Google has settled with the publishers, but not the Authors Guild. This is good news for the Digital Humanities because it means that we may still get a substantive ruling on the big fair use question underlying the entire litigation.
Human life is short, none of us can hope to read more than a smattering of the literary record, but fortunately massive digitization efforts like those undertaken by Google allow scholars to apply large-N computerized methods to millions of works. Computational and statistical analysis of literature will be a big part of humanities research for years to come. However, legal actions like those of the Authors Guild could bar scholars from studying as much as two-thirds of the literary record.
In a comment published in Nature today [paywall] [Nature Vol. 490, pages 29–30 (04 October 2012) doi:10.1038/490029a], Matthew Jockers (an English professor), Jason Schultz (a law professor) and myself (also a law professor) explain why the the Association for Computers and the Humanities and a large group of scholars chose to file an amicus curiae brief on behalf of the digital humanities in the Authors Guild v. Google and Authors Guild v. HathiTrust cases.
In the brief we explain why U.S. courts should recognize that copying books for non-expressive purposes is not infringement.
My view is that the settlement between Google and the publishers makes such a ruling more likely because it provides further evidence that the ability to make non-expressive uses of copyrighted books works hand in hand with the commercialization of expressive uses which is what copyright law is all about.
For more on this topic, see http://matthewsag.com/projects/google-book-copyright-the-digital-humanities/