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Love's labors lost as failed romance publisher unable to pay author royalties

No hint of the jilting to come marked the hopeful messages that passed between them just days before. They still talked enthusiastically of a future together. This relationship was bedrock.

But reminiscent of an argument that erupts when a lover opens a partner's credit card bill and sees mysterious charges for flowers and a hotel room at a romantic getaway, they split up amid accusations of cheating and betrayal.

Just where did all those beautiful roses go?

All Romance eBooks, an online e-book seller with Tampa Bay ties and half a million registered customers, abruptly closed its doors Dec. 31 as it told thousands of the mostly self-published writers using its site that it went broke selling love stories.

The closing came with just three days' notice, forcing customers to make frenzied efforts to backup their libraries before the All Romance website went dark at year's end.

All Romance's owner Lori James, based in San Diego, Calif., said her company was so broke at the end that writers must now forgo 90 percent of their fourth-quarter commissions on sales — or in a few cases, all of them. To get even a fraction of money they're owed, writers must agree not to sue James.

James co-founded All Romance with a Pinellas County woman in 2006, though the partnership broke up by 2015. But the company still lists a mailing address at a Weeki Wachee shipping store.

During the last decade, James' business model worked well: Up to 5,000 self-published writers or publishing houses listed books on All Romance's website. Sales were split with James 60-40, with the author or publishing house getting the fatter cut.

All Romance published less than 200 writers itself, acting as its own publishing house, but that was a small part of its business.

Now with the collapse of All Romance, James hinted that if enough writers reject the "negotiated settlement," she might file a prolonged and costly bankruptcy where they might get even less.

All Romance's failure was a shock to writers who had long respected James for dealing with them fairly and, until now, always paying them on time.

Now, some ask, where did their royalties go?

"Everyone's been blindsided by this," said Kathleen Zonca, a Polk County writer with several titles listed by All Romance. "When you sign with a publisher, you are entrusting your baby with them. You expect them to treat it well and pay you on time. So this feels like a betrayal."

The sting is more painful as it came without warning.

In a mass email to writers just a week before she announced All Romance's failure, James talked enthusiastically about expanding distribution of their books internationally and to audio.

At the same time, James solicited 2017 advertising from them. She said she is refunding payments.

James called it a simple story about a business failure in a world dominated by Amazon.com, nothing nefarious.

"Companies go out of business all the time," said James, a romance writer herself who has written under the nom de plume Samantha Sommersby. "It is a very hard market for independent bookstores."

A legal sequel has begun, however, courtesy of a Tampa writer suing All Romance in Pinellas circuit court.

She calls herself Wench Publishing.

Her name is Brenda Cothern.

The lawsuit she filed Jan. 12 seeks class-action status on behalf of all who listed books with All Romance.

"Sadly, over the last few years too many companies like All Romance have taken advantage of independent authors and small publishers by not paying us for our work," Cothern said in a news release. "Hopefully, this lawsuit will give other companies pause before they try to take from authors."

The suit accuses James of refusing to pay writers what they are contractually owed and accuses James and All Romance of engaging in "unfair methods of competition, unconscionable . . . and unfair or deceptive acts.

"The total amount of commissions being withheld could be staggering," said the lawsuit.

For businesses existing in the computing cloud, brick and mortar headquarters are passe, printing plants unnecessary.

"The thing that's most eye raising is how could they not have the money?" said Cothern's Orlando attorney, Tucker Byrd, noting James should have been setting royalties aside as books were sold. "How expensive is it to run an online retailer? What kind of overhead could you have?"

But claims that All Romance may owe a staggering amount of cash may be belied by Cothern's suit itself.

Cothern describes herself as one of All Romance's top-selling authors.

Her suit says she is owed $820.

• • •

How much overhead can a company existing almost entirely in the electronic ether have?

Lots.

At least, that's what James says. In an interview with the Tampa Bay Times before the suit was filed, James said she had reinvested cash into the business, never anticipating even as late as Christmas that she was about to fail.

James said she has a few employees, and she has to pay to take down her website. She also said she has other ordinary business expenses.

Her accountant, she said, notified her very late in the year that the company, despite three profitable quarters in 2016, was going to be about $41,000 in the red when the year closed. Holiday sales had tanked.

Customers, James said, also were redeeming a higher percentage of their gift certificates than they had in prior years — more than double.

While all independent publishers and book retailers have struggled to compete against Amazon, James said, she still had been hopeful about the future.

"We've really been investing in trying to stay in that (romance) marketplace," she said, "and felt that, being a niche market, we could continue to compete."

In her best year, 2012, James said she had $4.5 million in sales. In 2015, she said her total profit was $45,000, though she did not say what her sales were.

James said she can't pay writers what she does not have.

The kitty is bare.

• • •

Some of her writers aren't buying the explanations.

"This is nonsense," said New Mexico romance writer Shawn Squires. She listed several books with All Romance and believes she is owed thousands of dollars with her partner. "This is going to destroy the little guy. I feel like she took advantage of us."

Squires said some would have pulled their books from James' website had they known a business failure loomed.

In a statement, the Romance Writers of America, representing 10,000 writers worldwide, said "it is unconscionable for the owner of (All Romance) to withhold information so long and to continue selling books through the end of the month when the company cannot pay commissions."

James "has handled the situation in a notably arrogant and unprofessional manner," says a blog post by a writer who identified herself as Victoria Strauss in one of numerous posts on social media excoriating James.

James is hurt by such barbs.

"I am surprised by the extent of the backlash and the direction it's going in."

• • •

By some accounts, romance e-publishing is still vibrant, posting $400 million in e-book sales in 2013 by one estimate.

David Vandagriff, a Utah lawyer who represents writers around the world (none selling on All Romance), said other independent book sellers are still swimming with the big boys.

As for All Romance, he 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.

To him, All Romance's case sounds like a typical business failure, which, as in a failed marriage, always generates ugly recriminations.

Like the song says, breaking up is hard to do.

Times researchers Caryn Baird and Carolyn Edds contributed to this report. Contact William R. Levesque at (813) 226-3432.

Love's labors lost as failed romance publisher unable to pay author royalties 01/23/17 [Last modified: Monday, January 23, 2017 11:16am]
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