A Primer in the Debate About Smashwords and Paypal
As I watch the discussion unfold about Paypal’s (a financial company) decision to pressure Smashwords (a publisher) into changing its policy about what kinds of books it can publish, I’ve noticed the mis-use of a lot of terms and ideas. I’m hoping to bring some clarity to the debate with this primer.
First, a caveat about my biases. In law school I directed my energies towards defeating the Communications Decency Act of 1996. Because of that specialty, during the ten minutes that I practiced law, I represented a company whose business it was to verify the age of people who wanted to access adult content on the internet. I am no longer a practicing lawyer, but when it comes to free expression, I am quite nearly an absolutist. That bias may show in this post.
Here are the terms I’ve seen bandied about in this discussion and why they are, or aren’t relevant.
Constitutional Right to Free Speech: The First Amendment of the United States Constitution forbids the government from suppressing the expression of its citizens, with few exceptions. Those exceptions form the basis of vast swaths of case-law, but boil down to the idea that any government intrusion into this area faces a test of strict scrutiny. Hence the government can prohibit someone from falsely crying fire in a crowded theatre in the interest of saving lives, but the government cannot prohibit someone from burning a flag as political expression. American pride in free expression that is at the core of the objections to Paypal’s actions, but Paypal is not a government entity. Consequently, the First Amendment is not directly at issue here. (The argument over whether or not Paypal is an unregulated monopoly, uniquely positioned to have a chilling effect on expression, is a different one. Whether or not Paypal is doing this in response to government pressure or out of fear of government regulation, is currently not known.)
Censorship: Censorship is the suppression of expression. It derives from the ancient tradition of Rome in which censors were elected to purge the Senate of undesirables and watch over the public morality. Sometimes censorship is perfectly appropriate–such as the example of forbidding others to create a panic in shouting fire. Sometimes censorship is not appropriate. Either way, the term has taken on a pejorative implication in our country because we don’t like to think of ourselves as repressed old Romans. Censorship is almost universally legal outside the context of government action. Paypal and Smashwords may not be involved in any wrongdoing whatsoever. Nonetheless, the decision to remove books from the major outlets based on content is a form of censorship, right or wrong.
Pornography: American jurisprudence does not concern itself with the definition of pornography, only obscenity, which I will cover next. Pornography is, by and large, a layman’s term. However, case-law on the whole tends to support the commonly held definition of pornography as the explicit visual depiction of sexual acts intended for the purpose of arousing its viewers. A thin wall between visual representations and written representations has helped to serve as a social boundary to allow for artistic expression within fairly easy-to-understand limits. Many of the objections to Paypal’s policy stem from what is now perceived as a brand new transgression over the social line of detente–from the classification of visual sex acts as pornography to a broadened definition that catches up literature as well.
Obscenity: Obscenity law is one of the least understood and most tortured fields of law in American jurisprudence. Almost all prosecutions surrounding obscenity have had to do with visual depictions of sexual acts, with a few exceptions, some of them famous. Although the Supreme Court declared in Kaplan vs. California that “Obscene material in book form is not entitled to any First Amendment protection merely because it has no pictorial content,” prosecutions brought against books have fared relatively poorly.* The court has never explicitly articulated a reason for the relative difference in legal outcomes. However, some argue that it’s because visual representations of sex acts involve both conduct and the chance of exploitation of real human beings whereas written fiction is not conduct and has not yet been shown to categorically cause a societal harm.
The standard for obscenity was once ‘I know it when I see it,’ but that was eventually replaced by a community standards test. Unfortunately–or fortunately, depending on your point of view–the internet blew apart that legal test. The idea of the boundaries of a community is in flux. The most important recent decision relevant to free speech was decided in 1997, Reno v. ACLU in which the court struck down applying indecency laws to the internet, but indecency is a different standard than obscenity. The internet has since become it’s own community with its own evolving standards, and we’ve had ten years of relative legal silence on the issue.
It is very clear that the appellate courts do not want to spend their time debating the individual merits of either pornography or erotic fiction, and yet, their tests call for just such individual decisions. Some people–including this author–do not believe that government regulation for obscenity is compatible with the First Amendment and that the entire field of law ought to be a relic of the past. Others would argue more narrowly that the ongoing uncertainty in the field of obscenity law leads directly to companies like Paypal making over-inclusive policies to guard against prosecution, thereby resulting in a chilling effect on public discourse.
