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Amazon Stops Processing Payments For Crowdfunding Platform For Creative Commons Books

from the weird dept

Thu, Aug 9th 2012 4:12pm — Mike Masnick

So this is a bit strange. Unglue.it is a cool crowdfunding platform that focuses on raising money for authors/rightsholders so that they'll release an edition of their books under a Creative Commons license. We've seen a few similar offerings, but Unglue.it seemed really interesting (and to be getting some attention/traction). Basically, they would work with rightsholders, to find out at what price they'd be willing to put their works out under a Creative Commons license, and then try to crowdfund that amount. Neat idea. However, as Jack Allnutt alerts us, despite having already been processing payments for Unglue.it, Amazon has cut the service off, with a bizarre claim about how they don't want to work with any new crowdfunding platforms:

Amazon Payments has informed us that they will no longer process pledge payments for Unglue.it, forcing us to suspend all active ungluing campaigns. According to a Senior Account Manager at Amazon, Amazon has decided against “boarding fresh crowdfunding accounts at this time”. Amazon has been providing payment services for Unglue.it, as it does for the popular crowdfunding site Kickstarter.

Of course, that statement doesn't make much sense, given that it was already processing payments for Unglue.it. In fact, part of this news was that Amazon is requiring Unglue.it to void all payments for existing campaigns (i.e., those not yet funded). So the idea that this is about not "boarding fresh crowdfunding accounts" doesn't make much sense. Amazon has been the only choice for payments on Kickstarter since the beginning, and that seems to have gone well, so it's odd that they're now cutting off others (and, of course, opens up Amazon to wild conspiracy theories). I contacted Amazon to get their side of the story, and they provided the following comment:

We support a wide variety of businesses, but we have regulatory obligations as a licensed money services business for how we operate. Unfortunately, Unglue.it’s model is not the same as some other crowdfunding services and at this time does not allow us to meet those obligations.

That statement makes this all the more... confusing. They're clearly implying that there are regulatory issues preventing them from supporting Unglue.it, though I'm not sure I can think of what the concern here might be. There have been some regulatory issues around equity funding via crowdfunding, but that doesn't seem to be an issue here. If they're just working out deals for licensing books... I'm at a complete loss.

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Filed Under: crowdfunding, payment processing
Companies: amazon, kickstarter, unglue.it

34 Comments

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The Mighty Buzzard (profile), 9 Aug 2012 @ 4:35pm

Amazon takes the gold in asshattery
This has got to be the weakest excuse for abuse of monopoly powers to stifle competition I've seen in ages. Even worse than Microsoft and the UEFI fiasco.
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- Anonymous Coward, 9 Aug 2012 @ 4:40pm
  
  Re: Amazon takes the gold in asshattery
  If they're doing this because it's competing with book sales they should at least be up front about it.
  
  Also, if that's the real reason they don't want to do it it shows that they're afraid that this has a real future.
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  - The Mighty Buzzard (profile), 9 Aug 2012 @ 4:48pm
    
    Re: Re: Amazon takes the gold in asshattery
    Also, if that's the real reason they don't want to do it it shows that they're afraid that this has a real future.
    
    Yeah, media companies have quite the history of going batshit over things that aren't real threats. Witness the histrionics over piracy when the real problem there is their UI sucks harder than that of most pirate sites.
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rosspruden (profile), 9 Aug 2012 @ 4:47pm

If Amazon's reason is somehow related to Creative Commons, then we'll see how this goes for me, since the Kickstarter campaign I launch tomorrow is to "fund public domain literature". I'll report back here if I get blocked. I doubt it because they've already emailed me approval.
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- rosspruden (profile), 16 Aug 2012 @ 5:52pm
  
  Follow Through
  My campaign�funding literature for the public domain�hasn't been banned by Amazon. Not yet, anyway. It just met its $1000 goal. Woo hoo!
  
