This morning as I was getting ready for work, a letter popped into my email from Eric Hellman at Unglue.it, the crowdfunding site operating on a Storytellers-Bowl-style model in which it solicits donations to buy free publishing rights for various books. Hellman wrote that Amazon had informed Unglue.it that it will no longer process pledges for Unglue.it, and required the organization to void any pending pledges.
Hellman wrote that Unglue.it is suspending current campaigns, though the previous, successful campaign for Oral Literature in Africa is unaffected, and soon to be released under a Creative Commons Attribution license for all to enjoy and use. However, the organization is in the process of implementing a new payment method and will relaunch as soon as it has one.
Laura Hazard Owen at PaidContent did a little more legwork while I was doing day-job work, pointing out that anti-fraud and money laundering provisions are a concern for any payment processing company, and quoting an Amazon spokesman citing “regulatory obligations” that Amazon cannot meet because “Unglue.it’s model is not the same as some other crowdfunding services.” No word on what the critical differences are, but another crowdfunding site EverythingFunded.com received a similar notice from Amazon and switched to using WePay instead. Eric Hellman has said that Unglue.it is in the process of applying to take PayPal, but there is no word yet what its prospects are.
This isn’t the first time that payment processing has caused trouble for e-book sites. Earlier this year PayPal attempted to crack down on certain types of erotica by threatening to drop Smashwords unless it removed such books entirely from its site. PayPal (and the credit card companies behind it) was eventually convinced to back down, but the lack of any good alternative payment providers at the time pointed out the same sort of problem Unglue.it is running into now. The ‘net has attempted to invent a number of possible alternatives, perhaps most infamously BitCoin—but the fact that BitCoin is being used for an estimated $2 million a month in on-line illegal drug sales illustrates the problem with that approach.
I wrote several months ago for TeleRead of my doubts that Unglue.it can succeed at very many of its current goals—how many people are going to be willing to pledge money to unlock works that they’ve either never heard of or can get cheaply and easily by other means?—but I never anticipated something like this. If Unglue.it can’t find a payment processor willing to take it on, the project itself could be what “comes unglued.”