I agree they shouldn't censor, but I can understand concern if Kobo is sending recommendations for mostly middle school books and one of the titles is an erotica book. Jane at DA points out that many of the self-pubbed authors have been retitling their books and labeling then as NA/YA so that they are more visable. I can see why the authors think having the adult label could hurt sales, but I also see how parents and others who want to search for books should be able to not have some of these obviously adult books appear in the results.
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