  Check it out here.
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Jay (profile), 9 Aug 2012 @ 4:47pm

Is it possible that Amaxon is worried about the lawsuit against the book publishers and trying to negotiate a settlement that might involve the Big Six? I can only think that perhaps the book publishers have leverage here that Amazon doesn't want to test out right now.
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- The Mighty Buzzard (profile), 9 Aug 2012 @ 4:51pm
  
  Re:
  Amazon doesn't have the authority to settle those suits. They were brought by the states and feds. So, I'm going to have to go with No.
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BentFranklin (profile), 9 Aug 2012 @ 5:01pm

Maybe it's because Amazon sells books, so taking books to CC doesn't help them?
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- PaulT (profile), 10 Aug 2012 @ 12:32am
  
  Re:
  CC doesn't prevent the author from charging for the book if they wish (and giving Amazon a chunk of it for using their platform), so it wouldn't necessarily cause them any more problems than the multitude of public domain titles they already carry. It's tempting to think this is just Amazon trying to protect its book business directly, but I'm not sure that's the case.
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H.P. Albarelli Jr., 9 Aug 2012 @ 5:09pm

copyright violation
Masnick-

We are filing a RICO Act complaint against you w/ the Calif. AG for illegally posting copyrighted material on the web.
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- Machin Shin (profile), 9 Aug 2012 @ 5:27pm
  
  Re: copyright violation
  So you really able to handle all the red tape and paperwork involved in filing a complaint like that and you can't find a better way to contact him than posting in the comments section here?
  
  Thank you for demonstrating once again how wonderfully technologically incompetent you people are. You have given a fine example of why we need to update our legal system. Too many technophobes in the system who can't even find the "contact us" section of a web page.
  [ link to this | view in chronology ]
  - Zos (profile), 9 Aug 2012 @ 5:32pm
    
    Re: Re: copyright violation
    i'm pretty sure that was meant to be sarcasm. or just an abysmal level of failtrolling.
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  - Donnicton, 9 Aug 2012 @ 5:38pm
    
    Re: Re: copyright violation
    He thinks the RICO act invalidates fair use, how competent could he be?
    
    Assuming this isn't just some really poorly done troll, what's funny is that this person is posting under the name H.P. Albarelli Jr., who, according to Albarelli's bio resides in Florida, but is filing allllll the way in Californa. Wonder what the angle is with that one...
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- drew (profile), 10 Aug 2012 @ 1:18am
  
  Re: copyright violation
  That's getting a funny vote!
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Anonymous Coward, 9 Aug 2012 @ 7:03pm

I ordered the classic novel "Where a Red Fern Grows" from Amazon, but I ended up getting a M-1 Abrhams.
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- MahaliaShere (profile), 9 Aug 2012 @ 8:31pm
  
  Re:
  And a new meme is born.
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Anonymous Coward, 9 Aug 2012 @ 8:09pm

Dear Troll:
That's Mr. Masnick.

Fail.
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- Anonymous Coward, 10 Aug 2012 @ 2:02pm
  
  Re: Dear Troll:
  Uh, what how can Mike troll his own shit?! Seriously!
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Rapnel (profile), 9 Aug 2012 @ 9:48pm

Amazon!
Amazoff!
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Anonymous Coward, 9 Aug 2012 @ 11:22pm

Mike, this is one of those cases where you show that you really aren't involved in business on the internet in any meaningful way. Otherwise, you would know what is going on.

There are various laws in the US to try to stop things like money laundering and such. As a result, there is the "know your customer" rules regarding payment processors. They need to know who they are actually paying money to (and for that matter, who they are collecting money from). That has all sorts of implications, including requiring W8 or W9 forms regarding payouts to individuals, groups, or companies that might benefit from the payouts.

If the site isn't very strict about it's payouts (ie, it's unable to provide the processors with end payout users, example), then the processors may not want to deal with them.

It's not about the product - it's about the methods.
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- drew (profile), 10 Aug 2012 @ 1:22am
  
  Re:
  Money laundering obligations is a good point, but presumably these things would have been checked when the account was set up. I wonder what's changed?
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  - Anonymous Coward, 10 Aug 2012 @ 3:28am
    
    Re: Re:
    Drew, the regulations regarding payments online have tightened many times over the years. There has also been some expansion of those rules in regards to companies that collect monies for others. With a situation like this where the company is only a conduit for cash, I am surprised that they even got processing to start with. It's a pretty difficult business model to maintain right now.
    