This is relevant to all of us because if obscenity is based upon community standards, then we are members of the community and our opinions about free expression are vital to the equation. Moreover, to be fair to Paypal, if this move is being made in anticipation of U.S. government regulation, the problem is much more fundamental.
Why Paypal should feel themselves accountable for monitoring the content of the companies for whom they process payments is beyond me. I invite a lawyer with expertise on the matter of third party liability to correct me, but in taking on such a role, they may be exposing themselves to more legal liability than if they took a neutral stance. This might lead some to conclude that either Paypal is seeking to impose a privately held moral stance on their business partners, or, they are seeking to appease governments or entities outside the U.S.
Free Expression: Contrary to what most Americans might believe, the right to free expression exists outside the boundaries of the U.S. Constitution and it is not just a matter of the individual versus the state. In fact, the right to freedom of opinion and expression has been declared to be a universal human right by Article 19 of the Declaration of Human Rights, which says that free expression is, “a common standard of achievement for all peoples and all nations, to the end that every individual and every organ of society, keeping this Declaration constantly in mind, shall strive by teaching and education to promote respect for these rights and freedoms and by progressive measures, national and international, to secure their universal and effective recognition and observance, both among the peoples of Member States themselves and among the peoples of territories under their jurisdiction.”
This is relevant for two reasons. It’s relevant because it specifically points out that the right to free expression is a moral issue that transcends governments. It is also relevant because Paypal is a member of a global community, certainly an organ of society, that has proved itself willing to have an influence over global public discourse. The rights and responsibilities of financial industries–especially one as relatively unregulated as Paypal–is a legitimate topic for conversation with respect to their ability to influence the public sphere of ideas.
Article 19 also means that it’s fair for consumers who support Paypal by using its services to question whether or not the arbitrary and capricious enforcement of their policies should subject them to public censure.
Further discussion might include wikipedia’s entry on corporate censorship.
Any other terms or phrases you’ve seen used improperly to the detriment of this debate?
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Updated to Include:
Protected Class: There are certain kinds of people that have been traditionally discriminated against such that the law regards them as protected classes, and laws aimed against them are subject to a higher degree of scrutiny. (ie. the justifications for those laws are vital.) In the United States, protected classes are based on race, color, religion, national origin, age, sex, familial status, disability status, veteran status, or genetics. Sexual orientation–gay, lesbian, transgendered, bisexual, dominant, submissive, were-lover, etc.–is not a protected class, though some people believe it should be. Protected classes are important because discrimination against them can be forbidden even by private actors. This has been brought up with regard to whether or not it would be legal for Paypal to demand the removal of all books about LBGT relationships. I have no expertise in discrimination law, so again, I invite a qualified attorney to correct me, but I believe it would be perfectly legal either because the discrimination would be aimed at literature and not people or because this is not a protected class of people, or both. However, I would point out that just because something is legal doesn’t mean it’s not also wrong. In related news, an author has just filed a gender-based complaint against Paypal with the European Court of Human Rights–which has its own version of protected classes.
Pseudo-Incest: The taboo is strong enough that I hesitated to even post this definition to my site, but I’m going to do it anyway. Why? Because it falls under the kinds of materials that are apparently being removed from online bookstores to comply with Paypal’s new policies. Pseudo-incest is a term used in the erotic literature industry to describe relationships that carry with them a patina of taboo, but do not actually involve a depiction of illegal activity of any kind. For example, an affair between consenting adult step-siblings.
* I don’t mean to imply that prosecutions against written works are never successful. Often pled out early, many of these cases never reach the appellate courts. I simply mean to say that words have fared better than pictures at the Supreme Court.
Tags: erotic fiction, erotica, paypal, smashwords
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February 28th, 2012 at 5:32 pm
Excellent! As a Smashwords, etc, writer I thank you for clarifying certain phrases and words.
I’d like to mention that Smashwords isn’t the only venue being impacted by PayPal’s decisions. Publishing entities both in the U.S. and elswhere that deal with erotica are getting the same message. (I’ve been in contact with five in the past two days). My hat’s off to Mark Coker CEO of Smashwords for his dogged attempt at clarification from PayPal as detailed at http://www.smashwords.com/press
PayPal isn’t acting independently. They’re in partnership with the credit card companies and as I understand it, those companies are the true voice behind the recent confusion and upheaval.
