The ebook industry has undergone several transitions in the past few years, where authors have become increasingly victimized by e-pirates, vanity presses, and scams designed to keep writers from making money on their intellectual property. Earlier today, December 28, 2016, the industry hit a new low when longtime e-tailer All Romance E-Books (Are), LLC (with its non-romance genre partner Omni Lit) released a surprise notice to its authors and publishers. ARe’s CEO and owner, Lori James, announced that the retailer was closing its doors in three days’ time.
What makes this so terrible is not the fact that they’re closing. What makes this so terrible is how they’re doing it:
We will be unable to remit Q4 2016 commissions in full and are proposing a settlement of 10 cents on the dollar (USD) for payments received through 27 December 2016. We also request the following conditions:
1. That you consider this negotiated settlement to be “paid in full”.
2. That no further legal action be taken with regards to the above referenced commissions owed.
Let’s break this down. An online retailer is closing down and cannot remit the royalties owed to authors and publishers for the entire fourth quarter of 2016. In lieu of the agreed-upon percentage of 60% of the cover price for each book sold, ARe is proposing that they pay authors TEN CENTS on the dollar of those owed royalties–for books that have already been sold and the money already collected and presumably deposited in the bank account of ARe.
As an author with books listed at ARe and a longtime ebook editor and managing editor at small presses, I am horrified to see this even suggested. Basically, the owners of ARe are telling every author of the thousands of books that were listed for sale as of this morning that they are planning to steal the majority of the royalties they are legally bound to remit.
So what kind of money are we talking here?
Let’s say I have eight books listed for sale at ARe, and each book is listed at $4 cover price. That means I am owed $2.40 for each individual book sold. If I sell 100 copies of each book, that’s $240 royalties owed for each title, for a total of $1920 royalties due for all eight books.
ARe is proposing that I accept $192 in lieu of the royalties they are legally bound to pay me, thereby keeping $1728 for themselves.
Obviously, no sane person would agree to terms like this. After all, ARe already sold and delivered the copies of those books to the customers, already collected the $3200 for the sales of those books, and has the money in its possession currently (or should). So if they can’t pay the royalties although they already received the money for the sales, where did the money go? And why do they expect authors and publishers to agree to this?
It is my sincere hope that we will be able to settle this account and avoid filing for bankruptcy, which would undoubtedly be a prolonged and costly process.
Well of course. That’s reasonable. In lieu of ARe having to deal with a prolonged and costly bankruptcy process, it will be far easier for them to just steal ninety percent of each dollar they owe to every single author whose books are on their site. What a great solution!
Wonder why Wal-Mart doesn’t do that? “Even though we already sold your product online for the last three months, we have decided not to pay you for the units we sold because we don’t want to have to deal with going through bankruptcy court. But we will pay you ten cents on the dollar! Isn’t that nice?”
Oh, that’s right. Wal-Mart doesn’t do that because it’s illegal.
And we’re not talking small amounts here. Despite the exodus of authors and publishers yanking their titles off ARe since the closure was announced, there are still thousands of titles listed there. Some books may never have sold a single copy. Some may have sold thousands of copies per quarter. In fact, owner Lori James had this to say about ARe:
Because All Romance stocks titles from over 5000 publishers, from Big 5 to smaller indies to the latest break-out self-published authors, there is something for everyone. Through our Publishing in Partnership program, we bring best-selling original fiction not only to our customers, but those who shop at other retailers as well. Our data-driven approach to publishing means we strive not merely to know the market, but to anticipate the market and ride emerging trends.
Five thousand publishers. Big New York publishing houses, small independent presses, and independent self-published authors.
The big publishing houses will almost certainly get their money. But the small presses and self-published authors are facing a terrible decision. Do writers allow ARe to steal their royalties? Do they submit for convenience’s sake because the owners of ARe aren’t planning to pay those royalties as they are contractually and legally required to do? Or, are writers willing to stand up to this theft and pursue legal recourse, knowing full well they won’t even see that ten cents on the dollar after all is said and done?
Because let’s be for real here. It’s not like ARe’s owners aren’t paying authors because they don’t have the money for the sales. They do have it. They banked all that cash and are now trying to keep it. And by hanging the threat of filing for bankruptcy out there, the company is attempting to threaten authors into agreeing legally to let them retain that money without future legal responsibility.