    The concerns regarding money laundering and other fiscal avoidance techniques is strong now. They can no longer just hand money to anyone and say "I didn't know what they were doing."
    
    I suspect that it's almost entirely a compliance issue in this area.
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    - drew (profile), 10 Aug 2012 @ 4:39am
      
      Re: Re: Re:
      Good shout, things have tightened up a lot in the UK (well, the laws have tightened up, the practices less so) but it's been very focussed on companies that actually take deposits rather than companies that facilitate payments.
      I wonder how much money-laundering this prevents vs how many start-ups / innovators find themselves unable to realise their idea.
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    - btr1701 (profile), 10 Aug 2012 @ 7:19am
      
      Re: Re: Re:
      > The concerns regarding money laundering and
      > other fiscal avoidance techniques is strong now.
      
      Your posts are challenging to read. Subject-verb agreement can be your friend. Look into it.
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      - drew (profile), 10 Aug 2012 @ 7:55am
        
        Re: Re: Re: Re:
        I just assumed that Yoda had forgotten to log in...
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MarkSG (profile), 9 Aug 2012 @ 11:32pm

Incompetence, not malice
I suspect cock-up rather than conspiracy. I have to deal with Amazon's payment system in my day job and, frankly, it's a humongous pile of cack. Their procedures are inflexible, seemingly arbitrary and prone to behaving in unexpected ways. Account managers, while pleasant enough, are completely incapable of working round their system's limitations.

I can well imagine that they'd cut off an account like Unglue.it just because "computer says no" and then scrabble around trying to justify it rather than fixing the problem which led to the account being flagged in the first place.
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Haywood (profile), 10 Aug 2012 @ 1:32am

Amazon has jumped the shark
They bent over for the Texas AG, they are in the news for screwing up big time with the gun for TV thing. Now this. They have gone from my vendor of choice to my vendor of last resort. I doubt I'm alone in this.
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Lawrence D'Oliveiro, 10 Aug 2012 @ 2:03am

So Now We Know Who Really Rules The World ...
... it�s the payment processors. Visa can bring WikiLeaks to a halt just by cutting off its payment processing; PayPal can control what kind of fiction gets published; and now Amazon can decide it doesn�t like CC-licensed publications competing with its own e-book sales.
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- RonKaminsky (profile), 10 Aug 2012 @ 4:54am
  
  so now we can guess the next legislative target
  Bitcoin.
  
  My guess is that very soon payment processor regulations will start to forbid them from working with entities who deal or organize trade in bitcoin (or possibly, who even honor it in parallel to normal payments).
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meddle (profile), 10 Aug 2012 @ 7:24am

There is likely way more to this story than unglue.it is saying. Amazon made money on every one of these transactions. They like making money. They would not risk a potential scandal just to kill unglue.ir, which really doesn't pose much of a threat to them at all. It's most likely some legal or accounting issue.
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Bianca, 10 Aug 2012 @ 1:22pm

Maybe they are in talks to acquire Kickstarter?
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zoe (profile), 21 Aug 2012 @ 6:58pm

what constitutes a monopoly?
At this point if Amazon is only in with Kickstarter does this make it a monopoly situation? I'm not sure why they should chose one over the other except this is dealing with literature and it might cut into Amazon's business. They are sticklers for not letting self published authors put their books out there unless they have copies and approve it, etc. But they painfully continue to bombard you with Createspace material to get you to sign up. I'm disappointed in Amazon!
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Peter, 24 Aug 2012 @ 9:01am

monopoly
The real reason I think is that Amazon (and PayPal) were warned by certain government officials that they might be allowing an online activity which isn't regulated (meaning taxed) properly right now.
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Paul Davidson, 29 Nov 2014 @ 2:46am

Fillable Tax forms
Just in case anyone needs to fill out a tax forms, I found a blank forms in this site PDFfiller. This site also has some tutorials on how to fill it out and a tons of fillable tax forms that you might find useful. Here is a link to the blank IRS form W-9 that I was able to fill out http://goo.gl/AAXDdi.
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