"Remember: Pay and the story rolls. Steal and the story folds," he wrote on the site. "No stealing from the blind newsboy!"
Readers will be asked to send the him $1 (67p) per instalment of his novel, The Plant, in a direct transaction he describes as "Big Publishing's worst nightmare".
King is counting on two things: honest readers, and a story that will be good enough to keep them reading.
The 52-year-old has threatened to abort the exercise if less than three-quarters of readers downloading the book fail to pay up.
"Remember: Pay and the story rolls. Steal and the story
folds," he wrote on the site. "No stealing from the blind
newsboy!"
The first instalment of the novel, about a "vampire vine" that takes over the offices of a publishing company and promises financial success for human sacrifice, will be published on King's website on 24 July.
Part two follows a month later with subsequent instalments only appearing if "pay-through" equals or exceeds 75 percent.
Second e-book
King's first e-book, Riding the Bullet, was made available through publishers' websites, and users paid $2.50 (£1.67) by credit card to download it.
However, within a matter of hours of going online the book was offered around the web for free.
Explaining how he got the idea, King said a reader of the e-book mailed him the money out of guilt after getting it free from an unauthorised website.
But he does not think the idea is a move towards the end of publishing.
"I love my editors, and I like my publisher," he said.
King sees himself as breaking the "trail for all the mid-list writers, literary writers, and just plain marginalised writers who see a future outside the mainstream".
Referring to the controversial software which helps internet users download music for free, he warns: "This ain't Napster. Take what you want, and pay for it."