Listen to this article
Imagine that in the 19th century the company furthest advanced laying US railroads was given the right to build all future rail lines. The public might have gained from the new services, but ultimately been left at the whim of a powerful monopoly. Now take the deal between Google and the publishing industry to create a digital market for out-of-print books – some 40 per cent of all those ever published. However laudable such a goal that may be, it raises anticompetitive issues too.
The complex deal settles a class action suit brought against Google by copyright holders. It creates an effective cartel via the birth of the Books Rights Registry, which will collectively represent authors and publishers in the administration of US online rights. Consumers gain access to a vast canon of work. Copyright holders, automatically covered, although they can opt out, meanwhile get fresh revenues.
Yet it also creates significant barriers to entry. Were a competitor to start scanning, for example, it would face the same legal challenges to which Google has become immune. Alternatively, if the BRR negotiated with a newcomer, perhaps a niche scanner of specialist material, Google’s most-favoured-provider status means it would get at least as good terms, potentially stifling competition.
Libraries are also concerned. They worry that prices charged by in effect a monopoly provider for its all-you-can-read service will rise as it gains popularity – just as happened with academic journals in the past. The Justice Department is already investigating. The most obvious remedies should require that there are no barriers to competition, and librarian representation on the BRR.
Other worries include price discrimination, where Google uses its auctioning ability to charge different readers different prices for the same book; and privacy, especially with respect to a company that already holds so much information on its users. Google’s ingenuity does not give it the right to surround itself with an impregnable digital moat.
The Lex column is now on Twitter. To receive our daily line-up and links to Lex notes via Twitter, click here
Lex is the FT’s agenda-setting column, giving an authoritative view on corporate and financial matters. It is also one of the few parts of FT.com available only to Premium subscribers. This article is provided for free as an example. A Premium subscription gives you unlimited access to all FT content, including all Lex articles and the FT mobile Newsreader.
If you have questions or comments, please e-mail email@example.com or call:
US and Canada: +1 800 628 8088
Asia: +852 2905 5555
UK, Europe and rest of the world: +44 (0)20 7775 6248
Get alerts on Media when a new story is published