The Business of Pleasure

(UPDATE: PayPal has announced they are retreating from their position on this matter, which has those who have been calling for their destruction congratulating themselves. However, a careful reading of their statement, quoted in today’s business section of the Chicago Tribune, the real reason for the change of heart appears to be that Visa and Master Card provided a more detailed explanation of their policies, which were what had prompted the PayPal action in the first place. Note that this had been offered as a likely reason for the policy change by several sources.)

The people at Amazon must be breathing a sigh of relief these days–there’s a new villain in the gunsights of those who confuse freedom of expression with the right to write what they please and sell it anywhere they want.

Recently, possibly because the credit card companies that allow them to act as a merchant account provider threatened to raise service fees, PayPal contacted customers who sell erotica and ordered them to clean up their wares. They were told to remove material that used rape, bestiality, sex with juveniles, and/or incest, including sex between step-parents, stepchildren and/or step-siblings as an erotic element. The alternative is losing their PayPal services.

Those first to receive the injunction were the major independent ebook retailers like Smashwords, All Romance eBooks and Bookstrand; Amazon and B&N may have gotten notice, too, but they don’t share company business. Not long afterwards, independent ebook publishers, many of which rose to success selling erotic romance and erotica, received similar notice. Nearly all of these publishers, be it noted, state they will and do refuse material containing the aforementioned tropes in their guidelines.

The furor that resulted buried the incipient protest generated the previous week by Amazon’s removal of ebooks received through the Independent Publisher’s Group from sale, which was in turn generated by collapse of negotiations between Amazon and IPG over pricing. On a discussion group for independent digital publishers, requests were made for viable alternatives to PayPal. There aren’t any, really. There are lots of wannabes, but none so far has developed the necessary infrastructure to handle international financial transactions with the ease PayPal offers for reasonable fees.

What has gotten lost in that furor are a few basic points. First, although you wouldn’t know it to hear some of the protests, everyone got the same email. In other words, PayPal issued a generic statement to all its clients who fell under the updated policy. You know: as when your bank tells their customers they’ve decided not to continue free checking unless you maintain a minimum balance. No one was “targeted,” except in the sense that the policy was applied to those most likely to be offering the material PayPal referred to.

At Zumaya, we have used PayPal since it was first created. It’s not perfect, but as a service it has improved greatly over that decade or so. We use it because we don’t do enough online retail selling to justify the considerably greater expense of maintaining a regular merchant account. We know, because we did have a merchant account for a while. PayPal also has the advantage that it’s easy for people who don’t have credit cards to use for online purchases.

Second, PayPal, like any other business, has to make money. They do this in a number of ways. One, of course, is through the transaction and currency exchange fees they charge. Another is collecting interest on balances. This is why a transfer of funds to your bank account takes 3-4 business days; PayPal is earning interest on those funds while you’re waiting for them. Annoying, but necessary, and your bank does it, too, when it requires a period of time after you deposit funds for them to appear on your balance.

In order to accept credit card payments, PayPal must enter into agreements with the credit card companies–AmEx, Visa, Master Card, Discover–just like any bank or other middleman. They are subject to the fees those companies charge. Those fees increase in any instance where the credit card companies anticipate a high level of chargebacks. One such instance is the porn industry.

Now, those folks I mentioned in my first paragraph might–no, are almost certain to–shout that what they are writing and selling isn’t porn. Unfortunately, many, many people would disagree with them. Yes, they have every right to produce it. They have every right to sell it. But no service, PayPal or otherwise, is obligated to help them do it.

This is what far too many people seem to be losing sight of these days. No business is obligated to do anything except obey the law. Have some online businesses acquired a disproportionate share of the goodie box? Yes, by virtue of (a) having gotten a huge head start on everyone else (Amazon) or (b) doing it so much better than anyone else (Google). That doesn’t change the fact that they are businesses, not charities, and that they are entitled to decide, within the limits of the law, how they will operate.

And if they are put on notice by some other business on which they depend that a policy change is required, they have the same choice those complaining about PayPal do: change the policy or find an alternative source for the service or product they require.

PayPal is making lots of money from online retailers like Smashwords and the independent publishers. Given that, what sense would it make for them to arbitrarily decide they didn’t want to do business with those people and issue a fiat that would drive them to another provider? Successful businesses don’t stay that way by driving off major revenue sources, figuratively shooting themselves in both knees.

Yet if you listen to the protests now being issued, that’s what PayPal has done. They are, we are told, waging war against their business partners and freedom of expression by requiring material most people would find offensive no longer be sold using their service. How dare they?

They “dare” because they have made a policy decision and enforced it, which is entirely within their rights. It may have been their own choice, or it may have been driven by pressure from outside, but PayPal has made a decision they are perfectly entitled to make.

If you consider the arguments being offered as to why PayPal is wrong to do this, the corollary is that I have no right to reject a manuscript I receive that contains the banned material because by doing so I’m interfering with the author’s freedom of expression. And yes, people, there is a difference between one of the banned topics’ being used as a literary tool and its being used specifically to arouse one’s libido.

No one is preventing the authors of the material in question from writing and selling it, which actually would constitute censorship. They just won’t be able to do it using PayPal. Right now, women and children are being raped and murdered on a daily basis in real life in Africa and elsewhere, and are being sold as sex slaves right here in the US, and I’m supposed to get all worked up because a business made a business decision that makes it hard for people to sell bestiality fantasies?

Not.