February 28th, 2012 at 5:37 pm
I suspect that you’re right about this, and given what we know about the influence of credit card and banking companies, this is all very important to discuss.
February 28th, 2012 at 6:09 pm
Thank you for this great post, Stephanie. I think you will appreciate my letter in the March MRW Newsletter. I withdrew as a candidate from a job because the president (who has a doctorate) of the online university I was interviewing with equated romance with “porn.” When I asked her to define porn, she said “anything describing sex between a man and a woman.” So, that pretty much leaves out most of the important literature of the world, including the Bible. Song of Songs, anyone?
February 28th, 2012 at 6:12 pm
I’m sure I will appreciate it, Sharon. I look forward to reading it. I’m sorry you had to deal with that.
February 28th, 2012 at 6:37 pm
Excellent post. I appreciate the intelligent explanation over the hysteria I’m hearing elsewhere.
February 28th, 2012 at 6:41 pm
Along with “pseudo-incest” as an affected subgenre that’s not actually illegal is the “barely legal” subgenre, also being pulled from virtual shelves. Books in this group are advertised emphasizing that one or both characters to be involved in sexual situations are only eighteen or nineteen years old — the whole “teenager” thing might also be played up — as a point of titilation. The fact is, though, that legal is legal and underscoring how recently they were illegal doesn’t make them illegal. Apparently you can write a romance where one of the characters is only eighteen so long as you don’t advertise that fact in the promo blurb, or something. [sigh]
Angie
February 28th, 2012 at 6:48 pm
Awesome post and a good contribution to the conversation.
I’ve had several people tell me the situation is not censorship because it’s not the government and I’ve been trying to patiently explain the First Amendment does not own the word or comprise its sole definition. I even linked to an article that defined non govt forms of censorship and still they argue with me.
So thanks for clarifying that yes it’s not a First Amendment issue but it is a form of censorship.
M
February 28th, 2012 at 6:57 pm
Excellent definitions. Very helpful in understanding this whole mess. Now if it were just as easy to resolve it. Thanks!
February 28th, 2012 at 7:18 pm
“Why they should feel themselves accountable for monitoring the content of the companies for whom they process payments is beyond me. I invite a lawyer with expertise on the matter of third party liability to correct me, but in taking on such a role, they may be exposing themselves to more legal liability than if they took a neutral stance.”
So true! PayPal really should be asking their own lawyers that question. They really do not want to be getting into areas that they are not legally responsible for and third parties, be definition, has to be one.
It’s the thin edge of the wedge argument. Where does it stop? Can a credit card company tell me what to purchase? What shops I am permitted to shop at? What items I can buy?
February 28th, 2012 at 7:39 pm
Coker has censored authors himself. I will not shed a single tear for Smashwords or Coker. What goes around . . . comes around. Rock on PayPal!
February 28th, 2012 at 7:43 pm
Stephanie, great post. Very useful and, as always, erudite.
February 28th, 2012 at 8:03 pm
Thank you for a detailed, yet concise description of the issue. I’m bookmarking it.
February 28th, 2012 at 9:11 pm
Thank you, Alyssa!
February 28th, 2012 at 9:12 pm
Elysa, I wish I knew how to solve the mess. Unfortunately, all I can do is try to get us all on the same page as to what exactly is at issue.
February 28th, 2012 at 11:33 pm
So I take it that we have no legal standing to sue PayPal for violating our right to free speech then?
February 28th, 2012 at 11:37 pm
I enjoyed your post. Most interesting. Thanks. It will be interesting to see how this all plays out.
February 29th, 2012 at 1:06 am
Thanks for clarifying the principal legal terms of this controversy. Do the affected authors have any recourse from the legal system? Maybe the larger issue is why would the public allow itself to be controlled by a financial corporation like PayPal? Is the USA run by the “people” or the corporation(s)?
February 29th, 2012 at 1:40 am
Whatever happened to if you don’t like it don’t read it. Is paypal planning to make that decision for everyone?
February 29th, 2012 at 8:18 am
Great article.
