Text of Prepared Remarks by Thomas C. Rubin, Associate General Counsel for Copyright, Trademark and Trade Secrets, Microsoft Corporation
“Searching for Principles: Online Services and Intellectual Property”
Association of American Publishers Annual Meeting
The Yale Club of New York
New York, NY
For Delivery on March 6, 2007
[Introduction by Jack Romanos, President and CEO, Simon & Schuster]
Thank you, Jack, for that kind introduction. Good afternoon to all of you. It’s a great pleasure to be here and to have the opportunity to speak about copyright’s role in today’s digital, online world. As Associate General Counsel for Copyright, Trademark, and Trade Secrets at Microsoft, this issue is one that I’ve thought about and grappled with for most of the past decade from Microsoft’s dual perspectives as a technology innovator and a major content owner.
I am fortunate to have the opportunity to speak here today for two reasons. First, I’m a passionate reader of books. I can’t imagine a world without great writers, and without the publishers who nurture them and help bring their works to the reading public. For that reason alone, I’m honored to be here.
The second reason I’m pleased to be here is because we have much in common. I recognize, of course, that the works that you help create and publish, and the works we create at Microsoft, seem very different. Still, we share a common understanding of the creative process. We both understand the time and commitment it takes to develop the first germ of an idea into a finished work. More importantly, we both understand the risk it involves – that despite all of our best efforts, a book or software product can still fall flat in the market. I suspect we share many of the same values when it comes to preserving incentives for creativity, so that people will continue to invest in creating works of the very highest quality, not just today, but long into the future.
Remaining true to these values is particularly important as content moves online. I think we can all agree that using the Internet to enhance the market for works is a crucial endeavor and that doing so creates tremendous new opportunities to reach customers. However, the reality, as many of you know, is that authors and publishers often find it difficult just to cover their costs, let alone make a profit, in this new online world. At the same time, companies that create no content of their own, and make money solely on the backs of other people’s content, are raking in billions through advertising revenue and IPOs.
So the question we need to ask ourselves is: What path will we as a society choose in making the world’s books and publications available online? Will we choose a path that nourishes creativity and innovation over the long term and that preserves incentives for authors to offer their best works online? Or will we choose a path that encourages companies simply to “take” the works of others, without any regard for copyright or the impact of their actions on authors and publishers too?
Microsoft, I’m pleased to say, has chosen the former path. At its soul, Microsoft is an innovation company, and we’ve been working hard for many years to develop innovative technologies that allow readers to experience books online in new and exciting ways. In a moment I’ll describe a few of those latest innovations. I’ll also underscore how our efforts are intended to boost your ability to cost-effectively market your works, which is one of the great benefits of online search. But as I noted earlier, we are also authors and publishers of copyrighted works, and as such we strongly believe that expanding access to online content must be done in a way that respects intellectual property rights. The challenge here – for all of us – is how best to balance the worthy goals of access, innovation, and creativity.
I can’t claim to have solved this challenge, but I do think that three simple principles can help us make the right choices. The first principle is that new services that expand online access to content should be encouraged. The second principle is that those new services must respect the legitimate interests of copyright holders; put conversely, we must forcefully reject any business model that is based on the systematic infringement of copyrights. The third principle is that even as we follow the first two principles, we must all work together to find consumer-friendly and cost-effective solutions to our shared goal of expanding online access to copyrighted and public-domain works.
Now let’s discuss these principles by focusing on an issue that is of great importance to all of us: online book search. Microsoft currently has two publication-focused search products in test, or what we call “beta,” right now. The first, Live Search Academic, focuses on scholarly books and journals. The second, Live Search Books, focuses more broadly on books of general interest. Let’s take a few moments to describe our work in this area, because it illustrates how book search and copyright can peacefully coexist.
Our Live Search Books initiative has two content sources. The first is our Library program, which involves scanning only books that are out of copyright or otherwise in the public domain. In connection with the program, we are currently scanning out-of-copyright books at partner libraries such as The British Library, the University of California Libraries, Cornell University Library, the University of Toronto Library, and The New York Public Library. The second source is our Publisher program, under which we receive books still under copyright from publishers with their express permission, either in digital form directly from the publisher, or scanned from hard copy. Participating publishers have access to an online site – or dashboard – that enables them to manage their publications on Live Search Books. They can choose the amount of text that a reader may preview, create click-to-buy links next to their books, edit metadata, and so on.
Several major publishers have signed on to the Publisher Program. Others, however, prefer to create their own digital repositories of their books. For those publishers, we’ve been working with them and the AAP to develop a seamless interface between Live Search and their own repositories. We think this interface is a tremendously important technology, both for publishers and consumers. It allows publishers to maintain control over their content and to pursue whatever business model they choose, while at the same time making their publications “searchable” by consumers through the Live Search Books engine. Microsoft also participates in the Book Industry Study Group, which is working to improve interoperability across digital repositories and search engines, so that consumers can easily search a huge body of works, while letting copyright owners retain control over them.
