majority of the written work are unavailable to the culture is a problem is a problem and that's why we work hard to try and come up with a solution and we failed member thank you mr chairman today's hearing allows the committee to explore the intersection of two areas of the committee's jurisdiction and copyright september two thousand a copyright owners and google reached a possibly approve the terms of the settlement agreement under the settlement toppy writing french planes against google for the un arthur did and millions of books would be dropped and google would be allowed to make commercial use of is scanned that were published prior to january fifth two thousand and nine this includes offering individual books for sale and subscriptions to the entire collection of scanned books in return google will share proceeds innovative way for people to acquire knowledge google has made accessible literally millions of books that were out of print or otherwise largely unavailable to readers and researchers the google books settlement also anticipates the creation of a book right registry that may be useful in resolving the so called orphan works program in the past the absence of such a registry has been considered a stumbling block to the ultimate resolution of this matter but there are countervailing concerns some complain that google was able to negotiate this agreement only after they allegedly infringe the rights of tens of thousands of copyright holders without that action and the litigation that led to the subsequent certification of a class we would not be here today the class action system by its very nature can only address google's actions the benefits would have came to this settlement are not readily available to any of their actual or potential competitors and book sales as a practical matter the only way a competitor would be positioned to benefit from a similar arrangement would be to follow the same course of action pursued by google in other words to first by digitizing massive amounts of copyright protected works without first receiving the express permission of the author other rights holders even then there is a question as to whether the competitor would receive the same settlement terms as google from a public policy perceptive it is unclear whether the google book search settlement is the ideal way to address the orphan works issue congress has been wrestling with this if you for years and the settlement agreement had a few days but one and not necessarily the right solution there's also the question of whether the books rights registry between the publishers and arthurs would facilitate price fixing of works not just  google but to all sellers this would undoubtedly be a bad deal not just for google and its competitors but for consumers as well but your harmonies are a few of the questions raised by the settlement and i think it is very helpful today to have such a balance  s welcome this hearing participants by observing that it is a good thing to provide millions of americans access to publish works that otherwise wouldn't be available to a library be available in every household with an internet connection this could be the greatest innovation in book publishing and welcome you to began our discussion this morning well thanks so much chairman conyers it is indeed an honor to be back ranking member smith committee members thanks for having me here to discuss how the the google book settlement will benefit the reading public and spur competition in the emerging electronic book industry imagine if a student living in a rural area or inner city you go to a local public library and read from millions of books in the combined collections of some of our nation's greatest universities and libraries university of michigan university of texas stanford the new york public library or if a blind student suddenly could access millions of digital books to unlock knowledge for clothes from the visually impaired today th consider the author whose lives work a book no longer in publication suddenly becomes available online so anyone could find it buy it in read it that's why i'm excited to be here because these and other opportunities will be created by the settlement of a lawsuit brought against google by authors and publishers now this settlement is the result of three years of painstaking negotiation but i'm proud of what we've achieved the settlement will create an educational cultural and commercial platform to expand access to millions of long forgotten books for anyone in the united states it will enrich our country's cultural heritage and intellectual strength as i explained the product we provide today is fully compliant with copyright law the settlement will let us improve our product in ways that will expand access for the public to provide rights holders choice in compensation lower barriers to entry in the electronic book market complement orphan works legislation and preserve congress's role in setting copyright problem now there's been a lot of talk that our scanning efforts originally violated copyright law i reject that and rejected wholeheartedly we strongly believe that we would have won the case on the basis that copying for the purpose of indexing which is same thing we do on the internet is a fair use under existing precedent and let me be clear about one thing because there's some confusion it's an important point although we scan books if it isn't in copyright books we are not displaying any more than a few lines of text around the search term we call this a snippet and we believe that just like web search indexing and showing snippets does not violate anyone's copyright now if you're on google books today and you see more than a short snippet you're looking at a book that's directly licensed to us from one of our thirty thousand publishing partners or you're looking at a book that's in the public domain that since two thousand and four google is scanned more than ten million books two million public domain books and two million from our partners the other six million are still subject to copyright protection but largely out of print meaning that there's no current market access to these books the settlement dramatically expanded access to these out of print books and it's this new access that makes the settlement a far