Sources briefed on the matter say DOJ attorneys have contacted Google (GOOG) as well as the Association of American Publishers and the Authors Guild about the antitrust implications of the agreement. Presumably at issue here are concerns over the settlement’s opt-out terms–authors and publishers who don’t opt out have effectively opted in–and the fate of orphan works, books still in copyright but whose copyright owners are unknown.

Orphan works number in the millions and the fear is that this settlement gives Google a powerful blanket license for them. As Pamela Samuelson, director of the Berkeley Center for Law & Technology, recently noted:

An estimated 70 per cent of the books in the Book Search repository are in-copyright, but out of print. Most of them are, for all practical purposes, “orphan works,” that is, works for which it is virtually impossible to locate the appropriate rights holders to ask for permission to digitize them….The proposed settlement agreement would give Google a monopoly on the largest digital library of books in the world….Google will also be the only service lawfully able to sell orphan books and monetize them through subscriptions….Virtually the only way that Amazon.com, Microsoft, Yahoo!, or the Open Content Alliance could get a comparably broad license as the settlement would give Google would be by starting its own project to scan books. The scanner might then be sued for copyright infringement, as Google was. It would be very costly and very risky to litigate a fair use claim to final judgment given how high copyright damages can be (up to $150,000 per infringed work). Chances are also slim that the plaintiffs in such a lawsuit would be willing or able to settle on equivalent or even similar terms.

Samuelson concludes that the Book Search agreement as written is essentially a major restructuring of the book industry and an anticompetitive one at that. If that is indeed the case–and Google maintains that it is not–it’s worrisome indeed. Certainly, it’s reason enough for the DOJ to give the agreement a good once-over.

Sources briefed on the matter say DOJ attorneys have contacted Google (GOOG) as well as the Association of American Publishers and the Authors Guild about the antitrust implications of the agreement. Presumably at issue here are concerns over the settlement’s opt-out terms–authors and publishers who don’t opt out have effectively opted in–and the fate of orphan works, books still in copyright but whose copyright owners are unknown.

Orphan works number in the millions and the fear is that this settlement gives Google a powerful blanket license for them. As Pamela Samuelson, director of the Berkeley Center for Law & Technology, recently noted:

An estimated 70 per cent of the books in the Book Search repository are in-copyright, but out of print. Most of them are, for all practical purposes, “orphan works,” that is, works for which it is virtually impossible to locate the appropriate rights holders to ask for permission to digitize them….The proposed settlement agreement would give Google a monopoly on the largest digital library of books in the world….Google will also be the only service lawfully able to sell orphan books and monetize them through subscriptions….Virtually the only way that Amazon.com, Microsoft, Yahoo!, or the Open Content Alliance could get a comparably broad license as the settlement would give Google would be by starting its own project to scan books. The scanner might then be sued for copyright infringement, as Google was. It would be very costly and very risky to litigate a fair use claim to final judgment given how high copyright damages can be (up to $150,000 per infringed work). Chances are also slim that the plaintiffs in such a lawsuit would be willing or able to settle on equivalent or even similar terms.

Samuelson concludes that the Book Search agreement as written is essentially a major restructuring of the book industry and an anticompetitive one at that. If that is indeed the case–and Google maintains that it is not–it’s worrisome indeed. Certainly, it’s reason enough for the DOJ to give the agreement a good once-over.

On Tuesday, a group representing members of the National Federation of the Blind and the American Association of People with Disabilities staged a protest over limitations in the Kindle’s read-aloud feature. Last month, Amazon (AMZN) said it would amend the feature to give publishers and authors the ability restrict it at the request of the Authors Guild, which says voice performances of books require separate contracts. During the protest outside the New York headquarters of Authors Guild, protesters chanted, “Stop the greed, we want to read.”

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After its official unveiling on Feb. 9, the e-book reader started shipping on Monday, and actually managed to grab much–but not all–of the hype that’s surrounded Twitter of late. The device has been met with much acclaim, though it’s by no means unanimous. Jeff Bezos made an appearance on “The Daily Show” Monday night to make his pitch to an as-yet unimpressed Jon Stewart. His main sell? “We’d make it cheaper if we could.” Roy Blount Jr., President of the Authors Guild, isn’t thrilled about the Kindle either, but his objection isn’t price–it’s that he believes the text-to-speech feature on the device threatens the audio book market. Rather than engaging in battle with the Guild, Amazon (AMZN) decided to modify the Kindle’s software to make text-to-speech optional. Meanwhile, the Hearst Corporation announced development of its own “Kindle Kopy” aimed at capturing the newspaper and magazine market. The Kindle 2 itself has been shipping for just a week and it’s already gotten some print media looking over its shoulder. It remains to be seen, though, whether it’ll earn the moniker of “iPod for books.” Walt Mossberg’s comprehensive review of the device this week provided a glimpse into its actual pros and cons and some insight into the Kindle hubbub from a hands-on perspective.

