Friday, August 10, 2012

Why I'm not mad at Amazon

Amazon seems moderately competent to me. That puts them in the top decile of large American corporations. So when Sarah Houghton, the "Librarian in Black" tweeted me "I hope you won't mind if I'm still mad at them ;)" I realized that I'm not mad at Amazon at all. A big company acting like a big company is not the sort of thing I get mad at. I've worked for one of the biggest companies in the world (at least it used to be!)  So when Amazon forces my small company to suspend crowdfunding because of its big-company traits, I find it hard to get too worked up.

But let me tell you the whole story.

Twelve years ago, my company, which was named "Openly Informatics" at the time, launched a book-linking service called "LinkBaton". We offered users the ability to link to the bookstore or library of their choice. Our value proposition for websites was that by letting users pick their favorite bookstore- Amazon or BN or whatever, they'd get more affiliate commissions. Meanwhile, we'd make money by getting good search optimization for our links. The problem with the business was that Amazon was so good at converting traffic to sales that any diversion of traffic to a non-Amazon site would reduce rather than increase a website's revenue. Still, our traffic built up, and at our peak, we were driving 200 transactions per day and getting nice sales commissions through Amazon Associates. Our peak day was September 10, 2001.

But that's another story entirely.

So we "pivoted" into library software, linking to journal articles instead of books. That turned out to be successful, and I ended up selling the business and the name, but not the company, to a big non-profit in the library space. I worked there a little over three years, met some wonderful people, and learned a whole lot.

When I left that job, I reactivated the company (now called "Gluejar") and did some odds and ends, consulting, selling some books through Amazon Marketplace, and blogging about ebooks and libraries. Amazon was happy to give Gluejar a business account.

Last year, I decided that creating a public sector for ebooks was an important thing to work on, and that crowdfunding was the way to do it. Unglue.it was born. The main technical uncertainty was the payment system. I hired some engineers and we compared various providers and chose PayPal, mostly because they offer better international coverage than Amazon Payments. Also we were hesitant to use Amazon because book publishers hate Amazon- they're jealous of Amazon's prowess in  e-commerce.

But Amazon Web Services is amazing. We have all our servers in the Amazon cloud.

And then we waited for PayPal to turn us on. That was January. We're still waiting. It seems PayPal has been reevaluating their stance toward crowdfunding businesses.

In April, we felt we'd waited long enough and decided to look at Amazon again. Kickstarter was seeing more and more success with Amazon Payments, so we figured they really had their act together. We already had a business account, we just had to get approved for Flexible Payment System (FPS) access. We verified our bank account, and 2 weeks later, FPS was turned on. With real money. Amazon is so awesome!

After all sorts of testing, we launched the website on May 17. One month later, our first campaign succeeded. We had supporting tweets from CoryDoctorow. And TimOreilly. And Weezer, goddammit! We carefully ran 259 payment authorizations, and real money appeared in our account. An ebook, Oral Literature in Africa, will be free to the world! Everything just worked.

Two weeks ago, I got this very phishy email:
Greetings from Amazon Payments,
Thank you for registering with Amazon Payments. We appreciate your interest in our product.
Unfortunately, at this time, we are not able to approve your request for an Amazon Payments business account based on our review of your intended use of our payments service.
As stated in our Acceptable Use Policy, the following product or services are prohibited from using Amazon Payments:
• Donations and Charitable Solicitations - includes charities and non-profit organizations without a valid 501(c)(3) tax exempt status, charitable solicitations, commercial fundraisers (including commercial co-venturers), or any activity associated with the solicitation of donations.
A member of our business team will be in contact with you to further discuss your business model and use of Amazon Payments.
---------------------
We have temporarily activated your account. Please initiate a new transaction to withdraw funds into your bank account.
Sincerely,
Account Specialist
Amazon Payments
https://payments.amazon.com
We thought it was a phishing attack because
  1. They didn't know we'd had a business account for 3 years
  2. They said nothing about FPS
  3. The action requested was to make a withdrawal. Huh?
  4. Donations? If what we're doing is asking for donations, when we commit to deliver ebook licenses for contributions, then what is Kickstarter, which promises squat, doing??
So the next morning, I called Amazon Payments customer service. The representative confirmed that nothing had changed in our account. But there was a note from the "verification team". And it was impossible, even for her, to talk to the verification team. So she said we should reply to the phishy email, and wait for the "member of the business team" to contact us.

So I replied, and the passive-agressive robot at the other end seemed to either want a human to intervene or to nuke our account. That scared us, because the account was linked to AWS and all sorts of good things. We felt confident that when we could speak with an actual human, all the misunderstandings would melt away. And so, after a week of not hearing more, I went away for a week at the New Jersey shore.

On Tuesday afternoon, I finally got an email from a human at Amazon Payments who knew what was going on, a Senior Account Manager. We scheduled a call for Wednesday noon. (we sleep late here at the beach) He was really nice and treated me with utmost respect. I explained my company's long history with Amazon and our crowdfunding achievements to date. He explained his much shorter history with Amazon and expressed admiration for what we were doing. He then explained some of the regulatory and contractual burdens that Amazon Payments (an entity separate from Amazon) has to meet, and how everything was more complicated with crowdfunding accounts. As a trivial example, they have to verify that their payments are not going towards alcohol or firearms. He did not mention nuclear weapons or drug money laundering, but I extrapolated. And it seems that Amazon has to spend money to do all this verification. They discovered all this crap because they're doing payments for Kickstarter. And until they figure out how to make sure that Kickstarter is not funding alcohol, drugs, nuclear weapons, prostitution and credit-default swaps, they've decided not to accept any more crowdfunding accounts.