better outcome for the parties and for society than if either of us had won the lawsuit first rather than showing just snippets will now be able to show a preview of up to twenty percent of the book this will let users browse books and read a few pages as they do in bookstores today second google can offer for sale a digital version of the book with sixty percent sixty three percent of the revenue going to the rights holder we don't sell books today so we're entering this with absolutely zero market share third we can provide an institutional subscription for colleges libraries and other organizations small colleges are eager to use this subscription to track faculty and students and level the playing field with level larger institutions and we'll give every public library across the country free access to our database at one on site  rights holder can direct google to turn these displays off at the purchase price itself or make other granular choices out of print books stop generating revenue for authors and publishers long ago so no incentive exists to resolve the complicated question of who owns the digital rights and it's simply not simply a matter of locating the author decades old contracts may or may not have included digital digital rights long ago communications may have been disputed and clearing the rights often costs more than the economic value of the out of print  settlement will change that it creates a registry to locate rights holders distribute revenue resolve disputes and license other providers besides some claim that the settlement will harm competition but the agreement is not exclusive in every possible respect and actually lowers barriers let's be clear about this any search engine the wants the indexes in copyright books to compete with us can already do that is a fair use any book retailer who wants to scan books can make deals with our library partners and do what we did so many of the critics confuse orphan works with the real problem which is clearing it's not that the book is orphaned it's that the two part parents sort of can't work out it won't it and it's not really cost effective to try the settlement doesn't make this make it any harder for anybody to do  this it actually makes it easier now there might be a small portion of books that are truly abandoned here the settlement complements orphan works legislation passed measures didn't really address the rights clearance issues which really are the lion's share of the problem years ago we call for effective orphan works legislation as the chairman alluded to will continue to support these efforts and we believe that the settlement makes this task legislative task easier as we funded a private sector initiative and a mechanism to clear rights that actually reduces the scope of the problem and let me clarify one last thing the settlement of private litigation does not take away congress's power to set copyright policy critics may dislike the use of class actions and copyright cases what is the judge's role to apply rule twenty three to assure a fair process for the class members and as a means a means to redress private litigation in the us the settlements consistent with all of our international treaty obligations which is run by the leading scholars while much time and energy has been spent on the settlement it's not really google's vision for the future of digital books it's part of the path we're partnering with bookstores publishers and device makers to develop an open platform that allows readers to find and purchase digital books from  next to mr drummond is vice president of amazon dot com global public policy and for nearly ten years ranking members and the other distinguished members of this committee today we stand at the threshold of a landmark achievement that promises to have a profound effect on the educational and cultural life of our country i'm work academic and public libraries into vast invaluable storehouses of intellectual and cultural capital but in spite of the best efforts of our librarians and the fondest hopes of our nation's authors only a small part of that value is being realized books aren't getting to all the people who would like to read them because they have disappeared from the market those tens of millions of out of print books represent a market failure one of the oldest market failures in our economy it's a market failure that my organization has tried to address in a small way for years going back a quarter of a century to the initiative of our member the late william f buckley mr buckley worked with us to develop a catalog of out of print books that authors were making available by mail order that effort evolved into back in print which now offers more than fourteen hundred books in demand for generating a modest but respectable one hundred thousand dollars in annual royalties back in dot com demonstrates on a small scale that out of print books have ongoing commercial value in the course of negotiating a settlement with google we found our we found a way to address that same market failure on a much larger scale in a manner similar to the way copyright systems around the world have addressed other market failure in germany for example at this moment works by us and other authors are being copied without the author's permission everything can be called photocopies in print out of print even orphaned or unclaimed works there's no getting out of it i'm told there's no way to exclude your work from the system nearly every advanced economy has such a system a license by default for photocopying it's a practical solution to a knotty problem the transaction costs of clearing photocopy rights often exceed the value of the copy itself the systems address of market failure and they abide by international copyright law in our settlement we're creating commercial markets where there are none to get the necessary scale to create a viable market out of print works will automatically be in the system but as in the photocopy systems of the u k and canada rights holders will be able to exclude them our settlement besides creating new markets provides another important benefit it will shrink the orphan works problem the new book rights registry will have as a duty the duty of finding authors for whom it has money this is not nearly as daunting as