Microsoft’s innovations in this area go beyond the mechanics of search. We’ve also invested heavily in making the online reading experience richer and more engaging. One of my favorite examples is the collaboration between Microsoft and The New York Times to create the Times Reader. Times Reader is a technology that combines the readability and portability of the printed New York Times newspaper – the hardcopy, if you will – with the interactivity and immediacy of the Web. Rather than read an article by endlessly scrolling down a web page, readers enjoy a column-oriented layout that mimics the printed page. Rather than a generic font, the actual New York Times fonts appear on the screen. These innovations allow online readers to enjoy many of the same positive experiences they have as readers of the print edition.
At the same time, because it is online, Times Reader offers several features that are not available to hard-copy readers and actually improve upon that experience. These include the ability to customize column widths and font sizes to maximize readability; to browse photographs in a slideshow; to save, print and e-mail content; to highlight and annotate passages within the text of articles; and to update the news continuously through a feed from NYTimes.com. Several other news publishers, including Associated Newspapers, Forbes, and the Hearst Corporation, have recently begun rolling out similar digital reader applications based on Microsoft technologies, and the results are very impressive.
Another innovation that’s a personal favorite of mine is the British Library’s “Turning The Pages 2.0” technology. It was recently launched in late January and is built on Microsoft’s .NET 3.0 engine which is integrated into Windows Vista and also available as a separate download for Windows XP. This technology makes it possible for Internet users to view old texts that would not otherwise be accessible to the public, but in a way that highlights the richness of the original works. The British Library and Bill Gates jointly made available two parts of Leonardo da Vinci’s original notebooks using this technology and the results are stunning. The texture and beauty of the notebooks are rendered directly and flawlessly on the screen, and the pages can be turned as if you were thumbing through the books themselves. This technology, which the British Library intends to use only on texts that are no longer under copyright, is making it possible for people around the world to directly experience some of the world’s rarest and most treasured books that form the basis of our history and our culture.
What I find exciting about all of these initiatives is that they use great advances in technology to dramatically expand access to works, yet in a way that respects copyright. We believe this is the right path and is one that adheres to the three principles I already mentioned. We also think this distinguishes our approach from one that all of you are familiar with: the Google Book Search project.
The stated goal of Google’s Book Search project is to make a copy of every book ever published and bring it within Google’s vast database of indexed content. While Google says that it doesn’t currently intend to place ads next to book search results, Google’s broader business model is straightforward – attract as many users as possible to its site by providing what it considers to be “free” content, then monetize that content by selling ads. I think Pat Schroeder put it best when she said Google has “a hell of a business model – they’re going to take everything you create, for free, and sell advertising around it.”
To accomplish its book search goals, Google persuaded several libraries to give it unfettered access to their collections, both copyrighted and public domain works. It also entered into agreements with several publishers to acquire rights to certain of their copyrighted books. Despite such deals, in late 2004 Google basically turned its back on its partners. Concocting a novel “fair use” theory, Google bestowed upon itself the unilateral right to make entire copies of copyrighted books not covered by these publisher agreements without first obtaining the copyright holder’s permission.
Google’s chosen path would no doubt allow it to make more books searchable online more quickly and more cheaply than others, and in the short term this will benefit Google and its users. But the question is, at what long-term cost? In my view, Google has chosen the wrong path for the longer term, because it systematically violates copyright and deprives authors and publishers of an important avenue for monetizing their works. In doing so, it undermines critical incentives to create. This violates the second principle I mentioned. Google has also undertaken this path without any attempt to reach an agreement with affected publishers and authors before engaging in copying. This violates both the second and third principles.
Google defends its actions primarily by arguing that its unauthorized copying and future monetization of your books are protected as fair use.
To be sure, Microsoft has a long history of strong support for the fair use doctrine. In 2001, for instance, we were proud to author an amicus brief in The Wind Done Gone appeal in support of Houghton Mifflin’s argument that Alice Randall had made fair use of copyrighted material from Gone With the Wind. In the case of book search, however, suffice it to say that there are serious questions about the merits of Google’s fair use defense.
Rather than delve into this arcane legal issue, what we really should be asking is whether it would be possible for Google to provide its Book Search service in a way that respects copyright. The answer to this question is: of course there is. How am I so sure? Well, because we at Microsoft are doing it. And not just Microsoft. We and others are working on search-driven projects that are proceeding with the express permission and support of copyright owners. And then there’s Google’s own Publisher Partner program, which makes book content available online only after obtaining the necessary authorization.
So, what we really have here are two fundamentally different paths. Google takes the position that everything may be freely copied unless the copyright owner notifies Google and tells it to stop. Microsoft and most other companies, by contrast, take the position that they should get the copyright owner’s consent before they copy. The Copyright Act, in our view, supports this approach. It’s hard to see any justification for exempting Google from its requirements.
