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Google has agreed to pay $125 million to settle a three-year legal battle over the Netco’s book search program.

Tuesday’s settlement between Google, the Authors Guild and the Assn. of American Publishers is subject to court approval. It calls for Google to pay $34.5 million for a nonprofit Book Rights Registry, fork over fees for the millions of copyrighted books already scanned under the Google Print Library Project, and cover the legal costs of the guild and pub org.

Snippets from millions of out-of-print but copyrighted books were digitized under the project, and then indexed online for library use. Google has called the project, which also scans public domain works, an invaluable chance for books to receive increased exposure.

But in a class-action suit filed in 2005, the Authors Guild alleged that Google was “engaging in massive copyright infringement.” A year later, publishers also sued on copyright infringement grounds.

The settlement expands the amount of text to be scanned, makes it available for free online at designated libraries, available for subscription for colleges and universities, and allows readers to pay for full online access of copyrighted works.

Rights holders for the copyrighted books already scanned will receive $60 per complete work. Any sales, subscription and ad coin from the search program will be divided with 63% going to copyright holders and 37% to Google.

“This may be the biggest book deal in publishing history,” guild exec director Paul Aiken said.

This legal battle has been closely watched in the book biz. Authors and publishers once strongly resisted free online books, but over the past year, they have softened. During the year, entire works have been made viewable and even downloadable for free, including Charles Bock’s novel, “Beautiful Children,” and works by Paulo Coelho and Neil Gaiman.

The court is expected to rule on the agreement by next summer.

Google still faces an even bigger copyright battle over its popular vid-sharing site, YouTube. Viacom is seeking at least $1 billion in damages in a lawsuit alleging that YouTube has illegally profited by tens of thousands of pirated clips from copyrighted shows like “South Park,” “SpongeBob SquarePants” and “MTV Unplugged.”

Google, which bought YouTube for $1.76 billion two years ago, has denied the allegations and blasted Viacom for threatening to stifle free expression on the Internet. A trial date in that New York federal court case still hasn’t been scheduled.

(The Associated Press contributed to this report.)