Elsewhere, much of the news this week was about reorganizations in the digital space. BoomTown covered the much-anticipated Yahoo (YHOO) reorg, which was sketched out by CEO Carol Bartz for employees first in a post to the company blog, then elaborated upon in not one, but two, internal memos. Even BoomTown’s attention began to wander there toward the end. Must’ve been something in the water this week, because Time Warner’s (TWX) AOL kicked in a little reorganization of its own–CEO Randy Falco announced that Maneesh Dhir, head of AOL International, would be leaving the company and returning to his entrepreneurial roots, and ad head Greg Coleman announced a reshuffling of his own group. Over at News Corp. (NWS), upon official announcement of President and COO Peter Chernin’s departure, CEO Rupert Murdoch alluded to a reorg sometime in the future, and an immediate commitment to “streamlining” the business.

In Mossberg’s Mailbox this week, Walt answered questions about transferring data to an iPhone, giving Vista a dedicated graphics card, and using TrueSwitch to transfer email accounts when switching ISPs. And in the Mossberg Solution, Katie Boehret took a look at the ways different mobile companies back up your data and give you access to it.

More next week.

Kindle 2′s experimental text-to-speech feature is legal: no copy is made, no derivative work is created, and no performance is being given. Furthermore, we ourselves are a major participant in the professionally narrated audiobooks business through our subsidiaries Audible and Brilliance. We believe text-to-speech will introduce new customers to the convenience of listening to books and thereby grow the professionally narrated audiobooks business. Nevertheless, we strongly believe many rightsholders will be more comfortable with the text-to-speech feature if they are in the driver’s seat.

Therefore, we are modifying our systems so that rightsholders can decide on a title by title basis whether they want text-to-speech enabled or disabled for any particular title. We have already begun to work on the technical changes required to give authors and publishers that choice. With this new level of control, publishers and authors will be able to decide for themselves whether it is in their commercial interests to leave text-to-speech enabled. We believe many will decide that it is.

The move comes on the heels of a meandering New York Times editorial in which Roy Blount Jr., president of the Authors Guild, argued that the Kindle’s roboticized nondramatic book readings are a threat to the audio book market.

Kindle 2 can read books aloud. And Kindle 2 is not paying anyone for audio rights. True, you can already get software that will read aloud whatever is on your computer. But Kindle 2 is being sold specifically as a new, improved, multimedia version of books–every title is an e-book and an audio book rolled into one. And whereas e-books have yet to win mainstream enthusiasm, audio books are a billion-dollar market, and growing. Audio rights are not generally packaged with e-book rights. They are more valuable than e-book rights. Income from audio books helps not inconsiderably to keep authors, and publishers, afloat….You may be thinking that no automated read-aloud function can compete with the dulcet resonance of Jim Dale reading ‘Harry Potter’ or of authors, ahem, reading themselves. But the voices of Kindle 2 are quite listenable….And that sort of technology is improving all the time….no part of my voice is competing with my own audio books yet. But people who want to keep on doing creative things for a living must be duly vigilant about any new means of transmitting their work.”

Ah.

The crux of Blount’s argument, then, is not so much that the roboticized nondramatic book readings of the Kindle threaten the audio book market today, but that they will in the future when they better approximate the human voice. We must be vigilant about any news means of transmitting our work. And given that, wouldn’t it be prudent to rethink the way authors license and profit from their work? That seems a reasonable point and one worth discussing. After all, we’ve seen this situation time and time again, all the way back to John Philip Sousa and player piano music rolls. In fact, if you think about it, the Kindle’s text-to-speech function is a sort of player piano for books. And if you take that view, these words from Sousa, penned back in 1906, still resonate today:

For the life of me I am puzzled to know why the powerful corporations controlling these playing and talking machines are so totally blind to the moral and ethical questions involved. Could anything be more blamable, as a matter of principle, than to take an artist’s composition, reproduce it a thousandfold on their machines, and deny him all participation in the large financial returns, by hiding back of the diaphanous pretense that in the guise of a disk or roll, his composition is not his property?

Do they not realize that if the accredited composers, who have come into vogue by reason of merit and labor, are refused a just reward for their efforts, a condition is almost sure to arise where all incentive to further creative work is lacking, and compositions will no longer flow from their pens; or where they will be compelled to refrain from publishing their compositions at all, and control them in manuscript?  What, then, of the playing and talking machines?”

