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December 30, 2016

All Romance eBooks' Sudden Closing: Many Questions, Few Answers

Posted by Victoria Strauss for Writer Beware

This post has been updated.

On Wednesday, December 28, All Romance eBooks--a romance-specific ebook distributor and publisher that also distributes general fiction and nonfiction through its OmniLit imprint--dropped a bombshell. In mass emails to customers and authors, ARe's owner, Lori James, revealed that her company was closing, and that in lieu of full payment, authors and publishers would be offered a fraction of what they were owed.

The exact why of the ARe closing remains a mystery (the emails make generic references to losses and poor financial forecasts, but provide no specifics). As to the what, here's what we know so far.

- The ARe website is going dark at midnight on December 31, 2016. Customers were given just four days to use their credits, download their purchases, and backup their libraries. Authors were given just four days to decide whether to accept ARe's offers of "settlement".

- ARe is offering just 10 cents on the dollar to authors whose books it distributed. Per the email, "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."

- ARe is offering no payment at all--zip, zero--to authors whose books it published. In a different email, published authors are offered rights reversion on condition that they consider this "a negotiated settlement of your account to be 'paid in full'.

- In order to receive these settlements, ARe is requiring authors to waive their right to pursue legal redress. They must agree that "no further legal action be taken with regards to the above referenced commissions owed."

- ARe is staying open until December 31, but is offering settlement only on payments received through December 27. Romance Writers of America, in a statement on the closing, calls this four-day no-payment zone "unconscionable."

- ARe is saying nothing--publicly at least--about reimbursing 2017 advertising purchases. Just days before the closure announcement, ARe sent out an email soliciting ad buys. Many authors took advantage, or had already bought ads.

- ARe is doing all of this because, it claims, it wants to avoid filing for bankruptcy. "It is [our] 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." Yes, it would--and it would also make ARe accountable to its creditors.

I've been contacted by a lot of ARe authors over the past couple of days. By all accounts, the company's implosion came completely out of the blue. Some authors did tell me that they'd noticed sales declines and ad price increases over the past year, but others saw their sales go up, and there were none of the classic warning signs--no late payments, no payment errors, no communications problems, no website glitches. Until Wednesday, ARe authors and customers had no reason to suspect there was anything wrong.

It looks like there is a lot of money involved. ARe claims close to 1.2 million titles across its two retail sites, and works with hundreds of publishers as well as individual authors. A few authors told me that they are owed relatively little--less than $100--but the majority of those I heard from are owed in the hundreds and thousands of dollars. For many, ARe was their largest source of sales after Amazon.

I've also heard from a publisher that used ARe to distribute its books; it told me that it is owed five figures, and is planning on making its affected authors whole out of its own pocket. A number of other publishers are reportedly planning to do the same.

It's worth remembering that editors and other staff are caught up in the implosion too. As are readers, whom ARe will not reimburse for purchases or pre-orders. Some authors and publishers are offering to honor pre-orders or purchases themselves, for readers who send them receipts.

Many of the authors who've emailed me plan on refusing ARe's settlement offer on principle--even if it means they get nothing, or risk having their ARe-published titles assigned to another publisher, as Lori James has apparently said she may do. On a private Facebook group, ARe refugees are talking, among other things, about the possibility of legal action.

So what to think about all this?

Even if we give ARe the benefit of the doubt--assume it is really in dire financial straits, and that its pennies-on-the-dollar offer is a good faith effort to provide at least some payment, rather than to stockpile cash by lowballing authors--it has handled the situation in a notably arrogant and unprofessional manner. I'm reminded of Booktrope, which also went out of business abruptly with few signs of trouble beforehand, leaving its authors high and dry--but Booktrope at least gave authors and customers a month to tie things up.

Can we give ARe the benefit of the doubt, though, considering that it's proposing to pay its published authors nothing (this, which hasn't been much noted in the general outcry, is for me one of the most disgraceful aspects of the whole affair), appears to be ignoring the issue of ad buy reimbursement, is expecting authors to waive their right to legal redress without knowing any of the reasons behind the closing, and is giving them less than a week decide whether to say yes or no? Not to mention that troubling four-day gap during which ARe will continue to sell books, but will not remit payment.

I am not saying there is dishonest intent here. We don't know that. But the lack of professionalism and care is really troubling.

----------------

The ARe author private Facebook page: P*ssed Off (former) ARe Authors

ARe authors are collecting data on money owed to authors and publishers. You can fill out a survey here. You can see results here; amounts range from less than $5 to more than $14,000.

