Unglue.it, which aims to release ebooks into the Creative Commons through crowdfunding, has only “freed” one book so far and has already hit a bump after Amazon (s AMZN) Payments pulled support for crowdfunding accounts.
Crowdfunding site Kickstarter also processes payments through Amazon, but has not been affected by the change.
Amazon told Unglue.it CEO Eric Hellman that it is not approving new crowdfunding accounts due to “regulatory burdens” and “contractual obligations.” Unglue.it has been “required to void all pending authorizations,” though the one book that has already been unlocked — Oral Literature in Africa, a title aimed primarily at academics and librarians that raised $7,578 from 259 supporters — is not affected.
While some commenters on Twitter suspect Amazon of trying to take down a smaller ebook company, another small company received a similar notice and Hellman told me “it sounded like they want to be able to reverse course once they figure out how to meet their obligations efficiently.” Amazon’s policy is likely to affect any company that wants to process crowdfunding payments through the site. Paypal (s EBAY) has a recommended process for crowdfunding payments and crowdfunding sites like Indiegogo and Togather process their payments through Paypal. A Paypal company rep did not respond to my request for comment, but a Paypal developer on Quora notes that any site processing crowdfunding payments, as well as any business oriented around them, has to worry about anti-money laundering policies. Hellman told Library Journal blog The Digital Shift that Paypal is still processing Unglue.it’s application.
Update: An Amazon spokesman told me, “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.”