And here’s the million dollar question – what did ARe and its owners actually do with all the money they collected from fourth quarter sales? They haven’t paid the authors, obviously. So where is it?
And what about the authors who prepaid for advertising in 2017? What happened to their money? Just last week, ARe sent out notices soliciting ads for 2017. As you can see from their website, advertising cost anywhere from $50 to $2000 per month.
The mystery deepens.
The Romance Writers of America guild released a statement upon hearing of the news which reads as follows:
RWA was notified today that All Romance eBooks (ARe) is closing effective 12/31/2016. The notice states:
- All Romance eBooks is unable to remit Q4 2016 commissions and is proposing a settlement of 10 cents on the dollar for sales through 12/27/2016.
- By accepting, authors consider the settlement as “paid in full” and they agree not to take legal action against All Romance eBooks.
- There is no offer to pay commissions on sales after 12/27, even though the site will remain open through midnight on 12/31/2016.
- Companies or individuals wishing to deactivate their accounts before 12/31 can do so by logging into the publisher portal.
RWA finds it unconscionable for the owner of ARe to withhold information so long and to continue selling books through the end of the month when the company cannot pay commissions. RWA contacted ARe but has not yet received a response.
Interestingly, despite sending out those notices on December 28, the All-Romance E-Books, LLC website was not immediately taken down, providing us with a great deal of information on who is behind this latest e-publishing fiasco. CEO Lori James and Administrative Assistant to the CEO Maxwell James are the first two names listed on this privately held company that was founded in 2006. The company’s Linked In profile cites 11-50 employees.
But the mailing address on the website (6252 Commercial Way #145 Weeki Wachee, FL 34613) is different from the one on Linked In (2519 McMullen Booth Road NorthSuite 510-199 Clearwater, FL34685). The website address is actually a virtual office, where for $99 a month anyone can set up a storefront that gives the appearance of an actual physical location. The Linked In address is a strip mall in Clearwater, with numerous restaurants, a Scientology outlet, and a UPS store…among other unrelated businesses. On the privacy page is yet another address: 303 Main Street #186 Safety Harbor, FL 34695 – which is the physical address of a United States Post Office.
But when we checked Lori James’ Linked In profile, she’s nowhere near Florida. In fact, she is in the greater San Diego area according to her profile. In a bio she provided to the California Dreamin’ writers conference, she splits her time between San Diego and the mountains by Big Bear Lake which is, of course, a lovely way to spend one’s time.
So how does a corporation exist in the state of Florida when the CEO and owner is on the opposite side of the country? That’s easy. The physical addresses are a front. Everything is online, and there is no physical office per se. For many online businesses, that’s not a big deal. Honestly, to conduct e-business you don’t really need a physical storefront and your business can still be on the up and up. But to cite three different addresses on the company’s website and all three of them go to a virtual storefront, a UPS store, and a post office – is somewhat suspect, particularly when the owner is literally on the other side of the continental United States. Everything you find online about All Romance E-Books, LLC is designed to create belief in the company as a physical entity and therefore to give a sense of trustworthiness to potential customers and affiliates.
That trust is furthered by ARe’s website, which states:
We’ve worked to give publishers maximum control of their books. Publishers will be able to upload novels and have them instantly available for sale. The publisher will set the price, decide when to offer discounts, choose which file types to offer, and select the heat level and categories.ARe has no set-up fees and no special formatting requirements. Publishers will earn income on their very first sale, and all sales can be tracked in real time using our secure publisher reporting features.
Best of all, publishers will earn 60% of the retail price on each and every eBook sale.
Bolding is ours. Authors who self-publish their works are considered publishers by ARe, and so they are guaranteed 60% of the cover price on each and every book sale. Again, in perspective, that’s $2.40 for a $4.00 title. The FAQs support this as well:
Q: When do I start earning?
A: You start earning with the very first sale.
Q: What percentage do I get?
A: Publishers will earn 60% of every sale.
Q: How often do I get paid?
A: ARe will release payments quarterly, 45 days following the close of the quarter.
