PayPal vs. Smashwords

By Joe Moore

In February, PayPal, the global e-commerce payment service notified Smashwords, one of the biggest indie publishers or electronic literature that they had one week to remove all books in their catalogue that dealt with themes of rape, incest, bestiality and underage sex. Failure to do so meant that PayPal would deactivate their services. The pressure to take this action appeared to have come from the credit card companies that partner with PayPal (owned by eBay). Smashwords has over 100k books available online. A quick search of Smashwords showed that there were about 1k titles tagged with the offensive subjects.

Smashwords has been able to negotiate an extension of the deadline in order to come to some compromise with PayPal and its credit card, bank, and credit union partners. In the meantime, as this situation goes on, it raises many questions starting with:

Should a business such as a credit card company be allowed to force its moral beliefs directly or indirectly upon another company?

Before everyone starts pointing out the lack of redeeming literary qualities of the specific books targeted, let’s just move to the bigger topics of censorship and free speech—and who in this example has the right to decide when and how to implement it. Does a middle-man payment company like PayPal have the right to decide what is obscene? If PayPal can tell booksellers what they can and cannot sell, aren’t they also telling readers what they can and cannot read?

What’s your reaction to PayPal’s mandate? Is this just the start of bigger things to come in the censorship arena?

32 thoughts on “PayPal vs. Smashwords

  1. Wow. Scary thought, Joe. Before Paypal/ Ebay gets on their high horse, they should fix their own problems. My publisher & many others are still dealing with copyright violations with their vendors selling non-sellable Advance Reader Copies (ARCs) online, books these people got free. On EVERY cover, it states clearly that these books aren’t to be sold. Ebay tells publishers, “Not my problem” and they continue to let sellers sell them, even when pictures online show these books aren’t to be sold.

    Sounds like Smashwords needs to develop their own secure system for online purchasing, but your question on Freedom of Speech & censorship is a valid one. Censorship like this is a slippery slope. Once it starts, who decides & how far does it go? Scary.

  2. This smacks of censorship and pay pal’s actions really concern me. I might not want to read books that contain the content they highlight but I sure as hell don’t want them dictating what I can or can’t read!

  3. Don’t those guys over at Pay Pal have attorneys and risk managers that understand the Constitution of the United States?

    Censorship – that’ll win over their financial backers.

    Bad decision, Pay Pal.

    Ditto what Clare said. How dare they?

    Don’t even get me started on the Ebay/Pay Pal regime – my husband hosts online auctions of baseball cards and Jordan’s right, they do little, if anything, to protect their sellers.


  4. I’ll be interested to see how the responses to this post play out, Joe. Months ago–maybe a year ago–I wrote an indignant post regarding the way Amazon was pressured to take down a book entitled something like The Pleasures of Pedophilia, and I was handed my head. That shocked me at the time. The preponderance of posters couldn’t get past the disgusting nature of the subject to see the slippery slope that’s created when we anoint a morality cop. It seems to me that it’s a fool’s errand for a business like PayPal or eBay to flex moral muscle, but I think they have a right to do so. (The Constitution forbids the government to censor, but does not forbid businesses to make foolish choices).

    Think about it, though. Are there ANY ideas that are too dangerous or too disgusting to be granted an audience? Snuff films and the like–and that includes actual kiddie porn, actual rape, actual incest and actual bestiality–don’t count because they require a crime to be committed in order to be produced. I’m talking about fictional accounts of terrible things. Are there topics that are too morally awful to allow them to be seen by the public? I personally don’t think there are, even though there are scads of topics about which I never care to read.

    John Gilstrap

  5. I wish there was a way to satisfy both sides. I’m not familiar with how Smashwords lists their books so I can’t use that as an example.

    But take the Amazon Top 100 listings. While it is certainly a very small percentage of the overall listings, they occasionally advertise books that have truly grotesque and inappropriate covers. I always feel dirty when my eye has to scan over the images presented.

    But how do you fix that? It’s a top 100 list. No consumer is going to waste time clicking over to another list or click a hidden image.

    I find that censorship, like other issues, is only screamed about at certain times. And I, like everyone else, value free speech.

    And I have absolutely no idea what the correct answer is, but I do wish that authors and everyone else would exercise a little better judgement. But that hasn’t happened since the world began and it’s not likely to start now.

  6. I believe that PayPal or any other middle-man service should have the right to restrict the use of their services if they are morally opposed to something their services could be used for. I believe in the right to free speech, but I do not believe anyone should be mandated to facilitate speech they do not agree with. To say that PayPal can’t restrict its services is to say that the rights of Smashwords and the authors involved are more important than the rights of PayPal.

