OK, so what I thought I had figured out earlier isn’t so simple.
In a prior post, I “discovered” (for everybody) that it is likely that the biggest revenue opportunity in the pile of books being scanned by Google would be the republishing possibilities among the orphans. I posited that with all those books about subjects still of interest from Babe Ruth to Eisenhower, there must be (to paraphrase an old joke Ronald Reagan loved to tell) “a pony in there somewhere.” MANY ponies, actually.
But, here’s the problem. It is not clear that anybody can publish those books without substantial risk.
There is, as I understand it, a potential liability under the copyright act (perhaps unlikely to be assessed, but possible) for publishing a book one doesn’t have rights to, even if one is diligent about looking for the copyright owner. Apparently, holding a normal royalty payment “in escrow” doesn’t eliminate that liability.
The big win for Google in this settlement is that all parties are agreeing that Google is excused from any liability for the uses specified in the agreement. Those uses explicitly include “streamed” ebooks; but not “downloaded” ebooks.
There are also, in section 4.7 of the agreement, contemplated “new revenue models” that the BRR and Google can agree to, which include: 1) print-on-demand; 2) custom publishing (“helpfully” defined as “per page pricing for the educational and professional markets”); 3) downloadable PDFs; 4) consumer subscriptions, which are defined as individual sales of the databases intended to be sold to institutions; 5) summaries, abstracts, or compilations.
Apparently nothing else is “protected.” The liberation of the stranded — orphan — IP is not accomplished for any uses not contemplated here. My colleague Michael Cairns suggests that the Registry itself could create a presumption of diligent search for a copyright holder and mitigate the chances that a court would find statutory damages applied, but it might take legal cases playing out to determine that.
Let’s say there are 5 million orphan works and 1/2 of 1% of them are worthy of a press run of 5,000 or more. With a few bigger winners in there, let’s say that’s an average of 6,000 press run across the 25,000 estimated titles. That’s 150 million units. Average retail of $15, average discount of 50%, conservative royalty of 5% of retail calculates to $1.125 billion in revenue to publishers and $112.5 million in royalties.
Cairns says that maybe these numbers are too high by a factor of ten. If he’s right, we’re still talking about $112.5 million in revenues to publishers and $11.25 million in royalties to authors. I have to believe those numbers are still larger than licensing revenues will be, although Cairns and I have not explored that more complicated question seriously yet. And the truth of the press run potential probably lies north of Cairns’s number (although perhaps south of mine.)
Why was that element left out of the settlement? Did the negotiating parties even contemplate it? And exactly how useful is the “orphan” relief if this huge portion of the potential revenue (and public value) is omitted? Were the parties so fixated on electronic exploitation that they just didn’t notice this?
It looks like the need for Congress to act is about as urgent as it was before. The Copyright Office has long noted the need for Orphan Works legislation in a host of contexts and has been unable to goad our legislators to take the necessary steps. It had been my hope that the Google settlement cut the Gordian knot, but it would appear that the problem of true public access is a long way from being solved.