March 2, 2012 eBay Inc.

2065 Hamilton Avenue San Jose, California 95125 PayPal USA 2211 North First Street San Jose, CA 95131 Attn: Scott Shipman, scott@ebay.com Jonathan Fox, jfox@ebay.com Jonathan Muller, jmuller@paypal.com Dear Sirs: On behalf of The American Booksellers Foundation for Free Expression (ABFFE) and the National Coalition Against Censorship (NCAC), we write to express concern over recent reports that PayPal is refusing to process sales of books and other written materials containing some types of sexual content. As organizations representing the interests of booksellers, publishers, authors, scholars, readers, and others who have a strong stake in a culture that values and promotes intellectual and artistic freedom and a free Internet, we urge you to revise this policy, which threatens to turn your company into a morality police. Published reports, as well as a flood of complaints filed with our organizations, indicate that PayPal has notified a number of online booksellers and distributors, among them BookStrand.com, Smashwords, All Romance Ebooks, and eXcessica, that it will cease to do business with them unless they remove certain kinds of erotic content, including descriptions of rape, incest (and pseudo-incest) and bestiality. If PayPals concerns were limited to restricting the sale of illegal content, the policy would be unnecessary, since it already holds users independently responsible for complying with all applicable laws in all of your actions related to your use of PayPal's services, regardless of the purpose of the use. However, the apparent purpose and clear effect of the policy is to prevent booksellers from distributing content that adults have a legal right to receive. Given PayPals dominant role in processing online transactions, the policy will have a dramatic effect on online sales of materials that do not even arguably qualify as obscene.

The policy positions PayPal as contemporary exponent of its own Index Librorum Prohibitorum. The Catholic Churchs Index of Prohibited Books, like the Hays code in the film industry, has long since lost favor with the American public, and there is no reason to think that they would welcome PayPal in a similar role. The commitment to free speech is firmly embedded in our society, legally and culturally. Those who find sexual (or any other kind of) content disturbing or immoral dont have to buy it, but it is widely accepted that they have no right to impose their views on others, or to expect society at large to adopt their perspective. Like the Index, PayPals policy has the potential to suppress important works: incest, rape and bestiality have been depicted in world literature since Sophocles Oedipus and Ovids Metamorphoses. While PayPal may claim that its policy would only apply to low-value erotica, many great and even iconic works of literature were widely reviled as low-value filth when first published. Books like Ulysses and Lady Chatterleys Lover were banned as obscene in the United States because of their sexual content. The works of Marquis de Sade, which include descriptions of incest, torture and rape, were scandalous and probably remain repugnant to many readers, notwithstanding his acknowledged importance in the history of literature and political and social philosophy. In short, there is no telling what kind of works, or how many, may be affected by PayPals policy. We recognize that PayPal, as a private company, is not bound by constitutional standards. However, we suggest that PayPals assumption of the role of moral arbiter is misguided and damaging to the company. If the company is concerned about appeasing those who believe some books should be banned entirely from the marketplace, it should also consider the far greater damage to its reputation if it is perceived as a self-appointed enforcer of public morality. The right of freedom of speech and expression, especially regarding matters such as politics, sexuality, religion, and morality, is increasingly valued around the world. The Internet has become an international public commons, like an enormous town square, where ideas can be freely aired, exchanged, and criticized. Ironically, PayPal takes advantage of the open and vast nature of the Internet for commercial purposes, but would undermine the very quality that makes it so attractive to so many the freedom to express oneself and make ones own choices. We do understand the need to have appropriate acceptable use policies, but we strongly believe that those can be crafted in ways that will allow PayPal to protect its interests without becoming a censor. We would be happy to work with you on developing such an approach. Sincerely,

Joan Bertin Executive Director National Coalition Against Censorship p: 212-807-6222 x101 e: bertin@ncac.org

Chris Finan President American Booksellers Foundation for Free Expression p: 212-587-4025 x4 e: chris@abffe.org