Earlier quoted context omitted.
In United States copyright law, fair use is a doctrine that permits > use of copyrighted material without acquiring permission from the rights holders. Examples of fair use include commentary, search engines, criticism, news reporting, research, teaching, library archiving and scholarship. It provides for the legal, unlicensed citation or incorporation of copyrighted material in another author's work under a four-fac…
One of the biggest questions will be how transformative annotations are, and whether that will give adequate protection if users upload large chunks of copyrighted text. Google's use of thumbnails in image search wound up being covered by fair use[1] for this reason, and a judge recently ruled that book scanning was covered by fair use[2], as well. From the article: > "The use to which the works in the HDL are put is…
The page they have up with the Topic Blog post, however, is just a 100% reproduction with flyover notes. If You were to reprint the entire Harry Potter series, and add notes to the margins, it might seem similar. I believe that was already a subject of legal debate, though. Which might be precedent [see notes 1,2].
That being said, I don't per-se disagree with any of the issues being raised in your post. Also, I wouldn't rule out they will find a way to license content. The issue is just at what price? That's the spotify connundrum, IMHO.
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[1] http://en.wikipedia.org/wiki/Warner_Bros._and_J._K._Rowling_...
Judge Patterson said that reference materials were generally useful to the public but that in this case, Vander Ark went too far. He said that "while the Lexicon, in its current state, is not a fair use of the Harry Potter works, reference works that share the Lexicon's purpose of aiding readers of literature generally should be encouraged rather than stifled." He said he ruled in Ms. Rowling's favor because the "Lexicon appropriates too much of Rowling's creative work for its purposes as a reference guide."
[2] Another example, might be you-tube. Who has its "annotations" listed below each work of art. These are commonly referred to as "Comments". Some of the comments can now even be time-inserted into flyovers, more similar to the "flyover" type annotations currently up on the linked article. This is an example where there is both licensing and unlicensed content as a hybrid model.