What then of the Kindle?

“[The Kindle's text-to-speech function] presents a significant challenge to the publishing industry,” the group said in a statement released Thursday. “Audiobooks surpassed $1 billion in sales in 2007; e-book sales are just a small fraction of that. While the audio quality of the Kindle 2, judging from Amazon’s promotional materials, is best described as serviceable, it’s far better than the text-to-speech audio of just a few years ago. We expect this software to improve rapidly….we recommend that if you haven’t yet granted your e-book rights to backlist or other titles, this isn’t the time to start. If you have a new book contract and are negotiating your e-book rights, make sure Amazon’s use of those rights is part of the dialog. Publishers certainly could contractually prohibit Amazon from adding audio functionality to its e-books without authorization, and Amazon could comply by adding a software tag that would prohibit its machine from creating an audio version of a book unless Amazon has acquired the appropriate rights. Until this issue is worked out, Amazon may be undermining your audio market as it exploits your e-books.”

Hard to view the sort of roboticized nondramatic “reading” that the Kindle provides as a “significant challenge to the publishing industry.” If that was truly the case, you’d think the industry would have gone after Apple (AAPL) for VoiceOver (could it’s “Hysterical” and “Zarvox” voice options be any more realistic?) Beyond that, the idea of derivative rights and royalties for text-to-speech just seems ludicrous.

“When you buy a book, you’re also buying the right to read it aloud, have it read to you by anyone, read it to your children on long car trips, record yourself reading it and send that to your girlfriend etc.,” says author Neil Gaiman “This is the same kind of thing, only without the ability to do the voices properly, and no-one’s going to confuse it with an audiobook. And that any authors’ societies or publishers who are thinking of spending money on fighting a fundamentally pointless legal case would be much better off taking that money and advertising and promoting what audio books are and what’s good about them with it.”

“[The Kindle's text-to-speech function] presents a significant challenge to the publishing industry,” the group said in a statement released Thursday. “Audiobooks surpassed $1 billion in sales in 2007; e-book sales are just a small fraction of that. While the audio quality of the Kindle 2, judging from Amazon’s promotional materials, is best described as serviceable, it’s far better than the text-to-speech audio of just a few years ago. We expect this software to improve rapidly….we recommend that if you haven’t yet granted your e-book rights to backlist or other titles, this isn’t the time to start. If you have a new book contract and are negotiating your e-book rights, make sure Amazon’s use of those rights is part of the dialog. Publishers certainly could contractually prohibit Amazon from adding audio functionality to its e-books without authorization, and Amazon could comply by adding a software tag that would prohibit its machine from creating an audio version of a book unless Amazon has acquired the appropriate rights. Until this issue is worked out, Amazon may be undermining your audio market as it exploits your e-books.”

Hard to view the sort of roboticized nondramatic “reading” that the Kindle provides as a “significant challenge to the publishing industry.” If that was truly the case, you’d think the industry would have gone after Apple (AAPL) for VoiceOver (could it’s “Hysterical” and “Zarvox” voice options be any more realistic?) Beyond that, the idea of derivative rights and royalties for text-to-speech just seems ludicrous.

“When you buy a book, you’re also buying the right to read it aloud, have it read to you by anyone, read it to your children on long car trips, record yourself reading it and send that to your girlfriend etc.,” says author Neil Gaiman “This is the same kind of thing, only without the ability to do the voices properly, and no-one’s going to confuse it with an audiobook. And that any authors’ societies or publishers who are thinking of spending money on fighting a fundamentally pointless legal case would be much better off taking that money and advertising and promoting what audio books are and what’s good about them with it.”

On Tuesday, the search sovereign said it’s resolved a copyright dispute with the publishing world that will allow it to scan millions of in-copyright books and make them searchable online. Under the terms of its proposed settlement with The Association of American Publishers and the Author’s Guild, Google (GOOG) will pay $125 million to end the legal actions pending against it and establish a Book Rights Registry through which copyright holders can receive payment for books included in its Book Search program.

“This agreement is truly groundbreaking in three ways,” Google Chief Legal Officer David Drummond said in a post to the company blog. “First, it will give readers digital access to millions of in-copyright books; second, it will create a new market for authors and publishers to sell their works; and third, it will further the efforts of our library partners to preserve and maintain their collections while making books more accessible to students, readers and academic researchers.”

Quite a coup for the publishing industry, which now has in Google a savvy and powerful business partner, instead of the hubristic antagonist it once faced. And a coup, as well, for Google, which has essentially just succeeded in licensing the longest tail of all: a searchable library of all (or most) the world’s books.