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Paypal to Get Into eBook, App Distribution?

paypalEarlier today I debunked fears about Paypal’s new terms of service, and now I think we know why the rules will be changing this summer.

The uproar this morning concerned a clause in the new ToS which suggested that Paypal is going to start distributing digital files. While they haven’t formally announced plans to do so, we do have hints that they’re looking in this direction.

Cnet has published an interview where Tomer Barel, Paypal’s chief risk officer, revealed that Paypal planned to extend its buyer protections and dispute resolution services to include more than just physical goods. Come 1 July, digital goods as well as payments to services such as Uber will also be covered.

"Trust…is one of Paypal’s most important assets and it’s an asset that we invest in," Barel said in an interview. "It’s crucial for our success and it’s one of those things that customers expect from us."

And not only is Paypal planning to guarantee digital content sales, they could also be planning to distribute the files themselves:

Additionally, with PayPal planning to expand into new areas of commerce amid its planned split with eBay later this year, offering services that keep customers coming back will be critical for PayPal to stay competitive against other payment services, such as Square, Google Wallet and Stripe.

Buyer protections for a digital goods are more complicated to do than similar services for a physical goods. For one thing, PayPal can’t check with a shipper to see if an item wasn’t delivered. Instead, the company needs to get proof from sellers from an email or access code.

Tell me, what is the best way for Paypal to guarantee that a digital file was delivered?

Why, that would be to deliver the file itself.

Obviously, Paypal is planning to start distributing the files as well as processing the payment. The hints dropped in the Cnet article suggest this, and Paypal’s response to questions about the legalese confirm it. They’ll be moving into direct competition with services like e-Junkie, Gumroad, and Steam.

While we don’t have details on how Paypal’s new service will work, I can add that Paypal already works with online retailers who sell digital content. Baen Books and O’Reilly Media, for example, sell ebooks on their websites.

Both publishers handle delivery and will likely continue to do so, but smaller retailers might see a benefit from using Paypal to both collect payment and deliver the files.

Today’s news (er, speculation) comes at a time when Paypal is being spun off from its parent company, Ebay. The move was announced in September of last year, and is expected to be complete some time this summer – at which point Paypal will be the healthier of the two companies.

images by jay8085iliveisl

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fjtorres April 30, 2015 um 2:29 pm

There’s a lot of Indie authors (and musicians) who would welcome a one-stop source for billing and delivering content from their own websites.

Never mind 70% royalties, howzabout 95%?

Nate Hoffelder April 30, 2015 um 2:41 pm

Gumroad does that. So does e-Junkie.

fjtorres April 30, 2015 um 4:37 pm

PayPal has a longer track record, no?
And a lot of existing consumer accounts. Moving to fulfillment lets them move upstream to capture a bit more revenue of the transactions thry process.

Nate Hoffelder April 30, 2015 um 4:39 pm

Longer track record? Not necessarily (e-Junkie dates back to 2003). But it is much more visible, and it’s definitely bigger.

And Gumroad is crap.

Maria (BearMountainBooks) May 1, 2015 um 9:23 am

It’s not always 95 percent that I get by using them for payments, and if they do the delivery, I bet they will want a higher chunk. Just for clarity on my comment, when I sell 99 cent books from my site, there is a flat fee because of the low amount, plus a percentage. The percentage on purchases depends on a few factors from what I gather, but is generally around 3 percent.

Right now my site handles the delivery. I’d look into letting paypal do it if they offered it, but I suspect they would want more money for the service. Since mine is already up and running, I’d like to leave it that way!

Robert Nagle April 30, 2015 um 4:46 pm

E-junkie sends payments to indie publishers through paypal, so I wouldn’t mind cutting out the middle man.

Nate Hoffelder April 30, 2015 um 4:59 pm

In that case, let the disintermediation commence.

puzzled April 30, 2015 um 5:57 pm

The change in the legalese (the other post today) is very poorly written in light of this planned service. That new clause can clearly be taken that Paypal has copyright rights over everything you sell though them. In perpetuity. In any format or medium. At least it’s non-exclusive.

And do you really trust big, evil corporation to not realise this at some point, and cut out the drain on its revenues…the suppliers.

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[…] Update: We might not know for sure why this clause was added but we suspect that Paypal plans to add file delivery to its payment processing. […]

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[…] Paypal to Distribute Ebooks? (Ink, Bits & Pixels) There may be reason to believe Paypal might soon distribute digital content in addition to processing transactions, potentially paving the way for the company (now in the process of being spun off from eBay) to emerge as a content delivery service as well, which could include distributing ebooks and apps. […]

Paypal to Get Into eBook, App Distribution? | The Passive Voice | A Lawyer's Thoughts on Authors, Self-Publishing and Traditional Publishing May 1, 2015 um 10:00 am

[…] to the rest at Ink, Bits & Pixels and thanks to Meryl for the […]

Moriah Jovan May 1, 2015 um 10:09 am

Meh. I don’t find this wording any worse than what Dropbox did a few years ago, and because of their social media person who was an asshole to me on Twitter, I haven’t used Dropbox for anything to speak of ever since.

The ToS can be rewritten before this goes live.

And after my Gumroad experience, I’m doing the Happy Dance.

Nate Hoffelder May 1, 2015 um 10:22 am

Yes. That Dropbox incident is what convinced me to take a mild position on the new legalese.

Gary May 1, 2015 um 4:41 pm

Here is a crazy guess:

If Paypal distributes a digital file to me, they might make and keep a backup copy that I could download a second time, at some future date if, for example, my hard disc failed and I didn’t have a backup. This backup on Paypal’s servers might remain accessible even if the original vendor went out of business.

This might explain the legalese, and it could be a valuable service for the public, thus making a Paypal downloads more attractive than downloads through some other channel and therefore increasing Paypal’s business and profit.

Nate Hoffelder May 1, 2015 um 4:43 pm

That would be a good idea, yes. Amazon operates on a similar principle with the Kindle Store.

Abhishek k May 2, 2015 um 12:12 am

While paypal offering maybe robust but they will be missing personal touch, customized service for case to case basis and auxiliary features around that. I guess this is where ejunkie can play their games.

Dyann May 3, 2015 um 7:50 pm

I am an artist and more than a few times they have ripped me off by using their credit card and saying they didn’t get it, even when published or emails commenting with revisions needed and Dropbox time and date when they logged in to download! Thank Goodness digital goods will finally have protection as using a 3rd party escrow was getting expensive and a pain with up to a 5 day wait when released. Yay! I have used Paypal since 2001 and this helps immensely for creatives!

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