In a blog post today, Readability has stated that it is doing away with its “reader fees”. The app itself allowed users to send content from across the Web to a single location, to be read and shared from the app itself. The reader fees program was set up so that, if a user donated money to Readability, those funds would then be passed on to the content creator and the user would get premium features in the app.

Unfortunately, of the “millions” of sources that went through the service, a mere 2,000 were signed up to get their payments. This, as well as some other practices of the company, has caused quite the stink.

As well-intentioned as the service might have been, it doesn’t take away from two simple facts:

  • Readability was collecting funds, with no assurance that they would be passed to the creator.
  • The app’s terms of service were long on protection of the service itself, and far short on protection of the content that it used.

The collection of the funds problem goes a bit deeper, as well. If a publisher doesn’t collect their funds after 12 months, that money goes directly to the company. Call it a tax, if you will, which would serve to keep the company in business sans advertising or other, more traditional models.

But Readability was never especially proactive in getting publishers to sign up for its service. As such, at present, there is somewhere in the neighborhood of $150,00 sitting in the company’s bank accounts, just waiting to be doled out. If it hadn’t reversed its course, that money would likely go to the company itself instead of to the creators of the content that it used to make its business.

For a good look at the publisher’s perspective on Readability, take a look at what Ben Brooks has to say, especially in comparison to Instapaper:

“With Readability, who is the customer? Is the free user the customer? The VC helping fund it? Or is Readability itself the customer and the Publishers the ones paying Readability to do something they never asked Readability to do? (After all they take 30% before paying out to publishers.)

The fact that I don’t know this about Readability makes me leery of the service. The same is simply not true of Instapaper”

Back on today’s blog post from the company, commenter Keith Calder brings up some other important points:

“So basically if I sign up to collect money from Readability, I have to hold them harmless for ANY copyright infringement on ANY web page or article I have authored that is sent through the Readability Service. So if I wrote an article that is behind a pay-wall, and someone figures out a way to add that to a ReadList… Oh well.”

I have no desire to hop onto the dead-horse beating train here, but Readability’s actions were simply not well-thought out. The company’s long-term viability is now up in the air, but it probably should have been already. With so many other, great options on the market (the aforementioned Instapaper, and of course Pocket), it’s going to be very hard for a third player to squeeze in.

One thing is for certain – whomever decides to throw their hat into the ring absolutely must do so with a model that is transparent and defined.

Image courtesy NS Newsflash, via Flickr