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Tuesday Midday Links: Ellora’s Cave Gets the Smackdown from Judge

Yesterday, I received an email from HarperCollins that it was shuttering its ebookstore (used to be called PerfectBound) as of November 19 and that customers would only have until December 19, 2010 to redownload their purchases. After the December 19, 2010, date, titles purchased through the HC eBook Store would not be accessible. (I thought it odd that the email was sent 3 days after the shuttering of the eBook Store but I haven’t bought anything there for a long time).

Storming the CastleOn the same day, I received a newsletter update that AvonRomance.com will be offering special digital exclusives such as original shorts and digital bundles of their most popular authors.

These digital books will be available at your favorite retailer or for purchase directly from Avonromance.com beginning December 21, 2010, in epub format. The bundles are available only for a short time although the digital exclusives will be available forever. The first digital exclusive will be penned by Eloisa James. Storming the Castle takes up where A Kiss at Midnight left off and features Wick as the hero. Wick is the brother of the her in A Kiss at Midnight. AvonRomance.com will also have a brand new design come December 1, 2010.

*****

Digital Book World has a really interesting article on agency pricing and how publishers aren’t seeing any depreciation in sales because the ebook market is growing at such a rapid pace.   I think this is what Nate at the digital reader tries to point out in noting that ebook sales aren’t growing at the rate that they had in the past even if they are growing.   In essence, ebook sales are flat, argues Nate.     Further, agency pricing was supposedly designed to help new retailers enter the market and take away the dominance of a retailer like Amazon but in the short term, it has cost retailers millions of dollars.   In the long term, independents like Diesel and BooksonBoard believe it will help them combat Amazon and Barnes and Noble.

*****

Ellora’s Cave has been in a contentious legal battle with Christina Brashear, owner of Samhain Publishing, since 2008.   Brashear brought suit against EC alleging EC owed her 5% of EC’s profit in 2005, 2006, 2007 and 5% of the overall value of the company in a shareholder buyout in addition to damages arising out of Tina Engler, and others, defaming Brashear.

EC refused to give up documents such as tax returns and ledgers during the litigation.   The failure to respond the request for documents impaired Brashear’s ability to proceed with her claim.   EC blamed it on their first lawyer who they fired.   EC retained new counsel but the pattern of delay and duck continued.   Brashear filed a motion for sanctions (a request asking the court to punish EC for its delinquent behavior).   The court granted the motion after EC and its counsel failed to show up for a hearing.   EC asked the court to set aside the sanction and promised it would deliver the documents requested by Brashear.   EC never did.

In a twenty seven page ruling (PDF), the court sets out the behavior by EC that it characterizes as contumacious.

Defendants willfully evaded the production of discovery, resulting in unnecessary delays of this case and increased legal fees.   Defendants’ actions in this case have crossed the line from a zealous defense to malingering, malfeasance, sabotage and delay.

As for the missed hearing (which I think played a huge partin this ruling), the court noted that the Defendants Marks and Engler are “savvy and sophisticated litigants”, that they knew how to contact the Court and monitor the docket based on previous behavior, and that the two of them discussed the case and the hearing with each other in person and in email. Their attorney said that his absence was a calendaring error.

It is suspect that all three of them failed to appear for the final pretrial.   The Court could understand if one of them had neglected to put it on their calendar or “forgot” to come.   But the absence of all three, who concede to receiving notice of the hearing, is questionable.

….

Such continuous, systematic delays and flagrant disrespect for court orders resemble an unwillingness to defend and bad faith attempts to derail the case from moving to a resolution.

In the end, summary judgment was granted to Brashear and now all that is left will be a trial on damages and a hearing on attorneys fees.

In 2006, Forbes noted EC had pulled in $6.7 million in revenue in 2006 and another source pinned EC’s revenue in 2009 at $5 million.   The ultimate bill for EC as a result of not participating in litigation is likely to exceed seven figures if you include attorneys’ fees and interest.   Does EC have this amount of cash on hand to pay this judgment?   EC can appeal and would have to post a bond for the judgment (usually 10%).   The appeal standard for a decision like this is usually “abuse of discretion” and given the detailed account of EC’s misbehavior, it’s not likely (in my judgment) this decision would be overturned.

EC had filed suit against its first attorney but has recently dismissed the case (PDF).   The dismissal is without prejudice and can be refiled.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

19 Comments

  1. meoskop
    Nov 23, 2010 @ 11:15:24

    The closing of the HarperCollins bookstore is a strong argument for DRM stripping. The argument against DRM stripping was that you could download your purchases again if you had a permission error, theft of equipment, etc. Much easier to back up material that is not encoded, and the belief that store libraries were not a long term solution appears to be true.

    I think EC’s situation shows the first rule of court still holds – don’t annoy the judge.

  2. Ros
    Nov 23, 2010 @ 11:27:17

    I only got my HarperCollins email today. Guess it takes a while for these things to cross the Atlantic…

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    Nov 23, 2010 @ 11:47:25

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  4. Lisa
    Nov 23, 2010 @ 11:59:15

    Gross revenue is far from net profit. Net could be negative. Though if that were the case for EC I would have thought they’d just show the taxes and make it go away.

  5. Mireya
    Nov 23, 2010 @ 14:30:30

    Freebies… who said freebies?!?!?! I have to start paying more attention to this stuff.

    As to EC… I would place a bet that they will find yet another way to delay things further… even if it entails filing a lawsuit against their second attorneys for malpractice and then requesting a stay yadda yadda … that reminds me that I need a popcorn refill… brb …

    In a totally unrelated note, iPhone 4 or Blackberry Torch? Anyone care to share experiences if you have either of the two? I have a headache trying to figure out the right smartphone, now that my wireless contract is reaching it’s end. Thanks in advance.