Again, ARe’s alleged business practices are right there on their website, and they are bound to that policy. It’s in plain sight and has been for a decade. That cannot be refuted. What also cannot be refuted is James’s intentions as of today’s mass email, which is clearly stated below:
If you are willing to accept the offered amount and the terms proposed, please hit the reply on this email keeping the history intact. Change the subject to “Publisher Settlement Acceptance” and copy/paste the acceptance statement below into your email, filling in the fields.
Upon receipt of the signed agreement, I will authorize payment of the settlement amount in full by 28 February 2016 via the method stipulated in your publisher account.
James is giving the author/publisher no other options. You either agree, and ARe will pay you on February 28 (And of course, one can hope that 2016 is a typo and not another attempt to steal those last ten cents on the dollar) or you don’t agree and you don’t get paid. Obviously, the only author/publisher James has any concern for is herself. She certainly doesn’t want to hand over the money from the sales of every book ARe and OmniLit sold through October, November, and December of 2016.
But here’s the real killer – there are even more people who are losing potentially hundreds or thousands of dollars this week. ARe has been open since 2006, and loyal customers have whole libraries of books that they access through the ARe site instead of using physical storage on their personal technology. Those customers are being told they have three days to back up their books, because the sites will be closed down in their entirety. Loyal customers for a decade could lose their entire library of books purchased through ARe if they don’t realize that the site is closing at the end of the year.
As for the authors who published through ARe and have publishing contracts that tie up their intellectual property rights, the company has offered them the following choice. They can get their rights back, but in order to do so they agree to not receive a penny of their earnings from the 4th quarter of 2016. To these authors, there really isn’t a choice. If All Romance E-Books,LLC goes into bankruptcy, it’s not just their royalties that are tied up for years. It’s their IP rights also, and they will not be able to re-issue or publish their books until their titles are released by the creditors in bankruptcy court.
So who hasn’t ARe screwed over with this move? Let’s see…Publishing houses will lose a quarter’s worth of profits. Authors will lose 90% of each dollar they earned and that’s only if they agree to the company’s strong arm tactic threatening bankruptcy. If they don’t agree, they lose 100% of their royalties. Customers who stored books they purchased from ARe will lose their entire libraries unless they physically back up their books on e-readers or their computers.
Authors and publishers who paid for 2017 advertising will lose the money they prepaid for those services. And authors unfortunate enough to have published through ARe’s publishing service will lose not only their royalties, but the rights to their intellectual property as well.
Authors who published through ARe can either get the rights to their books back, or ten cents on the dollar of their royalties. One or the other…take your pick.
ARe must have had a great Christmas holiday, planning for this move. Ho ho ho and bah humbug to you too.
For the average reader, this retailer closing may not seem like a big deal. But for the authors with books listed through ARe – an online retailer who is still selling books at this moment with the clearly expressed intention of never paying the authors of those works their full royalties – this is yet another disaster. Whereas indie authors with the ‘right’ connections at Amazon are cheerfully manipulating the sales algorithms to ensure that their works are given preferential treatment over the thousands of other authors in their genres, a retailer who claimed to be above all that favoritism has closed its doors and stolen hundreds or thousands of dollars from each writer and publishing house that worked with it.
In fact, we may never know how much money ARe and its owners have absconded with exactly. That is probably a matter for the courts to determine. And it certainly seems like there is some strong legal basis here to charge the company and its owners (listed in some places as a partnership) with fraud or online theft. At the very least a breach of fiduciary duty. As ebook sales cross over all fifty states and even international borders, there may be taxation issues as well.
There is an underlying lack of legal protections for authors, their intellectual property, and their income in this country. Publishers, false agents, and retailers continue to run these long-term scams, sucking the unwary into their webs and milking them for every dime. But what makes this case stand out is the egregious bullying tone of its owner’s statement to the authors she stole from, and the utter lack of concern James and ARe display for anyone outside of their own personal interests. And sure, most of the authors whose money just vanished into the ether surrounding those multi-million dollar properties in a Big Bear Lake vacation community may be out ten bucks at most.