many assume the author's licensing and collecting society in the u k for example reports a success rate of upwards of ninety percent in finding authors of out of print books we would still like to address the orphan work problem in the u s but we'd like to cut it down to size at least for books in brussels this week there were hearings on this settlement the copyright wars are playing out over there as they are here so we heard the usual debating point we also detected something new a subplot of envy europeans are starting to size up what we've nearly achieved and they like it they think we're getting a significant advantage that we've found a way to more fully deploy the intellectual and cultural cultural capital stored in our great libraries they're right no doubt they'll be working hard to catch up in the meantime here we're at the threshold we can recognize what we have a transformational result of a rare and productive trues in the copyright wars negotiated by pragmatic representatives of the author publisher and library communities and a sophisticated technology partner and we can cross the threshold or we can let the fight consume us if that should happen then perhaps some day when everyone's worn out will arrive at another solution or however that it may not be good for everyone as the deal before and it almost certainly won't be worth the wait thank you for inviting me i look forward to your question thank you so very much we're now happy to have frequent this and other related subject and is the author of the general guide to the copyright act of one nine hundred seventy six we welcome you with this t basically making available for members to read before the hearing in my oral testimony i'm going to focus on only two point one is the settlement agreement is in effect a compulsory license that allows go that i'm trying to play here and the paper i wrote is figure out how to improve the product the fact that it's a great product doesn't mean it might not have problems the fact that it's a great product doesn't mean it might not engage in behavior which is competitive and it's the job of you senior fellow at the center for american progress focusing on competition intellectual property  present your views we're happy to have you here thank you mr chairman ranking member smith and other members of the committee for giving me the privilege of testifying today and it is a privilege for the indigent student in the bar  a barrio in los angeles for the child growing up on an indian reservation in new mexico for the child living in a poor low income area in washington d c transform potentially transform their lives one of the great things that google has done is democratize information and level the playing field to make information generally available to millions of consumers and that's the promise of the google books project and that's monopolist has when you determine whether or not a firm has the ability to exercise monopoly power you have to look at the incentive in the ability to exercise monopoly power look at what google does and search google doesn't charge consumers it would be foolish for it to do it because it would lose eyeballs the search product would function less effective and would be less attractive to advertisers it also probably doesn't google book project i understand the concerns that the professor has raised about the pricing model used by men and i trust him for certain frequently you have to go and find a second best for competitive market and the algorithm in the consent decree is not all that unusual considering the kinds of models that government forces frequently have to use now the paper i've submitted go through each of the claims that google somehow is going to explore consumers in one fashion or another the key question here is does the settlement raise barriers to entry does it make it more difficult for somebody to step into those shoes the answer is unequivocal you know but you don't have to take my word for it a group of thirty and i trust professors filed an amicus brief this is what they said the settlement overcomes barriers to entry for google without raising them for any rival because every write of the settlement that's extremely limited and it's appropriate for google to make sure that people can free ride on a google went to tremendous expense and should be applauded for their efforts in going in trying to all these technology negotiated agreements and navigated the uncertainty around complex copyright issues people may not like where that line is drawn but they deserve credit for trying to clarify this area to the benefit of millions of  consumers the purpose of the antitrust laws is to open access an opportunity open access and opportunity and that is precisely what google has done and what the books registry books right  between authors and publishers creating the financial incentive for the first time really for folks to come forward so we think that this will actually be a small number of the registry will have the ability  but let me just say that we actually don't believe we're getting any competitive advantage here but we want to make this very clear and quite frankly we're willing to put our money where our mouth is here's something you're here for the first time  anywhere any bookseller on any device totally open platform we are prepared and willing to commit to making this program to the out of print books that are covered by the settlement whether they're claimed or whether they're uncl and what this means is that any bookseller anybody whether it's amazon whether it's barnes and noble whether it's microsoft should they ever decide to get into this market would be able to sell the books that are covered by collude to set the price of books that are chartered not just to google but to all book retailers couple questions what safety mechanisms does a settlement have built if any to ensure that this does not happen and second when they are through be open to case obviously before the court quite often at least the supreme court quite often maybe not the lower court but quite often the supreme the copyright holders who opt out of the settlement are free to do whatever they want they can make agreements with amazon with independent agreement with google with anyone in fact witnesses are very well