Book publishers with surging profits struggle to prove Internet Archive hurt sales

Today, the Internet Archive (IA) defended its practice of digitizing books and lending those e-books for free to users of its Open Library. In 2020, four of the wealthiest book publishers sued IA, alleging this kind of digital lending was actually "willful digital piracy" causing them "massive harm." But IA's lawyer, Joseph Gratz, argued that the Open Library's digitization of physical books is fair use, and publishers have yet to show they've been harmed by IA's digital lending.

"There's no evidence that the publishers have lost a dime," Gratz said during oral arguments at a New York district court.

It's up to a federal judge, John Koeltl, to decide if IA's digital lending constitutes copyright infringement. During oral arguments, Koeltl's tough questioning of both Gratz and the plaintiff's attorney, Elizabeth McNamara, suggested that resolving this matter is a less straightforward task than either side has so far indicated. Koeltl pointed out that because publishers have a right to control the reproduction of their books, the "heart of the case," was figuring out whether IA's book scanning violates copyrights by reproducing an already licensed physical book and lending it without paying more licensing fees to publishers.

"Does the library have the right to make a copy of the book that it otherwise owns and then lend that e-book--which it has made without a license and without permission--to patrons of the library?" Koeltl asked Gratz as a tense pushback to IA's stance that this particular case is just about a library's right to loan out books.

McNamara argued that many libraries pay licensing fees to publishers to lend e-books, and she said this was the market harmed by IA's digital lending practices. The burden is on IA to prove that's not the case, or else it risks being found liable and potentially getting hit with a permanent injunction to stop the alleged infringing behavior.

Although creating its own unsanctioned e-books triggered the lawsuit, Gratz argued that IA's digital lending is fair use, precisely because it makes copies of the physical books in its Open Library collection. That, he said, is "transformative" fair use, utilizing technologies to transform millions of physical books in order to improve the efficiency of lending without encroaching on publishers' or authors' rights. Gratz said that IA avoids the conflict by only lending out e-books to one user at a time, causing no harm because it honors traditional lending in brick-and-mortar libraries that has been practiced for years without impacting publishers' bottom lines.

The only exception to this one-to-one ratio was when IA launched the "National Emergency Library" for 12 weeks when the pandemic started, offering "an enormous universe of scanned books to an unlimited number of individuals simultaneously," the plaintiff's complaint said.

During this same time, however, the book publishing industry experienced so much demand that revenues rose by 12 percent, amounting to a $3 billion spike in sales by 2021, Publishers Weekly reported. Because publishers profited when the National Emergency Library was made available, Koeltl pushed back on McNamara, asking how to reconcile the surge in profits with allegations of harm caused.

McNamara seemed to suggest that publishers would have been further enriched if not for IA providing unprecedented free, unlimited e-books access. She also told Koeltl that publishers suing--Hachette, HarperCollins, Penguin Random House, and Wiley--are concerned that there are already some libraries avoiding paying e-book licensing fees by partnering with IA and making their own copies. If the court sanctioned IA's digitization practices and thousands of libraries started digitizing the books in their collections, the entire e-book licensing market would collapse, McNamara suggested.

"Free is an insurmountable competitor," the publishers' complaint said.

Ars could not immediately reach the Internet Archive or the publishers' legal team for comment.