This week the battle around Google’s alleged copyright infringement took a giant leap though it’s hard to stay whether it was a leap forward or backward and for which side. Google was sued by publishers and authors after the company started taking their copyrighted books from libraries and scanning them.

The project started out as a research project called Google Print but has since morphed into Google Book Search. As you would expect, many librarians and readers (content consumers) were for the project, but publishers and authors (content producers) were against it.

On Tuesday, Google, The Authors Guild, and the Association of American Publishers (AAP) reached a settlement to the tune of $125 million, which allows the online giant to sell out of print books. Basically Google agreed to scare the wealth and pay royalties as they make money off the scanned content. However, the settlement did not tackle the issue of copyright. No one is yet answering “Is this legal?” They’re merely starting to answer “Who makes money and how?”

Regardless of what you think about book scanning and digitizing libraries, the fact that it is happening means that way we access and interact with books is about to radically change. Like with Napster and the music world, courts can declare digital file sharing illegal (to reiterate, this has not yet been settled for books), but once the digital copies are out there, people with use and share them and do all sorts of new and interesting things with them. Just think of all the amazing possibilities for searching, tagging, rearranging, annotating, and sharing texts that were once available only in hard copy

Google isn’t the only one trying to digitize books. My alma mater Carnegie Mellon partnered with Zhejiang University in China and the Indian Institute of Science in India for the Million Book Project. The goal was to have a million digital books by 2007, but by the end of last year they had far exceeded that goal and reached 1.5 million. That project didn’t cause the same uproar though because the organizations involved were doing it in the name of research and not commerce. This online digital library was always intended to be free. The universities want to create an enormous corpus to conduct research to improve machine translation, strengthen search algorithms, bolster machine image processing, and optimize storage formats. The libraries who partnered with them are looking for ways to distribute and preserve content.

As someone who strongly supports research in library science, I think that sounds good. But as someone who works for a big bookseller (Barnes & Noble.com), I wonder what these changes will mean for the industry. Anyone doing business in this space has to start moving now to prepare for the inevitable changes.

Sherwin Siy, a Staff Attorney and Director of the Global Knowledge Initiative at Public Knowledge, wrote a great article this week explaining what the settlement did and didn’t cover. In his article Google Book Search Lawsuit Settled, Fair Use Questions Remain, he wrote:

There’s a lot to be debated in this settlement (and it should be noted that this is the agreement that the parties in the suit have agreed to–it still needs to be approved by the court), but let’s first note what it doesn’t do: make a determination as to what is or isn’t fair use. This does mean that the financial and legal might of Google is no longer going to be aligned with libraries and archives that may wish to provide digital services that are technologically similar to Google’s efforts. This will mean that further fair use fights for digital libraries start closer to square one than they would have otherwise.