That Paypal should set itself as a moral arbiter is absurd. However that does not mean that individual entities do not take a view on the type of content or material they deal in.
I am a Smashwords author and have great time for what it has achieved for indie writers. If I have one reservation, it is in the increasing content drift towards the smuttier end of the writing spectrum. A distributer/publisher must position for niche in the market place and not be all things to all people. The Paypal issue has forced the decision onto the agenda. Not its place nor its proper responsibility but the outcome may not be all bad for Smashwords into the future.
February 29th, 2012 at 8:26 am
Excellent post Stephanie! Thank you so much for putting this together.
February 29th, 2012 at 9:25 am
Excellent post, Stephanie! I’ve been trying to follow the proceedings, and you’ve clarified a lot of terms that have been thrown around. I’ve linked back to this post from a blog entry I’m writing now, and I hope a few of my readers check it out.
February 29th, 2012 at 10:25 am
I’ve been thinking of you, Steph, as I’ve watched this mess unfold. Thanks for providing a clear breakdown for us civilians.
February 29th, 2012 at 10:48 am
Thanks, Stephanie, for this informative post. This really helps clarify what I’m hearing out there.
As much as I hate what’s going on, this is exactly what can happen when a company operates a virtual monopoly. I agree with you that it’s not directly a free speech issue. The government isn’t saying I can’t write the type of books that are at issue here or that people aren’t allowed to buy them. We just can’t use a particular corporation’s service (non-governmental entity) to complete the transaction. As you say, it does have a chilling effect however.
We’ve basically given Paypal the power to do this to us and it sucks. But in this enterprising country we live in, hopefully, someone will see this as an opportunity to create a viable small transaction company that doesn’t operate this way.
February 29th, 2012 at 12:05 pm
Dave,
I’m not sure what resource authors have within the legal system–though I’m sure given enough time and energy, a motivated attorney could get very creative. However, as happy as I am that Americans are so well-disposed to make use of the law to resolve their disputes, it’s not the only way to resolve disputes. Public opprobrium is a very powerful weapon.
February 29th, 2012 at 12:09 pm
Laurie, I’d like to believe that this can be solved with the free market, but I suspect that the problem is deeper than that. My guess is that Paypal has made these rules in a misguided attempt to insulate themselves from some sort of government regulation. Or perhaps they are responding to the wildly unpredictable nature of Obscenity law. If that’s the case, then the government is, in fact, part of the problem.
Also, if you ask authors if it would be ok for Paypal to discriminate against LGBT works, they become agitated, even though there’s no legal reason I can see that Paypal can’t do exactly that. The fact that authors are willing to look the other way as long as the content being removed is either not what they write or not something they champion is extremely disappointing to me.
February 29th, 2012 at 12:30 pm
So, here’s how I’ve been seeing it.
Paypal isn’t the government, they’re a business, one that is choosing to limit what and with whom they do business based on an ethical or moral determination. (I’m no lawyer, not even for 5 minutes, so I may be using inaccurate terms).
Why should they *not* allowed to do that? They’re not the government. Someone else can, in this free market, step forward and fill the void this leaves, and accept payment processing for those items, and make a bundle, I’m sure.
To me, it’s as deserving of regulatory intervention as an appliance store saying they are no longer selling refrigerators. They don’t like them, think everyone should go back to iceboxes. Refrigerators are too much of an energy suck, and they find it morally repugnant.
No one is going to say “they’re restricting my access to refrigerators.” No. You’d say, “Idiots,” and find someone else to buy from.
I don’t like the way, with this issue, the implication is that it’s somehow incumbent upon Paypal, or Smashwords, to continue to do something they don’t want to do in their business, whatever reason. We’re not talking access to education or wheelchair ramps.
Now, I know some will say it’s a slippery slope down to such things, but I have two thoughts in response.
1- It’s a slippery slope the other way, too. Imagine if you, as a business person, were required to do business you personally found morally…um, bad. It’s like making appliance stores sell refrigerators.
2- We should be very careful about making rules and requirements that impinge upon private citizens and businesses based upon what COULD happen if something were allowed to devolve, or explode, to its Nth degree.
Have you ever stopped doing business with a company when you realized they were engaged in business practices inconsistent with your values? Yep. You sure did.
