As a revised agreement now winds its way toward a scheduled February 18 fairness hearing—a hearing twice postponed in 2009—the controversial Google settlement's ultimate fate is still unclear. What has become increasingly clear, however, is that the historic debate the settlement has generated, as contentious as it has been, has already benefited the publishing industry. For his central role in the process, Bertelsmann Inc.'s Richard Sarnoff, a key architect of—some say the visionary—behind the Google settlement—is PW's Publishing Person of the Year for 2009.

“There were lots of people involved in this deal on the publisher's side,” says Macmillan CEO John Sargent, one of the publishers' negotiators. “Richard was one of the few in the thick of it from beginning to end. He provided many of the big breakthrough ideas and solutions, and mastered and maneuvered all the constantly changing, interlocking details of a very complex agreement. In the end, with deals of this magnitude, someone has to take control, put everything else aside, and get it done. Richard was that guy."

No question, 2009 has been quite a year for Richard Sarnoff. In January, in a PW Change Maker profile, he expressed a desire to get back to his work at Bertelsmann as the approval process ran its course and the settlement began to “live its own life.” It didn't quite turn out that way. He has since appeared on numerous panels and discussions to defend and explain the agreement, as well as help navigate changes—and Sarnoff is quick to stress to PW that no champagne corks are flying just yet.

Indeed, the settlement in 2009 became a controversial issue worldwide, drawing criticism from a range of stakeholders—not only from would-be competitors but from some authors and agents, academics, U.S. regulators and foreign governments, and legal scholars. After nearly two years of negotiation, the hard part had only just begun.

Reasonable people can disagree. But the debate that has ensued in 2009, we believe, has been a positive development for book publishing. Unlike some of the content industries that have blundered into the digital realm—from music to newspapers—the settlement debate has provided the book industry with both an opportunity for in-depth contemplation as well as a potential framework for its digital future. It has engaged a range of stakeholders—writers, librarians, technologists, publishers—as it seeks to find a place for centuries of our out-of-print heritage in danger of being lost, as well as for a sustainable literary culture in a world increasingly defined by bits.

We at PW have no doubt the industry is better off for going through this exercise.

As the principal advocate and negotiator in the Google settlement, Sarnoff has “redefined the meaning of leadership” in the publishing world, AAP president Tom Allen told PW. “The industry owes him an enormous debt of gratitude.” We caught up with Sarnoff to talk about the historic settlement process.

PW: Congratulations on the honor. Obviously, there have been many people involved but you are often referred to as the driving force or the visionary behind publishers' settlement efforts.

I certainly appreciate that, but this was a true industry effort, not that of one individual. John Sargent [Macmillan] and Will Etheridge [Pearson] are absolutely critical, acting as AAP officers representing the interests of all publishers, as were the legal teams at the plaintiff publishers: Wiley, Simon & Schuster, Pearson, Penguin, and McGraw-Hill. This is the settlement of a class action, of course, with the primary negotiators being the authors, represented by the Authors Guild and its counsel, and the publishers, represented by the AAP and its counsel. I have to stress that we're not across the goal line yet. But getting this far is quite an achievement, because this was like four-dimensional chess. It was a negotiation not just between publishers and Google, but between publishers and authors, between authors and Google, between Google and libraries. We also took account of the general public and their interests. As you know, lawsuits are not cheap or easy. This has been an all-hands-on-deck, team effort from an enormous variety of publishers, the board of the AAP, and outside counsel serving as class representatives. The cooperative spirit of process has brought our industry closer together—in a lasting way, I believe.

Process-wise, was it challenging to get everybody to sit together at the table with Google?

It was challenging. The first thing in term of the process was to work hand in hand with authors. In fact, it was in this office that [Authors Guild executive director] Paul Aiken and I first discussed how we might resolve the lawsuits in a way that actually benefited the publishing industry and authors' interests long-term. Our concept was that we could use class action as a mechanism to compensate rights holders whose works were being copied by Google by creating opportunities for their books using Google's financial and operational resources. With a host of other input from class counsel and representatives, the settlement gelled into what we now have.

Why settle?

The further we got into this, the more we became convinced that neither a victory nor a loss best served the interests of rights holders. Usually a victory is a good result. In the case of a victory, we could have prevented Google from scanning and using books, including preventing snippets from being served out to consumers. But that is not a victory for rights holders of books that are out-of-print and have no market. And, of course, it would not have benefited the reading public. If we'd lost the lawsuit, Google would have continued copying books, serving up snippets, and having digital copies retained in libraries. That is not a particular victory, either, because publishers and authors would essentially get nothing, and readers and academics would only have access to snippets. And, of course, had we lost, based on that precedent there could have been a slippery slope effect, where others could make copies of books without compensation to copyright owners.

as there a tipping point when you started seeing more opportunities than dangers in Google's scanning efforts?

The tipping point was when we first started to discuss what a settlement might look like. We realized there was an opportunity to do something extraordinary for readers and academics in this country. We realized that we could light up the out-of-print backlist of this industry for two things: discovery and consumption.

Now, the danger of increased digital access is that it can eat industries. If everything's fully accessible for free, you have a lack of motivation for writers to keep writing because there's no compensation. We need to avoid that. The music industry is often used as an example of how things go digital, but the music industry has a number of different dynamics to it, one of which is that musicians have more than one revenue stream. For example, concerts. Authors don't have those same opportunities. There are a few authors who get terrific speaker's fees, but that is because they usually have other careers besides writing. So we have to be very careful with the lifeblood of this industry: consumers, or institutions, buying books. Our challenge was to settle the suit in a way that would allow authors and publishers to be compensated while opening up access at the same time. From a public perspective, the amended settlement would also represent a watershed event for academic research in the U.S., as well as other pursuits that benefit from digital access to the immense collections of out-of-print books from library collections.

