Google is to pay $125m to settle lawsuits filed in 2005 by authors and publishers that accused the web search group with "massive infringement" through a book scanning project that digitised and offered excerpts of books without the permission of copyright holders.
The settlement with authors and book publishers paves the way for the creation of a legal and financial framework for the digital distribution of millions of books online in the US.
The agreement is the latest development in a dispute between Google and publishing groups, which have been wary of the media company's growing influence on their businesses.
The settlement requires the approval of the US District Court for the Southern District of New York. If approved, readers will be able to search and read snippets from millions of out-of-print and copyrighted books on the internet with the option to buy online access to them.
The Author's Guild and members of the Association of American Publishers - which includes McGraw Hill, CBS-owned Simon & Schuster, Penguin, Pearson Education and John Wiley & Sons - sued Google in 2005. Penguin and Pearson Education are owned by Pearson, parent of the Financial Times.
Author's Guild executive director Paul Aiken called the settlement the "biggest book deal in US publishing history".
It will pay legal fees and fund the creation of a Book Rights Registry modelled on ASCAP, a copyright clearing house for the music industry. Google also will begin offering subscriptions to the database to US colleges and other institutions, as well as offer free access to US public libraries.
Google, which will now be allowed to sell access to digitised books, will pay 63 per cent of the fees from customers to the book registry and keep the remainder, David Drummond, chief legal officer of Google, said.
Although the settlement only covers books belonging to the rights holders of the plaintiffs, other rights holders are welcome to join the registry. Authors whose works are involved in the current suit can also opt out of the settlement.
Google analyst Jeffrey Lindsay of Bernstein Research called the settlement a "huge positive" for all parties. "They stuck with a vision, which they saw as beneficial to the public and to publishers. They pursued that vision in an equitable way that is really knowledge expanding."
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