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
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.