Update: Corrects publication title.
Another writer has stumbled upon the notion that Google has the potential for monopoly power, citing the search giant's Oct. 28 agreement with book authors, the Authors Guild and the Association of American Publishers to pay $125 million to organize the world's books online.
That agreement was for Google's Book Search project, in which the company scans books on the Web for users to access. Publishers opposed this because they felt they and their authors were getting cut out of book sales.
The agreement, essentially a new, mini-business model for online publishing, lets Google continue to scan books, with publishers, authors and libraries recognizing revenues. Robert Darnton has a fantastic piece in The New York Review of Books that spells out exactly how this deal works down to some degree of minutiae, as well as what the likely effects will be on the publishing landscape with Google at the helm. More posts on TechMeme here.
Mind you, most Google Watchers discussed the potential for this deal to the point of exhaustion last October.
"$125 million to put millions of books online, with the ability to make money from online advertising and book licensing revenues? Are you kidding me? That's a one-time payment for a lifetime assurance that books Google wants to get online can get there without Google getting slapped with a Smith vs. Google or a class-action lawsuit every time it scans a book. Consider the 16,500 libraries in the United States and the millions of books that can funnel through them digitally for a per-page fee. Through this e-commerce play and its classic search advertising revenues, Google can begin to make billions of dollars over the next several years, easily offsetting the alleged billion dollars it will cost to digitize the books (Google is hush-hush about the cost and its book scanning method)."
Darnton, meanwhile, said the deal puts Google in position to create "the world's largest library" and writes:
"As an unintended consequence, Google will enjoy what can only be called a monopoly--a monopoly of a new kind, not of railroads or steel but of access to information. Google has no serious competitors. Microsoft dropped its major program to digitize books several months ago, and other enterprises like the Open Knowledge Commons (formerly the Open Content Alliance) and the Internet Archive are minute and ineffective in comparison with Google. Google alone has the wealth to digitize on a massive scale. And having settled with the authors and publishers, it can exploit its financial power from within a protective legal barrier; for the class action suit covers the entire class of authors and publishers. No new entrepreneurs will be able to digitize books within that fenced-off territory, even if they could afford it, because they would have to fight the copyright battles all over again. If the settlement is upheld by the court, only Google will be protected from copyright liability."
Darnton notes that he has no reason to suggest Google will abuse its power in book search, but worries that future leaders could use the deal to press their advantage. Hmmmm. Well, we could say that about anything Google does, right?
It's simple math. Google has an unprecedented foothold in online information thanks to search. It's building an armory of Web services that interplay with or augment search.
It collects information, and could collect more information on us to improve its online advertising opportunities, which pay for the company's ability to provide us with reliable search and other cloud computing services. It's a well-told relationship of Google giving and taking.
So, what is Darnton's piece of journalism? It's another piece in a growing library of damning articles from journalists who don't follow Google fanatically, but come from the 10-mile view that Google is getting big and scary. And then they write a piece with all of the majesty and bombast of somebody writing something no one has ever considered before.
Google has monopoly potential for Book Search just as it has a potential monopoly for search. Potential does not equal actuality though I always argue that Google already has a search monopoly because of its size and lack of serious challengers (sorry Yahoo, Microsoft).
We may sit here five years from now seeing that Google Book Search is the prime conduit for books online. Tim O'Reilly doesn't see much of a problem here and argues that the project benefits the online publishing world. As a leading high-tech publisher, O'Reilly's argument should carry weight.
But make no mistake; Google's power continues to grow, and it's detailed, wide-eyed illumination from folks like Darnton who will footnote federal anti-trust lawsuits versus Google in the future.