Insider Deals for Publishers? Where there’s smoke…

It is easy to see why the Association of American Publishers (AAP) is so pleased with Settlement 2.0 – it preserved a little-noticed provision that allows it to strike a better deal.  Section 17.9 of Google Books Settlement 2.0 entitled, “Separate Agreements with Amended Settlement Class Members” specifically enables the largest publishers to back out of the settlement provisions by negotiating their own separate agreements.

Will the largest publishers — empowered by specific language in the settlement — actually agree on a settlement that limits the rights of other groups while at the same time strike side deals that provide them with better terms than they are negotiating on behalf of the class?

For some time, many have been saying that the five publishing houses that are original plaintiffs in the lawsuit already have a private agreement with Google.  Some say they have already done so but no one really knows for sure.  In any case, it’s certainly unseemly for the publishers to be saddling an entire class of stakeholders with a deal that they don’t have to abide by themselves.  It is time that the issues come to light and the publishers let us know whether the accusations are true or false.

However, the rumblings are coming from some significant sources.

The Department of Justice notes in its brief on the proposed settlement that the parties have already acknowledged their intent to stick with separately negotiated agreements:

“It is noteworthy that the parties have indicated their belief that the largest publisher plaintiffs are likely to choose to negotiate their own separate agreements with Google (i.e., they will not opt in to the future provisions of the settlement), while benefitting from the out-of-print works that will be exploited by Google due to the effect of the opt-out requirement for those works.”

In August, heavyweight agency William Morris Endeavor wrote a letter to its literary clients recommending they opt-out of the settlement with Google, citing a lack of participation by publishers in the deal as part of their reasoning:

“It appears that most major publishers will not allow their “out of print” books to be sold through the Settlement program either.”

Everyone is free to make a business deal unilaterally but NOT when they negotiating other groups’ rights away at the same time. The question is simple. Will the American Association of Publishers commit to adhering to the terms they are negotiating for the rest of the world, or do they have better private deals with Google already in place?

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Important Dates

December 14, 2009
Notice begins

January 28, 2010
Deadline for authors to opt out of the settlement

January 28, 2010
Deadline to file objections and/or amicus briefs

February 4, 2010
Deadline to file notice of intent to appear at Fairness Hearing

February 4, 2010
DOJ response

February 11, 2010
Plaintiffs move for final approval

February 18, 2010
Final Fairness Hearing

March 31, 2011
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