Yellow Pages publishers are facing an increasingly contentious battle against a restrictive opt-out measure being proposed by the Seattle city council.

Yellow Pages Association President Neg Norton made a surprise appearance at DMS ’10 this morning on the panel “Distributing Directories in a Mixed-Up, Multiproduct, Opt-Out World” to give an update on the situation in Seattle.

While Norton said the industry and Seattle leaders have some shared objectives, the tenor and tone of the debate is getting more adversarial.

“We don’t want to deliver phone books to people who don’t want them either,” Norton said. However, “we appear to be heading down a path to conflict, which is troubling.”

Norton said the association is looking at legal recourse in the event of a negative outcome in Seattle, a prospect that he said has gotten the attention of the city. A legal approach could be based on the “legal right to deliver commercial free speech” as well as the premise that Yellow Pages has been singled out unfairly over other print media.

The Seattle proposed ordinance would impose several requirements that publishers consider onerous. They include an annual business license requirement, a 40 cent per directory recovery fee, the creation of a city-run opt-out site to manage consumer requests, fines for noncompliance and other requirements.

Norton said the YPA is arguing that its upcoming opt-out management Web site (www.yellowpagesoptout.com) will make the Seattle ordinance unnecessary. Once that debuts next year, a consumer will be able to add his or her ZIP code and manage book distribution across publishers, rather than contact each individually.

The industry’s concern is that the Seattle legislation, if passed, will influence other cities to follow suit.

The conversation shifted to a discussion of how to manage distribution in an opt-out world.

Dex One‘s Maggie Stonecipher acknowledged that the new opt-out world is much more complex and expensive.

“Costs are going up. It used t0 be just distribute them as cheaply as possible,” she said. Now, publishers and their distribution partners increasingly will have to spend time verifying distribution or the lack of it, recovering unwanted books, and maintaining very accurate databases of consumers who do and no not want print books. “That all costs money.”

Peter Rand, operations director at LinkDirect, a U.K.-based distribution company, said that moving to an environment where fewer books are distributed due to opt out doesn’t necessarily mean lower value for advertisers.

“If you deliver only to those who want the book, the [relevant] audience remains the same but at lower cost,” he said.