UPDATE: SFWA members with books at ARe are urged to contact Griefcom at griefcom@sfwa org.

Other coverage of the ARe closing:

Smart Bitches, Trashy Books
The Digital Reader
Lilith Saintcrow
Mary Winter
Liana Brooks
KT Grant
Marilyn Vix

UPDATE 12/30/16: I don't know what this means, or if it means anything, but in March 2015, ARe co-owner and CFO Barbara Perfetti sued Lori James for a variety of causes, including breach of fiduciary duty and unjust enrichment, alleging that James had improperly forced her out of the company in November 2014. Among other things, Perfetti alleged that James started paying herself a salary shortly after Perfetti was locked out of the company (previously, Perfetti and James had taken distributions, but had not drawn salaries).

According to court records, James never responded to Perfetti's complaint, and the case was dismissed in August 2016 for lack of prosecution.

The complaint can be seen here. To see the full court record, click here, select All Case Records Search, and enter the plaintiff's name: Barbara Anne Ulmer.

UPDATE 1/2/17: Just days before the closure announcement, Lori James contacted multiple ARe authors with an offer to market their foreign and audio rights (another "click here if you agree" email), and was also contacting agents about representing those rights at book fairs. These really don't seem like the actions of a company on the verge of shutting down. Curiouser and curiouser.

UPDATE 1/3/17: At least some authors report receiving full refunds for 2017 ad purchases. And the story has spread beyond the writing/publishing community: the Guardian did an article today.

UPDATE 1/14/17: A class action lawsuit on behalf of writers and publishers has been filed in the Circuit Court in Pinellas County, Florida, against All Romance eBooks and its owner, Lori James, by the law firm of Byrd Campbell P.A. The press release is below; you can read the complaint here.


UPDATE 1/23/17: The Tampa Bay Times covers the ARe story.

David Vandagriff, a Utah lawyer who represents writers around the world (none selling on All Romance), said...authors are probably out of luck if they think James was legally obligated to avoid commingling royalties with business accounts.

"That would certainly be a good business practice," he said. "But it's not required.

"What happens in these cases, the owners have a good quarter, so they assume the next quarter is going to be as good or better and they pre-spend money they don't have yet," he said, acknowledging he has no firsthand information on All Romance.

UPDATE 1/31/17: Multiple sources are reporting receiving the following email from Lori James (reproduced exactly as sent):
I wanted to take this opportunity to update all contracted publishers on some key elements involving the winding down of All Romance eBooks, LLC. First, we have completed the process of refunding all 2017 Pre-orders and Advertising. Next, all book files and images have been deleted. On Saturday, February 4, 2017 the remaining server content will be wiped. Once the server content is erased, you will no longer have access to the publisher portal (https://www.allromanceebooks.com/publishers/index.php). Please make sure to log in and download any reports you might need prior to that date. We remain on schedule to remit payments by February 28, 2017 of payment of the settlement amounts for those who agreed to accept our 10 % settlement offer. Finally, those who are due to receive a 1099 for the 2016 tax year will be receiving them via the post. Those who are due to receive a 1042 for the 2016 tax year will be receiving password-protected files via email. We will be sending a password protected document to the email address we have on record. The password to unlock the document will be sent via a separate email. As per our terms of agreement, we will be using the information that was in our database as of December 31, 2016. If you need to update any information for the 2017 tax form distribution, please send a request to allromanceebooks@mac.com.
Sincerely,
Lori James
All Romance eBooks, LLC
UPDATE 9/25/17: Recently spotted: re-issues of some of Lori James's books (under pen names Samantha Sommersby and L.J. Harper) through a publisher called Morpho Press LLC. Morpho has no website, but a business entity search shows that it is registered in Sheridan, Wyoming by Cloud Peak Law Group, P.C.

Meanwhile, the ARe lawsuit is proceeding. James has moved to dismiss for lack of personal jurisdiction. A hearing is scheduled for January 9, 2018. (To see court documents, click this link, click "All Case Records Search," search on James, Lori, and click on Case No. 17-000247-CI.)

37 comments :

Anonymous said...

Presumably a breach of contract lawsuit would be easy to win, but despite their ability to pay a whole bunch of authors 10% on the dollar, the judgment winner would no doubt magically find them with no money or assets left at all.... So the winner would be out a lot of money, and as an LLC the owner is theoretically protected from accountability. But nevertheless, one does hope there's a lawsuit, that the company loses, and that for some good and legal reason their limited liability turns out not to be so limited after all.