At the Frankfurt Book Fair, one of the settlement's European critics, Roland Reuss, claimed the settlement “fetishized” access. Did that criticism surprise you?

I love that term. But I think there is a bit of a one-eyed view out there, which I wouldn't necessarily ascribe to Reuss, that shutting off access electronically can guarantee the future of printed books. But that's just the wrong debate to have. Electronic access is enhancing to the entire industry, to print as well as electronic. Every day people discover things electronically and buy them in print. They may discover things in print and buy them electronically. This is a mutually reinforcing, not a destructive cycle. What we have to do, and I think what we are doing, with the settlement, and for example, by supplying Amazon's Kindle and B&N's Nook and all the other devices that are coming out, is make sure we create an ecosystem where it is easy, and attractive, to buy electronic books.

PW: Do you think the revised settlement is better than the original?

We amended the settlement to respond to concerns of the Department of Justice and certain of the comments that were filed with the court. We narrowed the scope of the class, particularly to respond to objections from outside the United States because there were some countries that were simply uncomfortable with how Google might exploit these works. We had to recognize that outcry. Personally, I would have preferred that all of the books in U.S. libraries be covered. The reduced scope is not something I am thrilled about, but I acknowledge it was necessary.

Orphan works have been a source of opposition. To borrow a phrase from the health-care debate, is there an opportunity for a public option here—for Congress to step up with legislation?

There has been a lot of discussion about orphan works and the extent to which others can exploit those works in ways similar to the authorizations that the settlement gives to Google. If Congress wants to pass legislation that gives others those rights, we now have a way to implement it. This settlement sets out a regime and establishes the Book Rights Registry [BRR], so that others could exploit works licensed through the registry.

Critics have expressed concerns that Google will have de facto exclusive access to orphan works. We tried to address this in the amended settlement. For consumer purchase, Google will offer all works, including orphan works, for anyone who wants to resell access to them in the U.S. And most of Google's margin [its 37%] will go to that other party, not to Google. I think we've done this in as fair a way as possible. We'll have a fiduciary for unclaimed works that will have sole responsibility for looking after their interests. And the BRR is tasked with finding the owners of these works. If no one claims a work after 10 years, the registry can ask the court to allow the unclaimed funds to serve charities and literacy efforts. None of those funds will be going into the pockets of the existing rights holders, Google, or the registry itself. I think we have to recognize what the proposed settlement is—it is a way to make sure that our out-of-print legacy is not left behind as we move into digital publishing.

Has the settlement informed your views on the future of digital publishing and digital media?

I'd say, inevitably, yes. This has been a remarkable education to work on this settlement, together with our industry colleagues, the authors, Google, and the other players in the electronic realm. As president of Bertelsmann Digital Media Investments, my job is “lighthouse” investing; in other words, investments that can illuminate new digital directions in which our core businesses may go. When we invested in Audible years ago, we invested because we understood that it was going to have a major impact on our audiobook business, and we wanted to have a ringside seat and a stake in that development. The Google settlement has been a ringside seat of a whole different character, and I think it is inevitably going to inform every decision that I face in my “day job.” Both Random House and Bertelsmann have been enormously supportive of the settlement and my role in it, and I hope this experience ultimately benefits the company in a variety of ways as our businesses inevitably become more digital.

For or against, this has been an educational experience for the whole book enterprise. But how much of this has been educational for you and how much has been, well, exhausting?

Well, there has been a great deal of work in terms of the cat-herding exercise for our industry, actually across four different industries. In fact, it's not a cat-herding exercise so much as an entire zoo-herding exercise—you have some animals that don't always get along with each other. But there is also plenty of joy in that. The joy is creating something unprecedented, something important. Because this settlement, when approved, will have a far-reaching quality, it is satisfying in a different way than your day-to-day job can be satisfying. That's why it's been and still is, worth the fight—and it has been a difficult fight.

About that fight, do you think the opposition has been constructive?

I'll try to answer that—but of course, we still have a live lawsuit. I think the opposition falls into a few camps. One is what I call a “program” camp—people who are upset because someone who has violated the law might end up with a settlement that is beneficial to them. I've gotten calls from parties saying, “Google should be punished, not rewarded.” Although I understand that position, I have described why I think this settlement is better than a victory for the rights holders.

Others perceive that this settlement allows Google to become a player in the world of electronic books in a way that it might not have been able to otherwise. That may create an element of competition in the electronic book market that not everybody wants. We can argue about how competitive that market is today, but if you are an entrenched player, do you want to have Google as a competitor or not? And then, of course, there are Google's own competitors. If you're competing with Google in search, you probably don't want Google's search engine benefiting from all the material in these books because it might make Google's search a little better. So you might have to invest yourself to compete with that.

I do think the government is trying to have this settlement work for the benefit of all its constituents, and I believe the filing of the DoJ and our discussions with them have enhanced the settlement. No settlement can be perfect for all parties. We are walking a tightrope between increasing accessibility and avoiding the leakage of value in our industry.

On a general note, after years working on this settlement, as well as on new digital initiatives, how do you feel about the future of books?

I'm endlessly optimistic. I think there are a lot of changes that are inevitable to the industry. However, I think, fundamentally, what we do, that is, what publishers do in terms of servicing authors' interests and servicing consumers' interests, will be enormously valuable, even more valuable over time than it is today.