    The fact is, middle-men have a history of being selective. That is a large part of the services they offer. For example, you wouldn’t go to your local NAPA Auto Parts store to buy fabric softener and toothpaste. If PayPal wants to create a reputation for standing against certain things, they have that right. If people still want to buy and sell the products involved, there’s still the good ol’ American dollar, the use of which, by law, cannot be restricted in such a way to limit free speech.

  7. Jordan, you’re right about the ARCs. I’ve seen many of mine on eBay, some signed from events at BEA, appearing on the auction site. Kind of makes you wonder why so many line up for those free advance copies.

    I agree with you, Clare. I have no desire to read the books in question, but I do feel I have the right to read them if I want.

    Paula, you can bet that the PayPal legal department has analyzed this issue to the bone. What it means is that no matter how high up the ladder you are, there’s always someone above you pulling the strings for whatever reason.

    John, I remember your blog on the Amazon/pedophilia book issue and how it drew fire. That’s one of the reasons I didn’t mention the specific titles of some of these books on Smashwords. My intention was not to focus on the books or their content, but the bigger picture: can a corporation dictate moral guidelines to another. And you’re right, the law does not forbid stupidity. To answer your question, I don’t believe there are any ideas too dangerous for public consumption if presented in a fictionalized format. My bookshelves are lined with thrillers from mainstream authors depicting torture, murder, adultery, war, violence, and thousands of other concepts that in real life I find objectionable. One in particular, a hardcover novel by a very popular author and published in 2009 by Viking contained the most disturbing, disgusting, vile scene I’ve ever read. You can order it right now on Amazon. Unlike the “visual” examples such as you mentioned, the written word, no matter what the words are or what ideas they express, exist ONLY in the mind. Yes, most readers will find the books on Smashwords disgusting and consider them in violation of common human standards, but can a corporation tell us that we can’t read them?

  8. I don’t feel that the business sector has any right to dictate what’s in our literature. This definitely smacks of Big Brother. Freedom of speech maintains the validity of artistic content. These companies should attack piracy issues instead and boycott the advertisers who support those sites.

  9. Thanks for chiming in, Timothy. This is obviously a two-sided issue.

    BK, you’re right. The answer is elusive. You won’t satisfy all with whatever the answer is. It makes it harder for me personally, because I’m a writer and feel like the words of all writers must be protected.

    Nancy, you touch on a REALLY annoying issue for a lot of us: the ability for anyone to download our books for free. There’s no outcry because most people don’t have intellectual property to protect. If they did, I bet more voices would be raised demanding action.

  10. As John G reminds us, this is not a Constitutional issue. It’s not Big Brother (because it’s not the government). It’s not even a censorship issue. PayPal cannot use force, only pressure. Which is a business decision. They have the right to do it, and Smashwords has the right to decide yea or nay. The market will drive this one. A new form of payment may be developed, which is how the market is supposed to innovate, etc.

    I am not of the opinion that moral decisionmaking in business is bad, or necessarily a slippery slope. Barnes & Noble, for example, is not obligated to order pornographic books or DVDs for its brick and mortar stores. That’s not censorship, that’s economic selection. It’s also freedom to run their business as they see fit.

    Freedom of choice means sometimes not choosing something. So be it. If people want certain material, some venue will be developed to deliver it.

  11. Freedom goes in many directions. People are free to write and say anything they want, however objectionable, within legal boundaries. But businesses are also free not to host or do business with that content. And customers are also free to pressure vendors regarding objectionable content. Look at how the public’s reaction through social media to Rush Limbaugh’s recent statements sent his advertisers fleeing. That’s not censorship–that’s the free marketplace. If, on the other hand, a business gets too prim or moralistic with their rules, people will take their business elsewhere. We’re all free to act like jerks, but no-one can force us to do business with jerks, or with their sponsors or business partners.

  12. Why should we be surprised? Apple has been doing this with iTunes for years. Walmart refuses to sell music with explicit lyrics and artists have to make censored versions for Walmart to sell. It’s just business, as Kathryn pointed out.

    Now, if it was the government forcing this kind of censorship, I’d be more worried.

  13. Jim, Kathryn and Kessie, thanks for adding your thoughts to the discussion. The market always drives the car. We get to sit in the back seat and watch where it goes.

  14. Like Timothy, JSB and Kathryn said I think Paypal is fully within their right. Its not censorship, its business sense. While these works of fiction are not technically conducting illegal acts they are depicting what the vast majority would consider to be heinous illegal acts presumably in a positive light. If paypal doesn’t want to be the engine to proliferate those ideas that’s within their right.

    Likewise there are certain books on bomb making and terrorist tactics that are banned, by government censorship, for the same reason that these books I think should be banned. They incite those inclined to perpetrate evil and offer detail methods by which to proceed.

    By the way several of those advertisers who dropped Limbaugh for his comments against Fluke have also dropped serious market shares for that choice. Carbonite is down 12% since Monday when they announced dropping Limbaugh over a moral issue.

