Crappily Ever After: My EC Fairy Tale

Once upon a time, I was a loyal Ellora’s Cave author and reader. I defended EC on the internet when rumors started circulating, and I even stood up for them at an RWA Annual General Meeting, back when the national board of directors still refused to recognize e-publishers.

If EC hadn’t betrayed my trust so completely over the years since then, I’d still be a loyal EC author. They gave me a great start in this industry, and my checks (when EC bothers to send them) are still very nice—I published only five books with them from 2007-09, three novels and two short novellas, and yet my last few royalty checks averaged around $900 a month. Why would I want to throw that away by speaking out against EC?

Because good money—when it comes—no longer outweighs the harm EC is causing with their words and actions.

When EC’s August 2014 layoffs were announced, I’d already believed for years that the company was experiencing cash flow problems, and the layoffs convinced me they were in dire financial straits. However, I never spoke publicly against EC until they filed their SLAPP suit against Dear Author. Even then I behaved professionally, offering an unembellished declaration of my personal experiences and conclusions about EC for official court records. I didn’t blog about it. I didn't ask readers not to buy my EC books. I let my sworn testimony speak for itself.

The same cannot be said of EC. Even as the owner declined to be named in, or provide any sworn testimony for, EC’s SLAPP suit against Dear Author, she enlisted the help of internet trolls to wage a vicious flame war on authors whose only crimes were going public with their experiences at EC and demanding to be paid the royalties they’re owed. While author after author has come forward with sworn statements, financial records, contracts, emails and other proof to back up Dear Author's claims, EC has ignored the mountain of evidence and offered up nothing but bombastic rhetoric and paranoid conspiracy theories.

So what are the facts?

1. EC has been continually paying me (and most, if not all, EC authors) outside of contract terms since 2009, when they pushed royalty payments from the end of the first month after monies were received to the end of the second month, and began sitting on royalty monies for an extra month. This is a clear violation of the contract terms. EC’s own Accounting clause spells it out in black and white: every time EC pays royalties, they're required to send authors “any amount(s) then owing” “for all monies actually received by publisher”. There’s no provision allowing them to make a partial payment or to withhold royalties for an extra month or two (or six or eight). If they pay royalties every three months, they must pay ALL the royalties owed for those three months. The CEO's sworn testimony that EC had never paid outside of contract terms, that they'd simply paid us “less early”, is erroneous at best. I have to wonder if any of EC's principals has ever actually read their own contract.

Here is the Accounting clause in all my contracts:
 2. EC is now seven months behind on my royalty payments. According to the payment schedule Ellora’s Cave provided when they signed my first book, they should have mailed royalties for monies they’ve received through January 2016 by now. But the last check they sent me, dated November 5th, was for monies they’d received from March through June of 2015. They’re still sitting on seven months’ worth of my royalties.

3. EC made a deliberate unilateral change to the payment terms of my books (and those of many other authors) contracted before the spring of 2008, and as a result, they’ve underpaid my royalties by more than $18,000 since late 2011. Because they’d suddenly made their royalty statements long and difficult to analyze, with many and varied amounts supposedly received from Amazon for each book, I didn’t detect the underpayment until late 2014, when I audited all of my royalty statements. I sent EC a spreadsheet detailing the underpayments, demanded immediate payment and offered to accept the rights to my books in lieu of payment. In reply, EC's CEO claimed they had notified authors about the change of payment terms on the business loop in 2011, and since I didn’t object within 18 months, the statements became final and binding on me—therefore EC owed me nothing. However, there are several major flaws in her argument:

a) Unilateral notification on a Yahoo loop does not meet the contract’s requirements for changing payment terms. The contracts call for any changes to be agreed to in writing by both parties. That could have been accomplished very easily. All EC had to do was post a contract addendum in the business loop files for authors to sign and return—and in fact they’ve done this for other contract changes—but that time they chose not to. They CHOSE to breach my contracts rather than negotiate in good faith. I can only assume they did this to me and the other authors because they were afraid we would refuse to sign the addendum and then EC would be forced to accept less third-party vendor profit on those older books, which in my case had already paid for themselves many times over. Here is the modification clause in all my contracts: 