Have you ever cheered when a company you used changed suppliers b/c they didn’t like the working conditions or the careless way they deforested the Amazon or the XYZ of the first? Yep. Did they ‘censor’ the businesses with whom they did business?
These are business decision informed by ethical considerations, and if it’s okay in some cases, we need to have a very high bar for those cases when it’s NOT okay. You may not agree with the morals/ethical basis in this Paypal situation, but you do in other cases. That’s my only point. We WANT business to be able to make those choices. And then, we make ours, about what businesses we frequent and where we spend our money.
In the end, it comes down to the line at which a non-governmental organization is allowed to make its own business decisions, especially when other options exist.
It seems to me that freedom of expression is, at its heart, an issue of access. If expression is unduly limited, others may not hear those words, limiting their access to your wonderful ideas.
But at some point, when other options exist, it has to be incumbent upon businesses and private citizen to avail themselves of those other options, rather than exerting regulatory force to require someone to do something. We should be leery about calling in such reinforcements. The bar should be extremely high. You may have to drive an extra 10 or 20 miles, but you CAN get your refrigerator.
This is not access to something that someone could not otherwise get. It’s the internet. It’s money. There will always be someone else willing to do your business.
Stephanie, you said: “It’s relevant because it specifically points out that the right to free expression is a moral issue that transcends governments. ”
But there is also Paypal’s right to express (via refusing payments). It is their business, after all. (Which which I don’t do business with, btw. I don’t like Paypal, so I’m no apologist.)
And to the extent one might say Paypal doesn’t have a right to expression because it’s a business, well…so are you. When you sell a book, you are a business. Why should they be required to carry it? Does Barnes and Noble? Does your local library? Maybe sometimes, but my point is, the rallying cry of ‘censorship’ should be used with discretion.
In the end, you’re both businesses. If you want the right to run your business as you see fit, and if that sometimes includes ethical considerations, then that same freedom ought to apply to other buisnesses.
Stephanie, you also mention, “Article 19 also means that it’s fair for consumers who support Paypal by using its services to question whether or not the arbitrary and capricious enforcement of their policies should subject them to public censure.”
Which of course, I agree with 100%. People should definitely talk about this. And move their business wherever they wish as a result of how they feel about Paypal’s move.
As someone stated above, if people don’t like the current issue because Paypal is so powerful, well, this is the trouble that comes with huge mega-corporations having a finger in every pie. Start frequently smaller, even local businesses, start spreading your wealth.
Or, open your own payment processing business, accept all those payments Paypal won’t anymore, and make a million.
February 29th, 2012 at 12:55 pm
Thanks for commenting, Kris.
Paypal isn’t the government, they’re a business, one that is choosing to limit what and with whom they do business based on an ethical or moral determination. (I’m no lawyer, not even for 5 minutes, so I may be using inaccurate terms). Why should they *not* allowed to do that?
I am unaware of legal arguments being made in favor of governmental or legal interference in Paypal’s actions here in the United States, but I just want to disabuse you of the notion that companies are always free to do business with whomever they choose without limitations. Just because you’re a non-governmental entity, for example, does not mean you are free to practice employment discrimination. That is just one example. If you’re a monopoly, you are subject to other regulations.
However, I am not qualified to say whether or not Paypal’s unique situation in the marketplace should subject them to regulation as a monopoly.
They’re not the government. Someone else can, in this free market, step forward and fill the void this leaves, and accept payment processing for those items, and make a bundle, I’m sure.
I don’t see how anyone could be sure of this. We don’t know if Paypal’s decision is coming from pressure higher up, perhaps even stemming from fear of government prosecution for facilitating the sale of obscenity. We are not in possession of all the facts at this time.
To me, it’s as deserving of regulatory intervention as an appliance store saying they are no longer selling refrigerators. They don’t like them, think everyone should go back to iceboxes. Refrigerators are too much of an energy suck, and they find it morally repugnant.
To my mind, a better example would be the bank telling the refrigerator store what kind of appliances they could sell. However, I reject even that as an analogy because expression is a special kind of product. It isn’t like refrigerators, or solar panels or anything else. It has been singled out for special protection because it’s vital to a free society.
I don’t like the way, with this issue, the implication is that it’s somehow incumbent upon Paypal, or Smashwords, to continue to do something they don’t want to do in their business, whatever reason. We’re not talking access to education or wheelchair ramps.