  6. Vi
    Nov 23, 2010 @ 15:02:49

    Jane, did the newsletter mention the prices of the Avon digital shorts or bundles? Or what the bundles are?

  7. MaryK
    Nov 23, 2010 @ 15:05:55

    Who controls the DRM for HarperCollins’ ebooks and what happens to it now? Does it run independantly through ADE or something?

  8. Brian
    Nov 23, 2010 @ 15:29:59

    @MaryK, Harper’s was using Overdrive as their distributor and had offered books with pretty much all the major DRM flavors. The 5 I have on my account with them are MS Reader format, but I know the offered PDF and Mobi and also later ePub. Can’t remember if they sold eReader PDB’s as well of not.

    Being warned to download a backup copy is all well and good, but folks are still likely to run into problems at some point unless they uninfect their books.

    At least people are being given some warning. When PaperBack Digital disappeared a couple years ago they were there one day and gone the next.

  9. Janet P.
    Nov 23, 2010 @ 16:17:22

    read through the linked articles. I have no reason to visit either Diesel ebooks or BooksOnBoard any longer given that I know they have the exact same books at the exact same prices. It’s frustrating for me and I know it has to be frustrating for them.

    I notice it didn’t take long for Kobobooks to reverse their policy on no longer offering coupon codes for non-agency books. The codes give me a reason to return to the Kobo site and browse around. They have something that Amazon doesn’t.

  10. Statch
    Nov 23, 2010 @ 18:55:33

    The Kobo coupon on non-Agency books also made me visit (and buy) from them. I get promotional emails from BooksonBoard but I never buy because of the prices.

    I’ve been worried that the publishers who use Agency pricing will come to the conclusion that it worked because of the general up-trend in ebook purchases. I’m even more worried that the Agency pricing actually did work, and that people who are new to ebooks since then have actually accepted the higher prices. (That can’t be true, can it?)

  11. library addict
    Nov 23, 2010 @ 19:58:16

    I just received the email from Harper Collins today as well.

    I bought a bunch of books from Kobo during the weekend sale. What I don’t understand is why they all seem to have DRM, even the Carina Press and Samhain titles.

  12. Sandia
    Nov 24, 2010 @ 05:55:15

    What I don’t understand for all the people giving a washy “success” to the Agency 5 is – how many of them have actually done a study of early eBook adopters versus these new people who now all own devices.

    I used to literally buy 2-3 backlist books a week from midlist authors. Now, I only buy the books in a series which I’ve already read and very rarely invest in a new author.

    I now have such a large back list of books to read, I don’t really need to buy books.

    Compared to last year when I spent around $3,000+ on books (random impulse purchases) – since April, I have maybe spent $300. Huge decrease in my purchasing habits – and a big I’m sorry to authors who I won’t try now because of pricing.

    An example of a top seller whom I will not buy is Jennifer Estep. At $7.99 plus tax, there is no reason why I would buy the ebook version. If in another few months I still want to read it and its not in my library (no moneys from me to Jennifer), I will probably go buy a used book off Amazon (and again, no moneys from me to Jennifer).

    I just feel like no one is really seeing that because they’re getting many more casual buyers so they didn’t see a drop in overall gross revenues.

    The only Agency publisher I still buy from consistently is Penguin because their prices are at least $1.00 lower than the MMPB version and I feel as if they have “heard” their users – though not all the way. They’re trying… a little.

  13. Mireya
    Nov 24, 2010 @ 07:08:16

    Most younger readers (young adults and college) that are into ebooks feel that ebooks are overpriced. We don’t see it here, as that is not the audience in DA, but if you look somewhere else, you can see the comments. These are also the readers that tend to look for “free” recent ebooks, if you know what I mean. It’s a combo of knowing about technology (hence they don’t understand why ebooks are priced higher than print in many instances) and the common ailments of this generation known as “need for instant gratification” and “false sense of entitlement”.

    I still refuse to pay more than the equivalent price of a mass market paperback for an ebook (to me, that price is $8.99). My purchases were substantially reduced to begin with when I got fired early this year (though I was able to find another job relatively quickly). And like others indicated above, I am less likely to try new authors now, saving my money for my current autobuy authors. Sad but true.

  14. Chicklet
    Nov 24, 2010 @ 09:44:09

    Defendants' actions in this case have crossed the line from a zealous defense to malingering, malfeasance, sabotage and delay.

    I love this quote. It’s like a little Suzanne Sugarbaker moment in the middle of my coffee break.

  15. Amy from Harlequin
    Nov 24, 2010 @ 11:17:23

    @library addict: Would you mind sending me an email to Amy(underscore)Wilkins(at)Harlequin(dot)ca about any DRM problems you’d had with Carina Press titles? I’d like to look into that.

    Thanks,
    ~Amy

  16. Tamara Hogan
    Nov 24, 2010 @ 11:22:08

    contumacious

    Now there’s a word you don’t see everyday.

  17. DS
    Nov 24, 2010 @ 13:07:11

    I personally liked “malingering, malfeasance, sabotage and delay.” That is a judge on a roll.

  18. Stumbling Over Chaos :: Hmm. This was supposed to be a short linkity post, due to my long holiday weekend. FAIL.
    Nov 26, 2010 @ 19:14:58

    [...] and publisher news and more from Dear Author and ReadReactReview (including a link to the very expensive official Dark-Hunter [...]

  19. Jane
    Nov 27, 2010 @ 20:24:40

    @Vi: The shorts are $1.99 but I’m not sure what the bundle pricing will be.

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