But that’s not the point.The point is that a retailer announced today that it was stealing the money it’s received for three months’ worth of book sales and has no intention of fulfilling its fiduciary responsibility to the authors whose intellectual property they sold. A retailer has basically committed fraud and has no evident fear of being challenged or behind held responsible legally, either on a criminal or civil level. And unfortunately, that’s probably true. They’ll get away with it, and Lori James will continue to spend part of her time at Big Bear Lake, where she will enjoy the benefits of running a company who blatantly stole from the authors whose books she sold.
Authors and publishers who are not interested in letting All Romance E-Books, LLC get away with this monstrous scaled theft do have legal options. The main thing they can do is to contact the Attorney General’s office in the State of Florida, the state where the company ostensibly exists as a legal entity, or file a complaint against Lori James and All Romance E-books, LLC here. Authors and publishers can also contact the Department of Justice and report James and ARe for fraud. Authors who published through ARe can also contact the DoJ for intellectual property crimes as well. Authors and publishers based in California can also launch a civil case against James, as the owner, if they so desire.
If enough of the injured parties in this latest travesty of e-publishing start the wheels turning, the Attorney General’s office and Department of Justice may look into the matter. If that happens, then ARe’s sales records and books will be subpoenaed and authors can at least find out why a company who had the money in hand after three months of sales suddenly determined it wouldn’t be able to pay the royalties it was legally obligated to pay.
Tonight as I conclude this post, I have the ARe site open to multiple tabs. Not just because I’m quoting and citing from their own publicly published material about their business practices and obligations, but because I’m watching the internet store. I’m looking at books from all genres, still available for sale although ARe is refusing to pay the author their share of any sale in the next few days. I’m looking at books that authors paid to advertise on the site, flashing in the sidebars or in special windows – still available for sale, still advertised as if the site will still be up on January 1. I’m looking at the tab entitled “My Library”, where on January 1 customers’ entire libraries will suddenly evaporate into the online ether, never to be found again.
I’m looking at thousands of books by thousands of authors who were informed today that a retailer they trusted to sell their intellectual property has decided instead to steal their royalties, and then dared them to do anything about it.
I’m looking at scores of books I edited for writers ranging from debut authors to NYT/USA Today bestsellers, whose reward for the months or sometimes years of work they dedicated to their craft is to have their royalties stolen by an outlet who was supposed to make them money, not take it.
I was looking at my books before my tech guru took them down from the site. My eight books listed on Omni-Lit, ARe’s non-romance arm. Eight fantasy novels. I released one book per month for the past eight months and that is a LOT of work. And in the past three months, every $4 ARe received for a sale of one of my titles is staying with ARe and Lori James. Not in one of the many addresses they listed as their physical address on their website. Not in the state of Florida, where their virtual storefront was allegedly located. No. In California, splitting their time between San Diego and Big Bear Lake.
Hell no, I’m not agreeing to ten cents on the dollar. I don’t care if ARe only owes me two bucks (which is probably about what they owe me as I do not write romance). I’m not going to agree, legally, to let them steal that two dollars. I’m contacting the Florida Attorney General’s office and the Department of Justice, and if you’re an author with ARe titles, I advise you to do the same. No one looks out for the indie author or the small press author. We’ll have to do it ourselves.
So share this article with your fellow authors. Share the information on your social media. Tell your brothers and sisters what to do, and why they shouldn’t agree like sheep to let ARe keep the royalties they legally owe them. Two dollars or twenty, two hundred or two thousand – it’s time to stand up for ourselves and each other. Enough is enough.
Authors should not be victims. Authors should be advocates. And then perhaps we’ll all get together at Big Bear Lake and throw a party. We may never see a dime of our money after a “long, costly bankruptcy”. But we can throw one hell of a celebratory bash if by banding together, we finally compel the legal system to come down on one of these publishing predators for the fraud, intellectual property theft, and breach of fiduciary duty they have perpetrated on our entire industry.
In fact, let’s have that party at Big Bear Lake. We may only get to drink water from the lake, but it’ll taste like Dom Perignon as we tell Lori James and All Romance E-Books, LLC what they can do with their ten cents on the dollar. Judging from the responses I’m seeing from writers all over the internet, I’m not the only author with definite ideas on the anatomical probabilities of “shove it up your…”