By your logic, what would the difference be?
Now, I know some will say it’s a slippery slope down to such things, but I have two thoughts in response. It’s a slippery slope the other way, too. Imagine if you, as a business person, were required to do business you personally found morally…um, bad. It’s like making appliance stores sell refrigerators.
That would depend on my position in the market. At present, nothing I do has any serious influence over the sphere of public ideas. My right to extend my fist stops at someone else’s nose. At this point, as far as I know, my reach is not that long. If I owned a newspaper, however, I might well feel responsible to do all manner of things that I did not personally like. However, at this time, I am unaware of anyone proposing new or special laws to inflict upon Paypal here in the U.S. The only instance of legal action I know of is the suit filed in Europe.
There is also Paypal’s right to express (via refusing payments).
Just for the record, Paypal is a corporation, not simply a business. And though the Supreme Court disagrees with me as per Citizens United, I do not believe that corporations are persons with the same right to free expression as natural born persons. That is really a side-point, but I cannot resist making it.
Stephanie, you also mention, “Article 19 also means that it’s fair for consumers who support Paypal by using its services to question whether or not the arbitrary and capricious enforcement of their policies should subject them to public censure.” Which of course, I agree with 100%. People should definitely talk about this. And move their business wherever they wish as a result of how they feel about Paypal’s move.
Certainly, that is my position.
Or, open your own payment processing business, accept all those payments Paypal won’t anymore, and make a million.
At this time it’s unclear that this is a genuine possibility. As I mentioned above, we do not have sufficient facts to make that determination. Furthermore, I categorically reject the idea that if people are not willing to start up such a business that members of the community ought not criticize Paypal for policies that they consider to be unethical.
February 29th, 2012 at 1:41 pm
Stephanie~
<>
I agree entirely on that! I’m a huge fan of people speaking their minds. And in my opinion, the more it disrupts mega-corporations, the better.
My unease comes only when it starts to sound like people are saying someone shouldn’t be *allowed* to do something. I think that should be an extremely high bar. (And in looking back, I see my uses of “you” may not have come across as a general “you.” Hope it did! But if not, let me retroactively clarify that my “you’s” were general “you’s” not you-you, Stephanie.)
February 29th, 2012 at 1:53 pm
Understood, Kris!
February 29th, 2012 at 1:54 pm
Well, that sure didn’t work out. I’m an html idiot. I was trying to copy the last part of Stephanie’s thoughts, “…I categorically reject the idea that if people are not willing to start up such a business that members of the community ought not criticize Paypal for policies that they consider to be unethical.”
February 29th, 2012 at 1:56 pm
<>
Would that this were true, but as a writer who was nearly sent to federal prison for one of my books, I can assure you it is not. Nor did this activity make me famous. Likewise my editor actually went to prison for printed material (books) – Your contention may be true if qualified “in the last xxxx years…” It is true, so far as I know, that government entities today have mostly turned away from printed material in favor of visual.
February 29th, 2012 at 2:11 pm
Victor, I cannot see what you intended to quote there. I said that prosecutions against books fared RELATIVELY poorly next to visual material, but I did not mean to imply that such prosecutions were never successful. The most recent case I know of is a 2008 case over written material that was pled out.
I only meant to point out that percentage wise, cases against the written word are less successful at the appellate level.
February 29th, 2012 at 4:46 pm
[...] In my previous post I said, and I still believe, that what PayPal is doing is within their rights. The word “censorship” has been one to handle carefully. So I guess I should clarify here that I do not think PayPal is violating the First Amendment. The First Amendment says that Congress shall make no law abridging the freedom of speech or expression. So what PayPal does is, well, what PayPal does. For more about censorship and obscenity definitions and some legal stuff, please check Stephanie Draven’s blog. [...]
March 1st, 2012 at 2:52 pm
Why Paypal should feel themselves accountable for monitoring the content of the companies for whom they process payments is beyond me.
In their reply to Mark Coker they said it was in response to the banks and cc companies they deal with and the restraints those companies put on them. The impression I get is that it’s a business decision based on the amount of problems certain transactions cause a bank. Those that cause the most chargebacks, moneylending problems etc will incur higher charges or be declined as customers.