Anthropic Settlement Hearing Comes into Focus

On Friday, the Guild took a dive into how the numbers break down. According to papers filed by attorneys for the authors, 440,490, or 91.3%, of the eligible works had been claimed by last month's deadline, compared to what the Guild says is a typical 10% rate in most class action lawsuits. That 91% rate is a huge increase over 54% of claims attorneys for the class reported on March 19.

The Guild noted that with the higher claim rate, the payout per work will be closer to the $3,000 per work estimated in the lawsuit rather than the $4,876 payout that was based on the number of works claimed in March.

The update also noted that many parties besides authors and publishers will receive money from the $1.5 billion fund. Attorneys' fees are at the top of the list along with administrative costs. While the exact amount of the expenses will be determined by the court, the Guild noted that the class counsel requests 12.5% of the settlement fund ($187,500,000) for attorneys' fees plus $2,779,950.26 for the reimbursement of litigation expenses.

"While $187.5 million is a fairly high number," the Guild wrote, "12.5% of the pot is an uncommonly low share of attorney's fees in class actions, where fees range around 30%."

When all the costs are added together, they come to "roughly $208.6 million, leaving a net settlement fund of roughly $1.29 billion for the class distributions," which translates to "an estimated base payout of approximately $2,931 per work," the Guild explained, adding that when interest on the money Anthropic has already deposited is included the payout "will likely be slightly higher."

According to the settlement agreement, per work payout will be split among rights holders -- authors, publishers, and any co-authors.

The Guild noted that it is unclear at the moment when payments will begin to be issued, noting that the timeline depends on when the judge grants final approval to the settlement and any appeals are resolved. The Guild estimated that the earliest payments would begin to be paid will be late fall.

The Authors Alliance update focused on the various objections that have been made about the settlement and which are likely to be raised in the settlement hearing. The objections were unsealed following a motion filed by professor Lea Victoria Bishop.

Among the objections are the claims that the distribution plan systematically favors publishers over authors; that the class notice was "misleading/coercive," since statutory damages per infringement can technically be up to $150,000/work which would make the settlement amount per work is inadequate; and that the settlement sets a "dangerous precedent" by permitting "a multi-billion dollar AI company to 'buy' its way out of massive piracy for a 'discounted' rate."

Judge Martínez-Olguín, who took over the case following the retirement of Judge William Alsup, will oversee the May 14 hearing set for 2 p.m. in the San Francisco Federal Courthouse. A Zoom link will be available for those who cannot make the trip to San Francisco.