Anonymous said...

The fact that several authors are reporting changing (ie decreasing) monies owed is certainly support for fraud. Monies changing from 300 owed to just 70? Others dropping a few dollars here and a few dollars there?

As if asking authors to accept 10 cents on the dollar isn't bad enough, now the dollar amount it is being based on is being changed?

Anonymous said...

So they're planning on stiffing their readers, authors, publishers, and advertisers, and everyone is supposed to accept no or minimal payment to keep THEM out of bankruptcy court?

Not only is 4 days' notice problematic, but this is the worst time of year to give anyone 4 days' notice. Because of the holidays, there are likely to be many people who won't even get their messages until after the New Year.

azteclady said...

(Second try--I hope blogger doesn't double post)

From what I hear, a lot of authors simply didn't get the infamous email, even checking filters, spam folders, etc.

Also, an RWA update, posted by one of their directors.

Cat Rambo said...

SFWA members with books there should mail Griefcom at griefcom@sfwa.org.

Victoria Strauss said...

Thanks, Cat. I've added that to my post.

Shiloh Walker said...

Some have suggested that those who have used a credit card to purchase books or advertising from ARe in the past 30/60 days might consider contacting their credit card companies and filing a dispute. From Helenkay Dimon's twitter.

https://twitter.com/helenkaydimon/status/814910418523070465

HKD- Let's say you bought books or services on a credit card in the last 30/60 days from a site that's a problem. You could dispute the charge.


https://twitter.com/helenkaydimon/status/814911026139308032
HKD - If enough people dispute the charge that site's bank account could be frozen. Just saying...

Nicola Cameron said...

I know I never got the email, and I double-checked my spam folders and filters. Nada.

Alessia Brio said...

If any authors (or editors, like me) are still paid via PayPal, a few complaints there would probably lock up those funds.

Weirdmage said...

Looked at that survey, and there were 100 replies.
Was a bit bored, so I did the math on what people claimed they were owed.
The total amount:
$91,094.83

Looks like we are talking a lot of money here.

Anonymous said...

Maybe ARE saw all the DMCA takedown notices from Torquere authors and decided Torquere's business model (defrauding others and shutting down with barely a notice) sounded like the way to go.

Annette Gisby said...

I never got the author email at all, nothing in the spam folder either, or the reader one, and I have bought hundreds of books from them over the years.

The first I'd heard about it was a post on KBoards from other authors. They don't owe me a lot of money, probably less than $10 for this quarter. It's not the money, it's the principle of the thing.

And I am shocked on behalf of the authors actually published by ARe are getting nothing at all.

Not the way to run a business.

Lisa Mondello said...

I never got the email. I had to write to the email listed on the website and was told that an email went out that morning to my email address. I checked spam, deleted, new mail and old mail in case I missed it. Nothing. What bothers me is they are still selling books today knowing they have no intention of paying authors their fair share of the royalties and are stealing from them.

Anonymous said...

A lot of authors are reporting a nosedive in sales from about the time the Barbara Perfetti thing started and Lori James started drawing a salary. Coincidence?

Anonymous said...

We do not actually know what sales have been for about 2 years. http://blogcritics.org/court-documents-regarding-all-romance-e-books-disturbing-business-practices-surface/

Althea Claire Duffy said...

I never got the email either - I learned about it from Smart Bitches.

Inkling said...

Dreadfully poor behavior by ARe. At the very least, if it were actually concerned about authors, it could have lined up a way to transfer their rights to a different ebook retailer, so the window of lost sales would be small. Instead, Instead, ARe is using the threat a long period of lost sales to force authors to not sue them.

Someone might want to consult an IP lawyer about the legality of authors simply reassuming their rights and moving to another retailer. After all, ARe has violated its side of the contract by no longer selling their books or paying the for prior sales. I doubt a court would hold an author bound to the contract under those circumstances. In law there's a principle called equity that can be used to override the letter of a contract when it is grossly unfair:

Equity: a system of law originating in the English chancery and comprising a settled and formal body of legal and procedural rules and doctrines that supplement, aid, or override common and statute law and are designed to protect rights and enforce duties fixed by substantive law.

And at the practical level, ARe doesn't have the money to sue hundreds of authors and would probably have trouble finding a lawyer that'd take on such a dubious and probably unremuniative task.

