You might not have heard it, but just a few weeks back a story emerged from the world of ebooks that had far reaching consequences, potentially disastrous consequences for consumer choice, censorship and who takes responsibility for what you buy and read.

"It would have set freedom of speech and imagination back by decades," says Smashwords CEO Mark Coker. "It would have jeopardised the ability to publish and sell mainstream fiction." On February 18, the company, which enables authors to self publish their own ebooks and provides the platform for readers to discover and buy them, received a chilling missive from Paypal.

The eBay-owned online payments giant informed Coker that it would stop processing payments for fiction that contained themes or mentions of rape, incest or bestiality.

In response to Coker's revelation, the publishing world and blogosphere erupted. Whatever your tastes in erotic literature or art in general, Paypal telling a bookseller what it would not facilitate was received with incredulity. To many, it was the equivalent of walking into a store to buy a product that has inherent cultural sensitivity (like pornography or weapons) and having your bank or credit card provider tell you you're not allowed to because they don't want any money they manage spent on it.

Buoyed by the enraged community of writers and readers behind him, Coker went further and discovered Paypal was acting on behalf of the credit card companies (such as Visa and Mastercard). In a statement to the company Paypal said “...we work with a number of acquiring banks and credit card associations as part of our business. Many of the items contained in our AUP [Acceptable Use Policy] are restricted by our banking partners, particularly rape, bestiality and incest related content.”

The statement went on to talk about how much Paypal relied on its banking partners and didn't have the means to judge every product on individual merit, left with no choice but to 'globally ban' the offending ebooks.

"It would have caused serious damage," is how Coker explains the affect on ecommerce. "The books targeted by this represented a small percentage of overall ebook sales – probably 2-3 per cent. But it would have raised all kinds of questions about whether or not mainstream fiction could be sold via online ebook stores. Remember, New York Times bestseller 50 Shades of Gray wouldn't be allowed under the guidelines."

The mystery isn't really why credit card companies thought they could stamp out literary themes or motifs they didn't want to be associated with – it's a common strategy for large, respectable corporations to strictly avoid any kind of controversy. Coker's still not sure what they wanted to achieve by the move. As he points out, self-published erotica makes up a tiny portion of the ebook market, ebooks are mere sliver in online consumer spending in general and online spending is itself is a drop in the ocean of global consumer trade. For every self-published ebook Paypal might have stamped out online, there are a million credit card or cash transactions going on for products banks might not want their products associated with. He describes it as “much intractable irony and hypocrisy.”

To make matters worse, when Coker challenged Visa on the issue, the company blamed Paypal. In a letter to the website, head of Investor Relations Doug Michelman wrote: “...first and foremost, we want to clarify that Visa had no involvement with PayPal's conclusion on this issue. Nor have we seen the material in question. This fact is made clear by PayPal’s recent blog post where it states that its own policies drove the decision...”

To many, the whole episode merely highlights how out of step traditional commerce providers are with new paradigms where the producer is the consumer (and vice-versa) and where the playing field really is level.

"They tried to apply rules that were created years ago to a content category – self published erotica – that didn't even exist three years ago," Coker explains. "After the rage against Paypal, they quickly realised their rules were out of sync with mainstream legal requirements. Financial institutions should not be in the business of moralising what authors are allowed to write and what readers are allowed to imagine."

The happy ending to the story is that people power prevailed. Coker met with Paypal at the company's California offices hoping to bring them around, and on March 13 Smashwords issued a press release praising Paypal's decision to revise its content policies in his favour. In the statement Coker thanked authors, published and customers who mobilised, saying “you made telephone calls, wrote emails and letters, started and signed petitions, blogged, tweeted, Facebooked and drove the conversation. You made the difference.”

But while there's a free speech-friendly resolution to the Smashwords/credit card/Paypal episode, it might stand as a warning to us all, as both merchants and consumers. If you're over 30 you probably remember handing over a credit card the sales staff would swipe with a mechanical device, keeping a slip to send back to the credit card company. By the time your purchase appeared on any report at a corporate multinational headquarters you were long gone with your purchase.

Today our wired world makes commerce much easier, but that also makes it easier to track, monitor and control. You might not want anyone see you buy (or sell) a saucy book or girlie magazine, but it'll only get harder to buy anything away from prying eyes as time goes by...

The West Australian

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