From the perspective of your business, Google’s approach is troubling for another reason. It assumes, in effect, that Google is the only game in town. Google argues that authors and publishers should simply notify Google if they want to preserve their rights in their works. But what if, as is inevitable, other companies around the world start taking the same approach? Should copyright owners be obligated to track down everyone engaging in unauthorized copying in order to preserve their exclusive rights in their works? Presumably, the desire to preserve these rights is why they asserted copyright in the first place. This approach would be absolutely unworkable in practice, which is probably why Congress in enacting the Copyright Act placed the burden on those who want to copy to get the express consent of the copyright owner, rather than the other way around.
In essence, Google is saying to you and to other copyright owners: “Trust us – you’re protected. We’ll keep the digital copies secure, we’ll only show snippets, we won’t harm you, we’ll promote you.” But Google’s track record of protecting copyrights in other parts of its business is weak at best. Anyone who visits YouTube, which Google purchased last year, will immediately recognize that it follows a similar cavalier approach to copyright. Since YouTube’s inception, television companies, movie studios and record labels have all complained that the site knowingly tolerates piracy. In the face of YouTube’s refusal to take any effective action, copyright owners have now been forced to resort to litigation. And Google has yet to come up with a plan to restrain the massive infringements on YouTube.
Another example is equally disturbing. Microsoft was surprised to learn recently that Google employees have actively encouraged advertisers to build advertising programs around key words referring to pirated software, including pirated Microsoft software. And we weren’t the only victims – Google also encouraged the use of keywords and advertising text referring to illegal copies of music and movies. These actions bolstered websites dedicated to piracy and reportedly netted Google around $800,000 in advertising revenues from just four such pirate sites. These are not the actions of a company that has the interests of copyright owners as one of its priorities.
So the question is: should business models that are built on the backs of others’ intellectual property choose a path that respects IP, or a path that devalues it? For Microsoft, a major copyright owner, patent owner and trademark owner, the choice is clear. But even if a company chooses not to create its own intellectual property – Google, after all, has not a single registration in the Copyright Office’s database – it cannot “opt out” of the law’s obligation to respect the rights of others.
Up until now, I’ve focused most of my attention on the first two principles, the need to promote digitization and accessibility of content and the need to respect copyright. But now I want to spend a few moments talking about the third principle in relation to book search, because without it the first principle can become meaningless.
There are important challenges ahead that will need to be addressed if the promise of online access is to be realized. This will require all stakeholders to be flexible and seek practical solutions that support a competitive, healthy, and varied marketplace of access to online content. No one said it would be easy. But it is important for content owners and technology companies to work together and invest the resources to overcome obstacles that impede the realization of this great opportunity. Briefly, there are several key challenges that remain.
First, in order to promote innovation and online access, we need to figure out ways to reduce transaction costs of negotiations between online service providers and copyright owners.
Second, we need to preserve the benefits of the Internet’s global reach. While online service providers must be mindful of the territorial rights of publishers, we all need to recognize that enforcing these rights in an online environment adds enormous complexity and cost. We need to work together to reach solutions to this problem that are simple and efficient.
Third, we need to address the orphan works issue, an important issue that I have supported in testimony before the U.S. Senate Judiciary Committee. Online providers should make diligent efforts to locate copyright owners, but when they cannot locate the owner, there must be a process or a safety net by which they can move forward without risk of liability beyond payment of a reasonable royalty if the copyright holder later makes herself known.
Fourth, and critically, we need to understand and address consumer expectations. For example, most consumers now expect to preview content before they buy it, and this needs to be taken into account in the digital world. DRM tools and other technical restrictions need to be adopted carefully so that they do not frustrate consumers’ legitimate experiences and expectations, or else you risk losing the vast new market that’s before you.
Finally, all of us need to be open to adjusting our business models to add value for the book customer. The software industry, and especially Microsoft, has three decades of experience of having its IP threatened by the effects of cheap copying technology. We have thrived despite this, in part through strong support of IP, but also through adapting our products and business models and trying different approaches. This same flexibility will be essential as we move into the brave new world of online books.
We as a society have a compelling interest in ensuring that those who profit from providing access to online content do not infringe the rights of content creators themselves. Rather, the content and technology industries need to work together to encourage the growth of online access to content and promote continued innovation to benefit our customers. It will require flexibility and even compromise by all parties, but the outcome will be tremendous.
Today I have articulated three basic principles that can help guide companies and industries as they navigate these issues. The examples cited illustrate that compelling new online services can be successfully implemented in a manner that respects the basic rights of authors, publishers and other IP owners. This path is the right path, the only path, the path that respects copyright law. It may, or may not, take slightly longer in the short term, but it will pay larger dividends in the longer term both by giving authors and publishers the incentives they need to continue creating high-quality content and by giving consumers better online experiences.
Microsoft is committed to making these decisions responsibly, respectfully, and with the goal of sustaining both artistic creativity and widespread access by consumers to online content. We want to join with all of you in urging other providers of Internet search and online content hosting services to do the same. With these three principles in mind, we can show them, and the public, how it can be done.
1. Hiawatha Bray, “Publishers Battle Google Book Index,” The Boston Globe, Oct. 20, 2005, at http://www.boston.com/business/technology/articles/2005/10/20/publishers_battle_google_book_index.