Why is Tina Engler economically irrational? #notchilled

When I first started the #notchilled hashtag, I said that I was going to use it to tweet harsh things that I believed were true. Here is a conclusion that I think is demonstrably true, but also extremely harsh: Tina Engler is economically irrational, and an economically irrational person is absolutely frightening to have in charge of a company.

No, I’m not going to talk about the Streisand effect, nor do I even refer to the dismal probability of success that this lawsuit has. I’m talking about the fact that it makes absolutely no economic sense to pursue the lawsuit at this point.

Here’s the thing: You can get some schmo of a lawyer to file a barely competent complaint for very little money–my guess would be under $5,000. And this is not always a terrible tactic (in the economic sense; it can be morally bankrupt even if economically sensible), because most people don’t have the money to respond to a lawsuit and so they back down very easily.

Winning a lawsuit defended by competent counsel is a completely different affair. [1]

If Ellora’s Cave intends to keep up with the suit–responding to discovery, filing for protective motions, writing responsive briefs in reply to motions for summary judgment–it’s almost certainly going to have to spend as much as Jane. And the Dear Author war chest is around $75,000 at present and still growing (Jane’s $20,000 + $53,000 to date in the DA fund + money donated outside the DA fund). As this is America, each party pays for its own attorney.

This only makes sense as a rational response if Ellora’s Cave expects that the damages in this case will exceed the amount they will have to spend on attorneys’ fees.

So what are the chances that Ellora’s Cave will come near that $75,000 mark?

The complaint itself only asks for “…an amount no less than $25,000, plus punitive damages.”

We can guess at how much they might be able to claim. They are (supposedly) losing money because they are losing contracts with authors as a result of Jane’s blogpost. How much do they make on contracts with authors? Well, in the words of Ellora’s Cave:

…the drastic drop in sales has resulted in large net short-term variable production losses and slow and often negative return on investment for EC on almost every new book we publish, with the exception of a handful of the highest sellers.

So by their own claim, Jane’s blogpost has caused Ellora’s Cave to lose contracts that lose them money. If that’s the case, Jane did Ellora’s Cave a favor.

I don’t see how Ellora’s Cave can prove damages of $5,000, let alone the $25,000 claimed in the suit. And that’s to say nothing of the $75,000 minimum mark to make this case economically rational–even if it had no effect on their reputation.

So why is Tina Engler pursuing an economically irrational case?

If Ellora’s Cave were flush with cash, I might not be so critical. But that does not appear to be the case. Whether authors, artists, and editors have been paid or not, Ellora’s Cave shows all the hallmarks of a business with serious cash flow problems. There are the multiple unpaid tax liens. They let almost all their contracted editors and cover artists go. They no longer have a person doing social media. By their own admission, they are losing money creating the products that are their bread and butter. And that’s not even counting signs like this lawsuit, filed in 2011, claiming that Jasmine Jade failed to pay on the lease of business equipment and owed $180,000.

Given all of that admitted evidence, Ellora’s Cave’s choice to spend $75,000 on a lawsuit is particularly bizarre. Do you know what a publisher could do with $75,000 to help turn things around? They could:

  • Hire a consultant to advise them on the current state of the digital marketplace.
  • Buy 150 BookBub ads in the erotic romance category.
  • Repackage all their old books where their cover no longer meets Amazon’s current standards–something that is almost certainly a factor in their current situation.
  • Repackage the backmatter to cross-sell all their books.
  • Run giveaways to bring readers back to Ellora’s Cave books.

I’m sure we could come up with a lengthy list of all the ways to spend $75,000 to save a company that is, by all appearances, struggling with a cash-flow problem that appears to be an existential threat.

Instead of actually trying to survive, Ellora’s Cave is earmarking whatever liquidity it has to prosecute a lawsuit that is ruining its online reputation, making it so that bloggers and readers actively try not to publicize their books, and which will almost certainly be revenue negative.

So someone tell me: Why is Tina Engler choosing to spend her $75,000 on a lawsuit that amounts to little better than a fit of pique, instead of saving her business? And why should any author ally themselves with a company run by someone whose decisions are not based on business savvy?

[1] In order for Ellora’s Cave to win this lawsuit, they’re going to have to have a full evidentiary hearing on the temporary restraining order, a lengthy discovery period, motions for protection orders within discovery, various motions for subpoenas (which will be fought vigorously if EC tries to get the commenters’ personal information) and motions to quash subpoenas, depositions, motions for summary judgment on multiple grounds, jury selection, the trial itself, motions for directed verdicts… Once you go from “threatening” to “prosecuting” attorney hours go from on the order of thousands to on the order of tens, if not hundreds of thousands. And this is not counting in the many, many things that could happen–for instance, denying or granting the temporary restraining order is appealable, so add the cost of litigating at least one appeal.