 

b) The messages posted on the business loop did NOT inform authors EC would be disregarding the contract language in older contracts that prohibited them from paying less than the required 37.5% of EC’s webstore price. They touted a new higher royalty rate on net, which didn’t seem suspicious because EC's publisher had already explained to us at a conference luncheon that EC is allowed to pay authors MORE than the contract stipulates, but NOT LESS. That was why EC came up with their higher “list price” on digital books, so that they could pay Amazon’s cut and still make an acceptable profit while paying royalties in accordance with those earlier contract terms. I have screen shots of their messages to the author loops proving that they said nothing about paying less than the contract terms allowed.

c) Even if the eighteen-month clause did apply (which I don’t believe it should since EC deliberately breached the contract and, in my opinion, obfuscated their royalty statements to hide that breach), EC still owes me more than $13,000 for the 18 months preceding the date I first notified them. When I told the CEO that, she reiterated that their attorneys had determined EC owes me nothing. Since then, I’ve sent EC a couple of reminders of what they owe me, and not only have they NOT paid it, but they’ve actually suggested that I offer THEM $18,000 to buy back the rights to my books.

4. Several of my more recent statements have been incorrect. Print books were paid at ebook rates, ebooks were paid at the wrong prices, and at reduced prices a month before the prices were actually reduced—multiple errors on the same statements. And even after I sent emails to EC’s CFO explaining exactly what was wrong and what the rates and prices should be, the adjustments were sometimes incorrect too. This ongoing lack of accuracy in their royalty accounting flies directly in the face of the owner's claims that, because of the alleged “new accounting system”, EC “must verify and re-verify every statement by hand”. As far as I can tell, no one is verifying, much less re-verifying, anything.

5. EC routinely violates USPS regulations, making it difficult for authors to prove when royalty checks were mailed. For years, EC made a practice of turning off the date on their postage meter machine whenever they mailed royalty checks, and now that they've switched to Stamps.com, they continue to abuse their metering privilege. Section 604.4.6.1 of the USPS Domestic Mail Manual states that, for all metered first-class mail except return envelopes, the meter stamp must contain a human-readable date. Our local postmaster verified this regulation, and confirmed that PC postage is considered metered mail and therefore subject to the same restrictions. Here is the last envelope I received from EC, folded so that both the return address and postage meter stamp are showing:


I have royalty statements, contracts, spreadsheets, envelopes, emails and lots of screen shots to back up all these claims and more.

I’m not responsible for EC’s downward spiral, any more than Ann Jacobs, Cat Grant, Avril Ashton, Joanna Wylde or any other EC author is. In fact, our unpaid royalties are probably the only thing allowing the company to dangle from that crumbling financial cliff by its fingernails.

Bloggers and other interested parties like Dear Author, Courtney Milan, Dierdre Saoirse Moen, Tejas and Karen aren't responsible for EC's spiral either, and I, for one, am grateful for their persistence in holding EC accountable.

And while Amazon, with their lowball pricing, deep publisher discounts and self-serving marketing strategies, has no doubt contributed heavily to EC's financial straits, they aren't responsible for how EC has reacted to them.

EC's principals alone are responsible for their actions. Their questionable (and in my opinion, unethical) business practices, their dogged denials in the face of a mountain of evidence, their desperate attempt to silence authors and critics with that SLAPP suit, their habit of “losing” readers’ bookshelves every time they upgrade their website... It's these factors, along with the owner’s flaming attempts to blame EC's problems on some racist, misogynistic, industry-wide conspiracy, that have destroyed Ellora's Cave’s reputation. And now, rather than rebuilding the company’s public image by owning up to its responsibilities and paying authors in full, the owner is openly devoting the company’s time, energy and resources to waging war on romance authors and bloggers—and even the romance industry itself—while portraying herself and EC as martyrs on a level with Joan of Arc. She’s making a laughingstock of both herself and EC, and I can’t imagine either will ever recover from it on a professional level.

So here’s where I finally ask my readers to please stop buying my EC books—not so that I can get the rights to them back, but because I’m tired of financing the owner’s malicious, deluded attacks on decent authors and bloggers.

It’s a sad conclusion to what started out as a wonderful fairy tale, dragging on long after it should have reached The End. I hope for EC’s sake that they finally do the right thing and either pay their authors or give us back the rights to our books and call it a day before it’s too late for all of us.

ETA: I'm closing comments on this post to prevent further flame wars.