    It is indeed a double edged sword.

    check out my new book trailer for 65 Below, let me know what you think. Of course it may be morally objectionable too, as it depicts violence against terrorists and commies in a positive light. but I ain’t got no sponsors to lose… 😉

  15. I am with John, James, Timothy, Kathryn, Taylor, and Basil on this. In fact, I prepared a comment early this morning that still hasn’t shown up. Censorship! Or maybe I forgot to prove I’m not a robot.

    This is an idiotic move on Paypal’s part. The great thing is that they are giving another upstart company an opportunity to fill the void. If I ran a small and struggling internet payment operation, I’d be knocking at Smashword’s door, offering my services. What is really ironic about the whole thing is that you can go on e-bay and buy back issues of Police Gazette, each and every issue of which contains articles dealing with the subject matters over which Paypal got their corporate undies in a bunch. Don’t ask me how I know this, but it’s true!

    I enjoyed the trailer, Basil. Can I be in the next one? And use live ammo?

  16. Although as a business move it’s not censorship per se, I still think it is important for people to speak up for freedom of speech and to highlight the restrictions – otherwise we will end up in a society that subtly over time loses these rights. I don’t want my reading options curtailed covertly by business anymore than I want the government to dictate them (and many classic, brilliant tales have dealt with pretty objectionable subject matter…Lolita anyone?)

  17. Good points, Clare. I thought of Lolita, too. And how about the Bible. Didn’t Lot offer his underage daughters up for sex?

  18. Yes, Lot did offer his daughters to the men of Sodom, but the context was in a setting where Lot was doing something bad, the same type of action that was bringing judgement upon the city. And there was a penalty for that type of thinking even later when Lot’s daughter’s got him to impregnate them both because they thought they were the last people on earth.

    That is the point I think with these type of books, are the materials simply portraying an evil or sinful act in that context? Or are they condoning or even recommending said action? That’s where the dividing line is I think.

  19. I don’t know, Basil. You know I love you, man, but this comment: “Likewise there are certain books on bomb making and terrorist tactics that are banned, by government censorship, for the same reason that these books I think should be banned. They incite those inclined to perpetrate evil and offer detail methods by which to proceed” disturbs me.

    It’s one thing to make choices of taste and angst on behalf of oneself and one’s children (to a certain age), but any sentence that uses “books” and “banned” in an approving tone makes me squirmy as hell. Throw in the threat that they might “perpetrate evil” and I get even more uncomfortable.

    Banning isn’t a business choice (unless you meant banning as a pseudonym for “choosing not to stock it on my shelves”), it’s a judgement of which thoughts are to be outlawed.

    As far as I’m concerned, so long as no one has to be harmed in order to gain access to knowledge or thoughts (a la my snuff film reference above, or the leakage of classified information), wherever there is a desire for knowledge–or even titillation, if that is one’s bent–there should be a supplier of it.

    That you or I or 99.99% of the country would wish not to read it is irrelevant.

  20. Just so no one gets the wrong idea keep in mind that on November 20th 1987 I took an oath that involved the phrase “to protect and defend the Constitution of the United States of America” which includes the the amendment allowing for freedom of speech. For me, like most any other Marine who has taken that oath it was a blood oath, for which I was and am prepared to die. I believe in freedom of speech, even freedom of expression in general as long as that freedom does not encroach on the freedom of another to live in a peaceful pursuit of happiness.

    What is the purpose of writing such materials as are in question in this Paypal/Smashwords conversation in the first place? Mind you we’re not talking about a rape scene in a thriller or crime novel where the good guys are chasing the bad guys. We’re referring to works whose specific intent is entirely to describe in detail in the acquisition of a victim against whome the act of rape, child rape, bestiality is consumated for the enjoyment of the reader in fantasizing about and being entertained by the virtual act itself.

    That being said, and if the concept of free speech is to include such materials, if one person’s free expression leads another person who has read their materials to the point that reading about it no longer satisfies their hunger and they find themselves in the position that they cannot control their urge to express themselves via acts against a third party with rape, molestation, etc, then they ought not be surprised if my freedom of expression manifests itself with physical force against the person of said perpetrator.

    It may seem like such a statement goes too far by supposing that readers of violent and/or pedophiliac literary porn would be likely to actually commit those acts for real. But, the facts and statistics agree that the vast majority of rapists and child molesters begin their descent via literary and/or visual porn. Ted Bundy spoke at length about the subject in the pre-execution interview he gave James Dobson in 1989.

    Freedom of speech is a great and important thing, but only noble and worthy of defense when in the context of a society that shares a moral base and is open to communication as opposed to mere one sided shouts and rants disguised as expression. Outside of that construct, like a teenager throwing a baseless emotion laced tantrum, it is only noise and chaos and a vehicle for division and violence.

