PayPal, Pragmatism and Economics
Posted in General Musings on February 29th, 2012 by Big Ed – 4 CommentsLast week, I wrote about how PayPal had put the squeeze on Bookstrand to eliminate erotica subjects they didn’t like, despite them being legal. This past week, they did the same to All Romance Ebooks and Smashwords. They gave little notice and refused to negotiate with the site owners, which made it clear that this is a bully tactic.
As I wrote last week, I’m not surprised that this has happened. It was just when and who was going to do it. There’s plenty of angry rhetoric elsewhere on the web about it, which I don’t need to repeat here other than to nod my head in agreement. Yes, this sucks, and yes, it’s censorship, and yes, it should be resisted if it can be.
However, rather than rally about free speech issues and the right to our basic human sexuality (which was the topic of one of my very first blog posts), I want to explain a different reason that PayPal’s move is a bad idea. That reason is simple pragmatism and economics.
In his letter explaining Smashwords’ policy changes due to PayPal’s pressure, Mark Coker wrote (emphasis mine):
*Incest:* Until now, we didn’t have a policy prohibiting incest between consenting
adults, or its non-biological variation commonly known as “Pseudo-incest.” Neither did our retailer partners. We’ve noticed a surge of PI books over the last few months, and many of them have “Daddy” in the title. I wouldn’t be surprised if the surge in “Daddy” titles prompted PayPal to pursue this purge (I don’t know). PI usually explores sexual relations between consenting adult stepchildren
with their step parents, or between step-siblings. Effectively immediately, we no longer allow incest of any variety in erotica.
That surge occurred because it was profitable. I know of several authors who were making thousands of dollars a month because they wrote pseudo-incest stories with Daddy in the title. Many of those stories were crappily written and offered at high prices. But they sold, and they sold well enough to make a lot of money. That, of course, drew other writers into the game and I myself seriously considered it. I, like Mark, wouldn’t be surprised if that was part of why PayPal got into the game, but I bring it up for a different point.
It wouldn’t be so profitable if there wasn’t a huge demand.
Now let’s look for a moment at the topics that PayPal is banning: incest (and pseudo-incest), erotica with characters under 18, bestiality, and rape for titillation. I know the first has a huge demand, and the second certainly seems to. Bestiality has a strong solid niche, if I follow storiesonline codes correctly. I know a lot of women fantasize about rape and probably a lot of men, but I can’t speak to the demand.
But what’s not on the list? Necrophilia, for one. Scat and watersports. A handful of other kinks that could be considered equally objectionable, but just don’t have the popularity (and I’ll have to explore the popularity of those big kinks in a future post, but my post on taboo erotica is a good place to start).
It leads me to conclude that PayPal is going after these subjects in part because they’re popular, which will, I think hurt them, and the rest of us as a society, in the long run.
This is because the economics pretty much ensure those topics aren’t going away. Many moralists have this mistaken belief that if they restrict the supply of something, it’ll go away. Given how well this worked with Prohibition and the War on Drugs, and the on-going saga of prostitution in most of America, you’d think the moralists would have figured out that trying to restrict the supply doesn’t work. Unfortunately, that doesn’t appear to be the case.
In fact, I happen to believe that most moralists are incapable of seeing that their restrictions and bans don’t work. Their views are idealistic rather than pragmatic. In their ideal world, people follow the rules and the law. If it’s out of sight, it’s not happening. It’s a nice world to live in, but it’s not this one.
As long as there is strong demand, all that bans do is drive the price and the risk up. Those risks are not always borne by the consumer either. How much of the cost of cocaine these days is what the users pay to the dealers and how much is what the rest of us pay for the ineffective DEA efforts?
The kicker is, economics also provides the pragmatic answer to getting rid of things we find distasteful. It’s called lowering the demand. Remember how necrophilia erotica isn’t viewed as a problem? Or better, consider tobacco. I don’t recall seeing any tobacco smugglers around these parts, and the supply at least in my neck of the woods is drying up. It seems there just aren’t as many customers as there used to be…
So… how do we, as a culture/society, reduce the demand for this type of erotica? If the attraction is that it’s taboo, making it more taboo by banning it would seem to defeat the point. One could go for humiliation or punishment for the consumers, but child porn shows this isn’t a successful strategy either (and my solution for child porn is here).
I don’t have a good answer, other than to grow up as a society. That’s going to require it’s own post some day.
I do know that PayPal is guaranteeing itself some lost revenue. Amazon will certainly pick up the slack, and any adult financial processors worth their salt will find a way to get into the game. There might be some long term gain that we don’t know about (fex: a quid pro quo that they’ll help presidential candidate Santorum go after ‘filth on the internet’ in exchange for regulatory breaks should he win), but otherwise they don’t seem to come out ahead financially.
Which leads me to my last point: there’s no guarantee this will last. Greed all too often wins out over morality, even within a corporation. Maybe the next eBay/PayPal board of directors won’t care, and will quietly look the other way. Maybe people will find a way to run under the radar. I certainly am (the donate button on my Tip Jar page could be yanked at any time if PayPal actually noticed what I write here). Or maybe they’ll reverse themselves.
That happened locally. Several years ago, the weekly free independent newspaper made a big hullabaloo about how they weren’t going to accept ads from escorts, massage parlors, and other semi-obvious fronts for prostitution. They were lauded for their moral stance, particularly because they admitted that they charged those advertisers much more than other businesses. Well, all those ads are back. There was never an open admission of the change in policy either. I’m guessing they just needed the revenue too much to put morality ahead of pragmatism.
Maybe PayPal will do the same. If not, well, I wish them the enjoyment of the lost profits their stance will bring.
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