18 thoughts on “Why is Tina Engler economically irrational? #notchilled

  1. Which also begs the question – why are they holding onto books that are obviously not making them any money? Why not revert the rights to their respective authors and be rid of a drain on their resources?

  2. One begins to wonder if Tina has discovered a new “income stream” that does away with all those pesky taxes and contracts and things that she apparently doesn’t understand very well.

    I wish her, and her “co-author” the best of luck in whatever venture they’re embroiled in. I do hope it’s nothing illegal.

  3. Except they’re not losing contracts, because they’re not letting anyone out of existing contracts. Oops. As far as rights reversions due to low sales…I don’t think they have anyone to blame but themselves.

  4. From all I’ve seen and read over the past few weeks, it strikes me that JB/TE/EC’s management style is primarily reactive. An organization cannot survive that way indefinitely. The only proactive signs I’ve seen from JB/TE/EC centered on a TV project that was first discussed in the summer of 2013. Elsewhere JB/TE was said to have expressed a desire to write something besides sex and romance. So from my seat on the uninformed sideline, I can’t help suspecting that she would like to be free of EC and move on to other pastures.

    @ Carolyn Jewel RE: #notchilled on Twitter. I don’t think that scales/louse has any real connection to EC. I don’t believe at this point that the STGRB reference had anything to do with JB/TE, and feel pretty silly for having been lured into exchanges about it. I’m pretty sure what would be best for Jane and Dear Author is for us all to simply stop indulging in banter with either (or any) of its personas. The emotional reactions it has coaxed out of #notchilled supporters is unproductive at best and may even be damaging if it continues.

  5. An excellent article and so informative. I think I am probably just one among many readers who appreciates your insightful (and well-researched) take on the whole EC saga. I hope Tina Engler is reading this and taking notes. Thank you, Courtney for another great blog.

  6. @Mzcue:
    I agree with you about the #notchilled responses. In the first few days, the tag was a wonderful source of information and support. The last few times I’ve opened it, it’s been a bunch of arguing with an obvious troll which leaves me rolling my eyes and clicking away.

    The STGRB tweets were more infuriating because they came from the official EC account, and I have *feels* about that account then spamming all their new releases in one quick flurry after engaging in a public argument with a commenter, but…I don’t know what else to do at present, other than put my head down, fulfill my contracts, since I can’t get out of them, and just move on as fast as possible. While I watch a story that I worked my butt off on sink into obscurity.

    My sum-up: this sucks.

  7. Irrational, yes.

    I do believe that Tina Engler *is* behind the EC tweet thanking the STGRB, just as she is behind all the nonsense that the Nut is still tweeting. The repeated doxxing? It serves to remind all of the EC authors who would like out of their contracts that Tina can–and quite likely would–if not sue them outright, doxx them to their day job employers, community and family.

  8. I am way late to this all and catching up. My questions is wasn’t the blog Jane did reporting on the email EC sent out (that was on Absolute Write) with more detail and such.

    IIRC the email was telling authors about bad sales at Amazon, low profits, layoffs and here is why your checks are late. Doesn’t that email all by itself say they were already losing money without the BIG BAD JANE posting?

    How can they then turn around and say see it is all bloggers fault?

  9. I apologize to those who found the engagement with PubNt (ie trollNt) exasperating. My intent was showing just how low this sockpuppet’s agenda was. Countering the irrationality just made them escalate to the point that right now, they are acting like an elementary school doofus-bully. Even to the childish language: “yuk” and “trash.” I find it hard to believe it’s actually JB as some suspect; rather, I am guessing it’s a much less intelligent sockpuppet. My point in engaging was to show their trollish ignorance in full-which is well displayed now for all to see.

    That someone representing JB talks about class vs trash is an eye-roller. I’m done now. Someone that moronic has been well and truly exposed as nothing more than a yammering fool and propagandist (and an inept one at that). You’d think EC would tell the troll to hush. EC could hire a better PR voice and would benefit from distance away from pubnt and their strange and illogial rants. I would. It mght be a fan or well-meaning friend, but they are making EC look bad…er…worse. I think if I grabbed a stranger off the street they’d be smarter and more adept at tweeting pro-EC stuff.

    Thank you CM for this very astute article. I donated to Jane’s fund and am rooting for her. May victory soon be hers.

    And again, I apologize to those who found the exchanges frustrating under the #notchilled label. But sometimes, engaging the troll exposes just how ridiculous they are and serves a purpose overall.