Someone might want to contact Smashwords or another of the major, independent ebook retailers for assistance. The money that authors should have been paid may never be recovered, so the most important move right now is to keep up the income from sales and keep from losing readers. That means finding another retailer quick. Don't let your anger about this override your business sense.

Two suggestions.

1. If you do have the time, make at least a quick editing pass over those books you are taking back, making some changes. That'll create at least some grounds for claiming a new copyright in your name. Call it the "Second Editor" or "New and Revised." It's a technicality, but a technicality that could weigh in your favor.

2. I was in a legal dispute that from the first threatening letter to settlement (totally in my favor) took a year and a half. Early on, I realized that courts move ponderously slow, in part to force the parties to settle out of court. Adopt an "I will be patient" attitude about this. That will keep it from taking over your entire life and keeping you from more important matters. You might find watching this extremely popular Doris Day video helps:

https://www.youtube.com/watch?v=xZbKHDPPrrc

One final and more general remark about the fact that print-on-demand and ebooks make it difficult for authors to determine their actual sales if a retailer wants to cheat. One solution would be to require all such retailers to report monthy to authors and publishers with the date, time, sales tracking number, city, state, and zip code (but not name or address) of all purchasers. Authors could then set up straw purchases. If those purchases don't appear in that list, the presence of even one such purchase would trigger a full-internal audit of the retailer with all costs borne by the retailer. Fear of that would be a powerful motivator.

Good luck to all of you!

--Michael W. Perry, editor at Inkling Books, co-author of Lily's Ride






Anonymous said...

What sort of advise do you have for buyers who didn't get chance to download any of their books?

meg94 said...

4 days to download all my purchased books from the last 5+ years. I lost 1000+ books. I got the email and was out in the woods camping with limited internet access. I wrote them back and this was the response.

"Perhaps you can find someone to do that for you. At this time, we are unable to offer download assistance for prior purchases."

Really.... that is BS... if they would have given 30 days, I'd be sad vs pissed. I'm pissed. I don't know where I will buy books. I like ePub vs kindle and iBooks. GRRRR

I bought 15 to 20 books a month. Grr Grr Grr.

azteclady said...

Major problem with that The Guardian piece: it blames the market, and doesn't mention Lori James, or the blackmail implied in the emails to authors, or the email ARe sent just a few days earlier, soliciting advertising, or...basically, none of the actual facts surrounding the abrupt closing of a heretofore successful retailer.

Anonymous said...

I feel sorry for all relevant party. Hope they forced this company to bankruptcy.

Anonymous said...

Like many others I have purchased many books over a number of years and did not have the opportunity to download my books before the site went dark. To give people 4 days notice over the festive period is totally unacceptable. That said even though I am very annoyed about my situations, my heart goes out to the authors of the books I love that have had there hard earned money stolen.

Anonymous said...

I purchased books and backed up my library the same day of the announcement. However, ARe had technical issues with their website and I was charged for books I never received. I contacted customer service...but, of course, the site went down before it could be resolved.

The word for today is PISSED!

Anonymous said...

I also used ARE as my main source for buying books and had over a dozen pre-paid books in my library. ARE did not contact me back about a refund after emailing them several times. I am sad that many of my favorite authors are having thier incomes hurt. I am wondering if thier is another place to purchase books.

Anonymous said...

The Guardian article did shy away from the possible fraud angle. As I understand it from the author who spoke to them, they were supplied with all of the information about the closure, sale of ad space and rights grab for audio and translation days before ARe closed. They were even given links to blog post about the legal action between Barbara and Lori but chose the safe road of blaming an imaginary downturn in ebook sales. Even with all the information they could have followed up online to beef the story up they still got the suggested settlement details wrong. Now these incorrect details are being copied and pasted into blog articles as if they are fact.

A reader on Goodreads said that she spent nearly $900 on books on ARe over the last three months and was on vacation for the holiday season, so lost her whole library. There are thousands of readers who have lost money as well as authors. The only person who has profited from the closure is Lori James. I hope this story gets some airtime in the US, Lori James has more than a few questions to answer.

Anonymous said...

Hello, I never got the famous email but ARE was my source for ebooks any recommendations for a new site? I travel a lot and ebooks keep me sane.

Stephanie Collins said...

As an FYI I have not heard of a single reader getting an email saying this was happening but we only found out if we visited the site or were told by authors/publishers via social media. I still miraculously received marketing emails though.... hmmmmmm

U N Owen said...

High Victoria, just wondering if you've heard about the closure of wilde City press.

