Richard Sarnoff

When the Association of American Publishers followed the Authors Guild in filing a copyright infringement lawsuit against Google in fall 2005, many in publishing and legal circles predicted a drawn-out battle headed for a courtroom fight. So it came as a bit of a surprise in October when an out-of-court settlement was announced. One of the key architects in making the settlement a reality is Richard Sarnoff, chairman of the AAP, co-chair of Bertelsmann Inc. and president of Bertelsmann Digital Media Investments. Sarnoff has long been involved with digital issues during his tenure at Random House, and he sees the settlement, which still needs the final approval of the judge, as providing the framework for a new business model for books that will benefit authors, publishers and readers.

Getting to a settlement that was suitable to all parties, however, took plenty of finesse. Sarnoff says there were numerous points in the negotiations when one party or another threatened to stonewall over a particular issue. “It was a bit like four-dimensional chess,” Sarnoff says.

The first step toward finding a way out of the legal woods was to “create an economic model that we could hang a settlement on,” Sarnoff explains. Early on, Sarnoff, along with his counterpart at the Authors Guild, Paul Aiken, wanted to craft an agreement that would go beyond the book “snippets” that are the core of the case to develop a new system in which everyone in publishing—as well as Google—could benefit. Sarnoff believed a settlement that created a new system that included all the books Google has scanned, and will scan in the future, would be much more appealing to the search giant. And he was eager to create a search model to easily locate books online, but without creating “the atmosphere of piracy” that exists in the music business. The formula developed—limiting page views to certain lengths, giving authors and publishers the opportunity to opt out while making millions of books accessible online—reaches that goal, Sarnoff believes.

The agreement will make available a “treasure trove” of material for researchers, scholars and the general public. “This is a sea change for anyone interested in exploring topics in-depth and giving them access to professionally produced and vetted material,” he says. The authors who will gain the most from the settlement are not bestsellers but rather the millions of authors whose books are still in copyright but out of print. The agreement, Sarnoff maintains, “is a game changer, not for the Dan Browns of the world but for those authors at the opposite end whose works don't have a large audience.”

Authors won't get rich from the Book Rights Registry being established by the settlement to disburse revenue generated by Book Search, but over time the money from the BRR could be a nice incremental flow to many authors. For the industry, however, Sarnoff believes that the revenue generated by the new electronic libraries “can be and will be significant.” He believes the subscription products that will be developed through Book Search will be widely adopted by universities and other academic institutions, and that some sort of consumer payment model will emerge sometime.

Pricing the material was a major point of contention between Google and rights holders. “Rights holders didn't want the price too low, Google didn't want the price too high,” Sarnoff notes, adding that while a compromise was reached, there likely will be lots of experimentation to find a price consumers like. How to pay authors and publishers of books in copyright but out of print was another area of extensive negotiation. For many books, records don't exist for the original deal and to reopen relationships with authors whose books were first published 40 or 50 years ago “would have been a nightmare,” Sarnoff says. The answer was to create a arbitration system as part of the BRR to resolve disputes and to split revenue between the rights holders.

With approval of the settlement in the hands of others, Sarnoff is ready to move on. The agreement “had a long gestation period, but now it is time to let it live its own life.”