Google has settled lawsuits brought against it by major publishers and authors that argued that Google's wholesale scanning and indexing of in-copyright books without permission amounted to massive copyright violations.
The Authors Guild, the Association of American Publishers (AAP) and Google announced the settlement on Tuesday.
The lawsuits were brought after Google launched a program to scan and index books from the libraries of major universities without always getting permission from the copyright owners of the books.
Google then made the text of the books searchable on its book search engine, although it argued it was protected by the fair use principle because it only showed snippets of text for in-copyright books it had scanned without permission.
The settlement comes after two years of negotiations and resolves a class-action lawsuit brought by book authors and the Authors Guild, as well as a separate lawsuit filed by five large publishers as representatives of the AAP's membership, Google and publisher groups said.
The settlement must still be approved by the U.S. District Court for the Southern District of New York.
Paul Aiken, executive director of the Authors Guild, said during a press conference that the settlement could be considered "the biggest book deal in U.S. publishing industry."
Despite their deep disagreements over copyright law, the publishers, authors and Google recognized that finding a middle ground would allow them to accomplish things that would be out of their reach individually, Aiken said.
"For the sake of this agreement, we were all able to set our differences aside," he said, adding that all parties involved, including readers, will benefit from the settlement because books will be easier to discover and acquire.
The wide-ranging agreement calls for Google to pay $125 million and in exchange gives the search giant rights to display chunks of these in-copyright books, not just snippets. This will result in broader exposure for out-of-print books that are, by definition, hard to find.
In addition, Google will make it possible for people to buy online access to these books. The agreement will also allow institutions to buy subcriptions to books and make them available to their constituents.
A royalty system will also be set up to compensate authors and publishers for access to their works via the creation of the independent, nonprofit Book Rights Registry. Revenue will come from institutional subscriptions, book sales and ad-revenue sharing.
This organization will also be tasked with locating and registering copyright owners, who in turn have the option to request to be included in or excluded from the project.
A big portion of Google's $125 million payment will go towards funding the Book Rights Registry, while the rest will be used to settle existing claims by authors and publishers and to cover legal fees.
"This innovative settlement breathes new life into millions of books without jeopardizing the rights of IP owners," said AAP Chairman Richard Sarnoff.
"It's impossible for me to overstate how pleased we are to participate in this settlement," said David Drummond, Google's senior vice president of corporate development and chief legal officer.
Making books available for online searching is key to Google's search aspirations, he said, adding that even before founding Google Sergey Brin and Larry Page dreamed of a broad and comprehensive book search engine. "Search simply isn't complete without this content," Drummond said.
The settlement applies to the U.S. so only U.S. residents will enjoy the benefits of the broader online access to books, but Google remains open to working out similar agreements with governments, publishers and authors abroad, Drummond said.
The settlement expands on Google's existing agreements with more than 20,000 publishers that have previously given Google permission to include books in its Google Book Search . More importantly, it also legitimizes the controversial program to scan and index collections from university libraries, for which Google wasn't necessarily seeking permission from copyright owners.
Launched in 2004, Google Book Search has more than 1 million books in its index.