qualified to speak on various aspects of the subject and it has been very enlightening hearing i like others would say that the effort to digitize books is a very very important thing and i com google and amazon and others who are about the business of doing that but i do have some questions about this process and this lawsuit i agree with the gentleman from north carolina mr wat that most of the questions we have here today need to be addressed and hopefully will be addressed in the legal proceeding and it would be inappropriate for the congress to consider any action until we see what direction the courts are going on this but i'd like to direct  by google at the settlement is much broader and includes authors whose books have never been scanned and as i understand it approximately ten million books have been scanned by google and there are approximately thirty million books in the united states is it fair for the court to approve a settlement that will limit all authors exclusive rights to their intellectual property when one could argue that two thirds of the authors included in the settlement have not even been harmed by google yet and when these authors are presumed to be part of the class only due to the  special procedures inherent in class action case would you like to comment on  this and you indicated that because injunctive relief was sought and can be awarded in these actions that it was appropriate to include authors whose books have never been scanned i would note however that while that really have had no rights taken away from them is that a basis for granting the exclusive rights that are as ms peters and others have called it effectively a compulsory license that hasn't been granted by congress but a settlement doesn't stop you from scan no it doesn't but the question is whether or not it's appropriate for the board in the context of a settlement to allow the settlement to cover the entire do you do you are you familiar with class actions in general you are not an expert outside be very careful why is the opt out process for class actions appropriate in most cases and why do you believe that that is not the acknowledge the presence of the national federation of the blind both impact and impressed me primarily because i have worked with visually impaired soldiers but i also see their presence here as an overall statement if you will about access that is so crucial in this discussion and i take a different perspective we may have acted slowly but i think going forward i hope that gentleman and lady that we don't view this hearing as a hearing for hearing sake i think there are some opportunities here and some opportunities to be both proactive and which is that we continue to make books searchable but also make them available for purchase so that reinvigorate the market for these out of print works and also provide broad access so i think you look at the concerns  one of the concerns of the rights holders here publishers and authors was that these books be made accessible another one of the concerns is that there be some security around in the digital copies that we had and that the  library our library partners and we negotiated a full set of sort of security protections to address those concerns so i think on a whole range of issues the settlement reflects a compromise and quite frankly a landmark compromise that i think ought accessibility our concern here today in this discussion is that under the proposed settlement google would be the owner only and they could treat copyright as an opt out mechanism everyone else would have to treat it as opt in if we all had a very ticklish issues that i think this committee has the talent and the leadership to really look at and there is a settlement of course and all parties did the best they could with the settlement the position of the authors guild with respect to texas speech with amazon's kindle was that we wanted to make it available to to all the visually impaired we thought there was a rule in copyright law and then the contracts that author  text to speech available for every blind person in america and that was our position mr misers also said that amazon has a small market share it has a allegations about monopoly when they're the ones we fear in this market seems a little  crazy thank you for the time judge gonzales thank you very much mr chairman first an observation i was a big proponent of mediation when i was a trial judge in texas and we had this incredibly successful mediator and so i asked him once i just said what is the secret what is the secret to getting these warring parties that argue in court and you get settlements he said charlie it's really simple if i can devise a way that all parties make money settle we have a situation  that works but it's bigger bigger than the party so what i want to ask mr drummond the genesis of this whole lawsuit which is very interesting it was doing something good for mankind and that was to make books book market in print books and we have as of today we have zero market share in any sort of box so we're a new entrant to the market so far far from being someone who's controlling the market we're not even in it yet and we're trying to get in there and  in there and compete with some of the players it's an emerging market with very competitive in there be lots of players in lots of different models so we don't believe that this is giving us what we have is a settlement of a particular lawsuit that was brought against us being settled under a pretty well established set of rules governing class actions with lots and lots of opt out ability and flexibility for the rights holders and lots and complete ability for them to go deal with with others and to the extent  california mr bragg thank you mr chairman we need to take a step back and just think of how wonderful it is that we're going to see one hundred million books available in every village on this planet chiefly the private sectors develop the internet and we need to make sure that this additional chunk of information is available on the internet we ought to give a high priority to moving legislation in this area it's been suggested that we provide to other firms the right  under this settlement surprisingly google seems to be the chief advocate of this would you object to legislation that