  10. Thanks for this fantastic analysis. My impression is that JB/TE is more concerned about fighting her perceived enemies than taking steps that would immediately and proactively help her business (like the ones you outlined). This Twitter exchange is where I lost all hope for Ellora’s Cave:

    Her plan to get back to solvency is to FIGHT AMAZON. Because that’s going so well for Hachette.

  11. I’m not sure what a “Fight Amazon” strategy for an outfit the size of Ellora’s Cave would look like. Aside from prompting EC authors to urge fans not to make purchases through Amazon, what can they do? Looks more like a “Blame Amazon” strategy, I’m afraid.

  12. Based on this post: http://jaidblack.com/entries/general/female-sexuality-under-fire-again on her blog, it seems that the suggestion is that…I don’t know, writers write things, even though they know they won’t sell through Amazon, and…don’t push EC to change the covers of their books so that the biggest distributor currently won’t blacklist them? I dunno.

    Also, afaik what she’s saying about SP authors not being held to these same guidelines is not the case. I’m quite sure that things slip through the cracks with Amazon’s system–Selena Kitt had an interesting post about this, recently, how her series involving pseudo-incest had to be renamed and reworked to avoid being hidden by search terms. But when I was searching for covers for an SP erotica story recently, all the cover designers I spoke with seemed to be well aware of what Amazon was looking for, and able to provide covers that wouldn’t trigger their flags.

  13. @ReeCroteau: So to return to Courtney’s assertion above, why would a corporate leader reject such an obvious move as redoing book covers? It’s tempting to dismiss the choice as stubbornness or irrationality, but for argument’s sake let’s not. Is it cash flow? Certainly the summer’s staff reductions support that. As does the owing of back taxes. Author payments seem to be trickling in as if the funds were slowly arriving to back them. So maybe positive moves are impossible for EC because of cash issues.

    I’ve come to believe that EC has no intention of pursuing the lawsuit beyond the first volley. If you agree that the suit’s real intent was to stifle discussion of EC issues (Streisand Effect notwithstanding), can it be that EC was hoping to be sold? Somewhere it has to have assets, since all that revenue went somewhere. I’d guess that a lack of liquidity is one of EC’s most serious issues. But the implications of that are grim indeed.

  14. @ReeCroteau: Thanks for sharing this link: http://jaidblack.com/entries/general/female-sexuality-under-fire-again . I had several head-desk moments when reading it, which is a lot for such a short blog post.

    Self-published authors are subject to the same rules about adult filtering that Ellora’s Cave experienced. Big 5 publishers may have more leeway. In some cases, self-published books may fall through the cracks, which may give the impression that the rules are different. But Amazon will catch up with them eventually.

    Yes, it’s true (from what I understand) that Amazon doesn’t specifically define what’s too “racy,” but self-published authors talk to each other and have been able to figure it out. Here’s an article from Selena Kitt’s website (NSFW) that explained back in June what was objectionable:

    Jaid’s recommendation that authors don’t bow down to “censorship” shows a lack of understanding of what’s happening. Amazon doesn’t care about the content of your books as long as they don’t violate the same rules that Ellora’s Cave observes: no pedophilia, incest, rape for titillation, necrophilia, etc. Those things may get the book banned. Other edgy topics, like pseudo-incest, dubious consent, and “barely legal,” may get the book adult filtered if you’re not careful of the words you use in the descriptions. They’re not censoring your books; they’re putting standards in place for the content of *their website*.

    Same is true for covers. Amazon doesn’t want nudity on covers in areas that are freely accessible to children. One of my RWA chapter mates had a problem about a year ago where a new erotica author started using the same pen name as she did for her YA books. You searched on her author name, and suddenly you’d get YA mixed with erotica. It’s not that much for Amazon to ask, that you keep the sexy bits covered up if you don’t want an adult filter on the book.

    Seriously: If your blurb and cover contain adult content, don’t complain about getting adult filtered. That’s not censorship on Amazon’s part. It’s good corporate citizenship.

    @Mzcue, I understand what you’re saying about cash flow. But if you can’t sell books because they’ve been adult filtered and readers can’t find them, then you have no choice. You’ve got to fix the problems, or you’re out of business. Jaid’s talk of resisting censorship suggests to me that once again, she’s putting her ideas about standing up to a perceived injustice ahead of serious business considerations. Her reactions strike me as emotion-based rather than logic-based. That’s not to say that emotion is bad. But time after time after time, she seems blinded by an easily triggered outrage button. It appears to me that her personal crusades are interfering with important business decisions. And that’s not good for anyone who relies on Ellora’s Cave for their income (including Jaid herself).

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