The connection: eBay bought a company a year or so ago that received venture capital from Alta Partners. "The Novel Network" is, according to Hoovers.com, owned by Alta Partners.
So, here's my interpretation of the PayPal v. Smashwords mess, which is nothing more than a new twist on an ageless predatory competitive practice.
As Amazon/Kindle's Preferred program appears designed to restrict competition, this eBay/PayPal venture is quite similar in outcomes.
As I said, "The Novel Network" is a direct competitor of Smashwords. eBay provides a link to "The Novel Network," as a sponsor feature. However, instead of including the direct link of http://www.thenovelnetwork.com/ , it's listed as www.burubookr.web99.eu/ . Seems peculiar ...
Another point: It's against card-association rules for PayPal, as a transaction processor, to reject transactions from a merchant, in this instance, unless the merchant has been classified as "high risk." So, if PayPal can provide proof to the card associations (Visa, MasterCard, AmEx, et al.) that Smashwords is non-compliant regarding banned content, then if PayPal were to push the case and win, the result can effectively change Smashwords' network classification to "high risk"; effectively cutting off Smashwords from access to the networks and its card-carrying customers. The end result - Smashwords would be limited to closed networks, checks, and cash payment methods. With its global presence, such a consequence would likely ruin Smashwords. Crippling Smashwords opens the door for "The Novel Network" to entice and assimilate Smashwords' authors, readers, and titles.
Then, get a load of "The Novel Network's" disclaimer! It absolves itself of any blame related to content (imagine that!). Here's a direct quote from the relevant portion of its Terms, Conditions, and Legal Matters:
"THE SITE, AND THE CONTENTS THEREIN, ARE PROVIDED "AS IS" AND "AS AVAILABLE," AND ALL WARRANTIES, EXPRESS OR IMPLIED, ARE DISCLAIMED, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, QUIET ENJOYMENT, NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE. WE ARE NOT RESPONSIBLE FOR DAMAGE OR LOSS CAUSED BY ERRORS OF THE SITE, CONTENT ON THE SITE OR THE INTERNET. The Novel Network DOES NOT EXERCISE CONTROL OVER ANY THIRD PARTIES THAT PROVIDE CONTENT TO THE SITE AND THEREFORE PROVIDES NO REPRESENTATIONS OR WARRANTIES REGARDING SAME." (http://thenovelnetwork.com/legal.html)
So, "The Novel Network" sidesteps the matter, taking no ownership in the event banned content may appear on its site? eBay and PayPal endorse this position? Well, if so, the solution for Smashwords is quite simple: Just add a sentence in its disclaimer that is identical to the one within "The Novel Network."###