    I am not merely willing to lend my voice to the defense of free speech, I have taken an oath to die in that defense be that necessary. But I will not give my life so a child rapist can document his exploits.

  21. First off, I loathe ebay and paypal with the white hot intensity of a thousand suns.

    I just got my 15-year anniversary self-printable certificate. I’ve been through it all with them. My greatest wish in life (besides a best seller) is to wean my customer base off that machine.

    Piracy is rampant and ebay claims “to be on it,” yet when I ended up with a bootleg video game they wouldn’t do anything unless I had a 3rd-party expert verify it was indeed bootleg. I went to the publisher and they replaced it for me.

    Morals have not a thing to do with this decision. These two companies in partical are lacking in that arena. It is a risk management decision. They are litigation adverse because they lose almost every case. They are concerned over a “Hitman” style scenario. It has nothing to do with reputation. Ebay is very frank that it doesn’t care what anyone thinks of it as long as they get their cut.

    PayPal has been a forbidden payment source for even soft adult items such as vintage Playboy mags on eBay for quite a while.

    I think writers and artists should be able to craft and create what they wish (as long as nothing living is actually hurt) and the audience can decide what is obscene or objectionable. If I don’t want “2 Girls 1 Cup,” I can move on. But it doesn’t mean you shouldn’t be able to watch it.

    And I guar-an-freaking-tee this is not coming from the credit card companies. All manner of pornography and sexual material is bought and sold every day via credit cards. I’m sure a lot of it is a lot fouler than anything you’ll find on Smashwords. That’s just their excuse. eBay is big on saying, “we’re beating on you because it’s what you asked for!”

    Smashwords is in a bind. Paypal is the 800-pound gorilla. They came on the scene early and occupied the field. Tens of millions of accounts and because you have all your bank account info and personal info tied up in it, there is a lot of intertia. People don’t want to change and Smashwords potentially loses customers if they dump PayPal.

    However, I hope they stand up to them. Terri

  22. MSNBC just announced the release of a book I find rather offensive, or at least gag-worthy (no pun intended). It’s rude, crude, sexually oriented, and is giving me the squicks just thinking about it. I was going to share the link. However, take my word for it.

    Just for fun, I clicked through to Lulu and made like I was going to check out. Every major credit card was an option. Yup, the credit card companies are driving the bus? I don’t think so.


  23. I am really concerned by these increasingly Big Brotherish tactics of PayPal and the credit card companies.

    How many women here have read any of Nancy Friday’s classic books on women’s sexuality? (MY SECRET GARDEN, FORBIDDEN FLOWERS, etc). VERY graphic descriptions of women’s sexual fantasies but presented as research and sold with psychology texts.

    How many of you who are disgusted by the idea of incest in fiction have read and enjoyed GAME OF THRONES with both incest (Jamie and Cersei Lannister) and underage sex (Daenyrs and Drogo)?

    Anais Nin anyone?

    PayPal will ban pseudo incest too (step-relations) but the law can do nothing about Woody Allen marrying his stepdaughter Soon Yi.

    And while thrillers and horror may not be in the line of fire yet, how long will that take?

    Erotica is an easy target because many people feel a little sleazy defending the content PayPal et al find obscene and objectionable even though we are for free expression.

    FICTION is not reality. Studies show up to 40% of women have rape fantasies. Does that mean 40% of women want to be raped? Of course not.

    I strongly object to PayPal or the credit card companies or any other corporate entity using their muscles to act as the thought police.

    What will they target next?

  24. The real danger of slippery slopes is that they are so darned slippery. Censorship leads to banning and banning leads to jackboots. Well, sometimes jackboots are involved if there are such things as jackboots nowadays. Anyway no group should have the power to dictate what may or may not be sold or available to adults. Period. Period.

    I also have this idea that all electronic (only) books can be erased by whomever has the ability to erase vast files that exist somewhere and maybe everywhere. That’s just my own personal paranoia. One of them, anyway.

    I’m embarrassed to be a paypal lover. So convenient. I think they need some neutral competition.

    It makes me want to write a novel that combines all those things. Murder, rape, incest, bestiality and underage sex. Oh, wait. I did write one containing most of those. Well, all but one. Bestiality, I didn’t think of a way to work in. And that was my best seller.

  25. Bottom line: Freedom of Speech. Period. If you don’t like something, move on. Bullying is just ugly.

    As for Smashwords, I took all my books down from there. Found out they’d ‘lent’ out 100 copies of MYTHOLOGICAL SAM and sold none. Their lending policy turned into freebies at my expense. I’m all for giving a free book now and again. But, all of them? Smashwords has to clean up more than the violations Jordan mentioned.

    As for censorship. Again, I say, no can do. It’s just wrong. Even if I am disillusioned with Smashwords for other reasons.

    Great post, Joe.

Comments are closed.