I make it sound a bit crazy, but that's the world we live in. Think about it: how would you make sure the thousand business partners of your thousand business partners aren't dealing cocaine-tipped Stinger missile futures contracts on the side? And the questions we've gotten from the Paypal people were heading in the same direction, so I'm inclined to believe Amazon Payments Guy. I think it's rather unlikely that Amazon is singling us out because we're funding free ebooks, or, as has was suggested on Twitter and Hacker News, that we threaten Amazon's Kindle business. In my dreams. (Which will come true!)

So we had to suspend our ungluing campaigns. Striking a blow against arms dealing and drug money launderers everywhere.

It would have been nice if, back in April, we had gotten a clear signal from Amazon that they weren't doing new crowdfunding businesses. Most likely, we would have gotten that signal in April if not for our 3 year old business account. I can easily imagine a meeting inside Amazon where some participants wanted to go full blast on crowdfunding and others wanted to ban it, resulting in a compromise position of no new crowdfunding "for now", but no announcement either. The crack we fell into was just collateral damage. Small companies that get shoved aside are not Amazon's problem. But no, I'm not mad about it. Did I mention how amazing AWS is?

I'm curious though. If it was me running payments at Amazon, I'd see this mess as an opportunity. If Amazon had tighter, front-to-back control of crowdfunding, it could do it better, more efficiently. If it was me running payments at Amazon, I'd set up a better-designed crowdfunding marketplace. No wait! If it was me running payments at Amazon, I would buy Kickstarter!

And based on sheer speculation, it's entirely possible that Amazon is right now trying to buy Kickstarter. In October 2009, Kickstarter said it was working to support international projects   and as of 2012, nothing has happened. Why dyaspose?

As for our relaunch, we'll be looking at companies like Wepay, Dwolla, Stripe, Balanced, Braintree and a few others. Maybe the regulatory crap is easier to deal with in a smaller company that can know its customers. I'd love to hear suggestions. We're also working on a way to decouple our market from payment providers entirely. Who knows, maybe Paypal will come to our rescue. whatever happens, we'll be back sooner than you'd think.

Until then, if you like our model for ungluing ebooks, please register on the site. Or start a nuclear reactor project on Kickstarter.

Update: Here's the followup post.

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8 comments:

  1. Offer Bitpay! It's the closest it gets to using cash by using Bitcoin.

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  2. "So we had to suspend our ungluing campaigns. Striking a blow against arms dealing and drug money launderers everywhere."

    Loved that line. Made me LOL.

    Good post. Thanks for sharing everything. Go Team GlueJar

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  3. Regretsy is using Wepay. It seems pretty easy, except that not enough other businesses are using it. I don't want to have accounts all over.

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  4. with regards to the remark that kickstarter is not expanding internationally, you seem to have missed their announcement that they will launch in the UK this fall: http://www.bbc.co.uk/news/technology-18780184 or http://thenextweb.com/uk/2012/07/09/kickstarter-will-start-allowing-uk-residents-to-create-crowdfunding-projects-this-autumn/

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  5. What a detail filled tweet! "<3<3<3"

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  6. That's very gracious of you, but it doesn't change the fact that Amazon have behaved (and here I am moderating my language) extremely shoddily. So, you know, kudos for retaining a sense of proportion. But this makes me much less inclined than previously to continue my usual strategy of buying pretty much everything from them because they're so darned convenient.

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  7. An Epistle from the UK. Alert to a new Amazon technique...one day prior to regular 14 day + 5 day clearance disbursement Amazon decides to withhold £900 whilst they 'carry out an account review' which may last 30 days. What is there to review Customer metrics tell all and no refunds due in fact emails of praise for our product. Oh and the usual 'cannot send an email directly' to anyone in Amazon and have to resort to poor old Seller Support to pass it on. Cynical transfer of our money to their account for a bit of interest, we cannot believe it's worth the trouble in aggravating small traders like ourselves. Should have gone to Ebay and PayPal
    Natasha Tunnicliffe

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  8. Why I am mad at Amazon.

    It has nothing to do with you or your project. It seems that you had nothing out of the ordinary happen to you, but there are those who worked at Amazon who did. Here in Pennsylvannia there is an Amazon distro that has been plauged with many issues. The largest of those is the heat inside the building. Heat stroke can be quite a problem and it was for the workers at Amazon, so much so that nearly a dozen workers were taken out by medical personel over the course of one summer. At least one worker was fired for "leaving their shift early" when they were taken to the hospital for heat stroke, another did not survive it and is now dead. In what has become rare in this day and age the media covered the story and shamed Amazon into renting a temp air conditioner. It seems that the chance of death for their workers was not good motivation to fix things, but when more news outlets around the country started picking up the story the threat of loss of buisiness was. Profits over people.

    So yes, I do hate Amazon, beause they treat people as disposible. Even today they continue to hire only temp workers and very few get hired on as full time. No need to pay for benifits for temp workers so Amazon stays with the labor pimps, in this case ISS. just like regular prostitution those in the lowest part of the chain do all the work and get the least reward. turns out much of the world is working this way, refusing to hire people as full time workers. Temps and part time do not get medical coverage so no full time jobs will be found. Why? so that the few who do nothing, the pimps of the labor world, get to keep most of the funds and Amazon has become one of the worst exploiting their workforce to the point of death. Maybe you should not hate Amazon for how they treated you, but there are other reasons Amazon should be hated.

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