settlement would have cost

  1. Terrific post! But why does this not surprise me? Because the authors are the ones who always get screwed–by their publishers, maybe their agents, now Google & the Authors Guild. That’s why more and more experienced authors are going indie.

  2. I’m not incredibly well informed on the Google stuff, but the impression I had was that Google was taking out-of-print works, some out of copyright (ie author has been dead for more than 70 years [or whatever length of time specified by the law in place when they published the book]), but many in which the author or author’s estate still “owned” the copyright, and putting them up on Google. In the case where the books were still legally copyrighted to the author/estate, Google didn’t have permission to publish the books electronically, and may well have been making a profit off of those books.

    If the book is in copyright, even if it’s out of print, my interpretation is that Google acted illegally. They violated copyright law.

    The settlement is really mushy in my mind, but it essentially seemed to say that all authors, past, present and future, who have been, are, and might be affected by this, should just sit down, shut up, let Google do whatever it wants, and maybe accept a small, limited token reimbursement along with a pat on the head.

    How, exactly, is this different from piracy?

    And honestly? If it’s my book, and under the law it’s copyrighted to me, I would prefer to make the decisions about how to exploit the options granted to me by that copyright. If I want it up electronically, I will decide where it goes and how I want it priced. If I want it on Google Editions, I’ll put it there and expect to be fairly compensated. If I don’t want it on Google Editions, why should they have the right to take it anyway and put it there? When Amazon did this with 1984, it caused a huge bleep-storm & the book ended up getting pulled. If Amazon or Barnes & Noble or Apple tried to pull this, it would be a huge scandal. What is it that makes Google so “special”?

    Maybe I’m oversimplifying this situation, or maybe I simply don’t understand it. But it has all seemed wrong from what I’ve heard – Google digitized & published work they had no right to digitize or publish, they are trying to weasel out of culpability, the Author’s Guild was rolling over and seemingly helping them do it, and for some reason nobody is pointing to them and saying, “You committed a crime and you have to make a serious attempt at restitution, plus you have to quit doing that entirely or we’ll throw you in jail.”

    thanks for the info.

  3. Shawn,

    I think that isn’t quite right. Google did not in fact publish in copyright books. They scanned them in their entirety and showed snippets of them, but Google argued (and I think they can make a good case for this) that this was fair use. That’s debatable. The lawsuit was filed over the scanning and showing of small snippets–a few lines at most.

    It was this behavior that Google was paying authors something like $60 each for.

    The settlement not only made fair use okay, it gave Google forward-looking rights that it had not tried to claim by conduct, such as the right to sell books still under copyright. It’s that forward-looking right that I address here.

  4. Ah. Okay. That makes more sense. I don’t generally have a problem with fair use if it’s reasonable, and I’ve seen plenty of the books on Google that fall into this category. Sometimes they have that bit of info I needed in the piece that was shown, and that’s been hugely helpful in the kind of little research, largely for my own benefit, projects that I have. I don’t feel like that’s an abuse of copyright, and if I need more indepth information I’ll go to the library & check out the whole book.

    So the lawsuit was about defining fair use in this case, is that what you are saying? I suppose I can see that, although in my (admittedly limited) surfing of such books, I think that’s making a mountain out of a molehill, but then, I haven’t written any of those books, either. My opinion might be different if I had.

    I guess my next questions would be, why did the Author’s Guild propose settlement terms that appear to be harmful to authors, while benefitting Google in ways Google never requested in the first place?

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