T. A. Grey said...

I did receive the email. I agreed to the 10cents deal. I've always enjoyed their website and felt badly for them. I had earned maybe $137 in December, and the same for Nov and Oct. I'm owed around $3-450. I'm not real concerned about it.

The lawsuit against Lori James is interesting, if you want to read: http://byrdcampbell.com/wp-content/uploads/2017/01/For-Love-or-Money-Complaint.pdf?mc_cid=e7c07d0ec7&mc_eid=a09642dcc8

Anonymous said...

So, T.A. Grey, you felt badly for ARe? How about you spare some of that pity and sympathy for those folks who have been betrayed by ARe and by Lori James's appalling, selfish, greedy behaviour. Feel sorry for the publishers and authors who have lost lots of money and the readers who have lost books and credits. You may not be 'real concerned' about your personal loss of income, but others are, some rely on every single dime and dollar to help make ends meet. Besides that, there's a principal at stake here - Lori James has utterly betrayed the people who placed trust in her, and she then has the ruddy cheek to ask those people not to pursue what they are owed, just so she can avoid banckrupcy. To hell with that. I hope you enjoy your miserable 10 cents deal.

Anonymous said...

Wow! I never got the email and I just now found out about it. I Lost all of my books and I had a lot of them. Spent a lot of money. Is there no way to get them?

Anonymous said...

I didn't log to my mail before the end of december. I tried to connect to the site in January and received the "sorry- the site is off-line" message. At first, I thought it was because of a cyber-attack, as I couldn't log to my mail account also.
I'm shocked the closure of the site occured so quickly. I had some 100$ e-books credits left, and apparently, they're gone...I'm very disappointed and stressed about it.

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Robin Willis said...

I never received any email about the site closing. I have hundreds of books and did not get a chance to download them all. I also had ebook credits. Are they offering anykind of option to get the books back?

I've used this site for years and am really upset learning about this.

Robin

Anonymous said...

I am an ARe author and received this email today. I took out links so it would seem less spammy. All other content--including the lack of paragraph breaks or any sort of apology or appreciation--is just as I go it.

I wanted to take this opportunity to update all contracted publishers on some key elements involving the winding down of All Romance eBooks, LLC. First, we have completed the process of refunding all 2017 Pre-orders and Advertising. Next, all book files and images have been deleted. On Saturday, February 4, 2017 the remaining server content will be wiped. Once the server content is erased, you will no longer have access to the publisher portal ([redacted]). Please make sure to log in and download any reports you might need prior to that date. We remain on schedule to remit payments by February 28, 2017 of payment of the settlement amounts for those who agreed to accept our 10 % settlement offer. Finally, those who are due to receive a 1099 for the 2016 tax year will be receiving them via the post. Those who are due to receive a 1042 for the 2016 tax year will be receiving password-protected files via email. We will be sending a password protected document to the email address we have on record. The password to unlock the document will be sent via a separate email. As per our terms of agreement, we will be using the information that was in our database as of December 31, 2016. If you need to update any information for the 2017 tax form distribution, please send a request to [redacted].

Sincerely,
Lori James
All Romance eBooks, LLC

Anonymous said...

I did not receive an email notifying me of the impending ARe implosion. I made the happy discovery after attempting to go to the site to download a book last week. Imagine my utter shock. Now I am just a reader (it looks like authors are really getting screwed by ARe) so I probably should not complain. And the fault of not downloading/backing up my books lies with me -I used to download, read, then delete the file to avoid taking up too much data space. But wow am I pissed!! It is unlikely the email went in my spam folder as I have never had issues previously receiving emails from ARe and I tend to check my spam folder ever so often. I had hundreds of books which are now all gone. That's a really big blow for me as I'm somewhat attached to a lot of those books (Not really healthy, I know). Ebooks are my guilty pleasure, my little luxury and I will not be able to replace my library. This whole situation really stinks. I really feel for the authors entangled in this mess. I hope that lawsuit goes in their favor

Anonymous said...

i just finding out that the ebook site All Romance is shutting down. i have over 200 or more books i never got the chance to download and are lost to me. i never received any notice thru email or did not see anything in spam. i spendt a great deal of my money on this site. this was the first ebooks site i have ever used. i am sorry the authors or suffering, but so are the customers who brought books on this site. Now, i have to go and find another ebook site or amazon to find and buy my books. i calculate how much i spendt on this site and it is a lot. I had some favorites and now they are lost to me. I know how Anonymous said dated 4/13/17 feels. this really stink and i have been with All Romance ebooks since 2007.

 
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