Over the past few weeks TIPM has taken a close look a close look at extracts from a thirty page Memorandum of Law and depositions in support of certification for a class action filed in the Southern District Court of New York in February by law firm Giskan Solotaroff Anderson & Stewart (GSAS) against Author Solutions Inc. GSAS is representing three authors in this lawsuit and alleges that Author Solutions Inc. (ASI) operates deceptive practices to lure authors into paying for expensive publishing services.
Author Solutions preys upon the dreams of authors by selling them expensive services that sound exciting but do not actually sell any books. Their defense: They aren’t being deceptive because they aren’t trying to sell books. Of course, for nearly 200,000 authors who have paid thousands (if not tens of thousands) of dollars to buy expensive services that promised to promote their books, Author Solutions’s indifference to book sales comes as more than a bit of a surprise.
GSAS also filed a second claim for a class action lawsuit — in the state of Indiana on behalf of two more authors. Like the first lawsuit, the authors purchased self-publishing services from imprints owned and operated by ASI — AuthorHouse and iUniverse. You can read a little more here on the recent Indiana class action lawsuit taken on behalf of authors Patricia H. Wheeler and Helen Heightsman Gordon.
In The Case Against Author Solutions (Part 1) we examined GSAS’s Motion for Class Certification where we explained the basis of the case. In this court document GSAS outlined how it believes ASI presents itself to prospective authors and the deceptive manner in which it operates. In The Case Against Author Solutions (Part 2) we took a close look at the second document GSAS filed as part of the case — the substantive depositions file.
Just to be clear, depositions are out-of-court oral testimonials of witnesses transcribed to written form for later use in court or for discovery purposes. As we discovered in part 2, these depositions were certainly a real eye-opener. In part 3 and our final look at this case before Judge Denise Cote rules on the certification for the class action lawsuit, we are going to examine the last of the publicly available depositions and finish with a short summary.
I want to stress that what is presented below comes from documents lodged with the Southern District Court of New York. The suit is still under review by Judge Denise Cote and she has yet to certify and allow the claim to go forward as a class action lawsuit. Any allegations made by GSAS and the authors it represents have not yet been ruled upon.
The depositions file is extensive. It runs to over 400 pages and includes 25 ‘exhibits.’ However, not all of the deposition exhibits have been publicly released. The deposition file available runs to 188 of the overall 400+ total pages. In part two we concluded with Exhibit 7. Let’s take it from there.
[NOTE: All questions are asked by Oren Giskan (lawyer for the plaintiffs). Answers are indicated in red and are from the person under oral deposition from Author Solutions. The final two depositions are from two of the authors. The ******** symbols indicate a pause or jump to a later part of the deposition.]
Deposition of Joel Pierson, Editorial Services Manager, ASI (January 23rd, 2015)
(Mr. Giskan is questioning Joel Pierson of ASI about editorial evaluations and recommendations made to authors who submit manuscripts.)
- Does a sales team sell editorial services to authors?
- Which sales individuals are tasked with selling these services?
- For iUniverse, it is the editorial consultants. For most other imprints, it’s the marketing consultants. Occasionally an author will purchase editing at the time he or she purchases the package. And that is sometimes completed by the publishing consultant but that is rare.
- Why does iUniverse have editorial consultants?
- Part of the distinctiveness of iUniverse is its focus on editorial…
- Has the editorial consultant read the book?
- Why does the editorial consultant go over the EE and EE here is editorial evaluation?
- Understood, it’s an opportunity for the author to ask any questions about the evaluation. The editorial consultants are very familiar with the format of it. They will have read the specific author’s editorial evaluation and they are ideally positioned to answer any questions. They are not there to talk about chapter six needs more punching up or your preface does not quite introduce what the book is about. It’s more about the evaluator has looked through the book, made a set of recommendations. And here is why we think they are good recommendations.
- So the author can talk to a salesperson about their evaluation but they cannot talk to the editor?
- For other imprints?
- For other imprints, give me a moment please. I am he trying to remember the process for other imprints. It’s less structured but after the editorial assessment is complete, if one is obtained, a marketing consultant will reach out usually within a couple of days to perform a similar role, going over the assessment, going over the recommendations and asking the author if there are any questions.
- Does a marketing consultant reach out even if there is no editorial evaluation or assessment on the author’s work?
- Typically not.
Deposition of Don Seitz, Senior Vice President of Business Development, ASI (January 13th, 2015)
(Mr. Giskan is questioning Don Seitz of ASI about the company’s partnerships with traditional publishers (including Thomas Nelson and Nook Media). ASI operates self-publishing service imprints for these publishers and then pays them a percentage of revenue per package sold to authors. What is interesting here is the confusion when the term ‘royalty’ is incorrectly used in such a partnership. Just to be clear, a royalty is a payment made to the author of a book. To use this term in any other manner is incorrect in regards to book publishing.)
- Have you worked continuously from 2009 to the present at Author Solutions?
- And where is your office?
- My office is in Bloomington, Indiana. I also have an office in Indianapolis.
- But you live in New Jersey?
- I live in New Jersey.
- Sounds like a long commute.
- 643 miles.
- Do you commute back and forth?
- I typically am in one of those Indiana offices every two to three weeks and then performing business development responsibilities at other times.
- We managed the self-publishing imprint called WestBow Press on behalf of Thomas Nelson.
- What does that mean you managed WestBow Press?
- We would with them generate leads from people who were interested in self-publishing. We would contact and engage those leads to discern their interest. We would sell services to them, we would fulfill services to them. We would meet regularly with Thomas Nelson, and we would pay them royalties. “Them” being Thomas Nelson.
- What did Thomas Nelson do as part of that partnership? What was their role?
- Their role was to also contribute and assist in lead generation and to help define and deliver unique services that would only be available from WestBow Press and from nowhere else in the marketplace.
- Were the marketing services for WestBow Press priced differently than the marketing services for AuthorHouse?
- I believe they were priced similarly with the exception that we paid a royalty to WestBow Press — to Thomas Nelson. And the price would possibly reflect that differential cost that we have.
- Possibly or did?
- I think in most cases did.
- Can you think of any cases where it didn’t?
- Not off the top of my head.
- Was the royalty you paid upon the sale of services to WestBow authors the same percentage across the board? For example, did you pay a royalty of 20 percent on all services?
- I think your question, if I heard it correctly, was a royalty to WestBow authors?
- Or are we talking about the royalty to the partner?
- Royalty to the partner.
- Were there book consultants for Inspiring Voices authors?
- Any other partnerships?
- What’s the next one?
- Partnership with Nook Press.
- What is Nook Press?
- Nook Press is the self-publishing platform associated with the Nook eReader.
- The Barnes & Noble reader?
- I’m not sure what the official relationship is between Nook and B&N.
- Was there an imprint for your partnership with Nook Press?
- Nook Press is the imprint.
- Nook is the partner?
- Nook is the partner.
- Are you referring to book sales?
- Sales to authors.
- Just book sales to authors?
- Excuse me?
- Let’s break it out. You have sales services to authors. That’s one part of it. Another part is sales of authors’ own books to the authors themselves. Was that part of your responsibility?
- Did you have any responsibility for sales in the retail channel?
- Who was responsible for sales in the retail channel?
- I don’t know where that fell.
- Was there someone —
- I’m not sure — we made books available — the reason I’m hesitating, we made books available through various retail distribution outlets. But that was an operational function, if you will; that was not a sales function.
- Who did you report to when you first started at Author Solutions in 2009?
- The CEO.
- Kevin Weiss?
- Did you know Kevin Weiss prior to your employment?
- I did.
- How did you know him?
- We went to college together.
- Did you stay friends?
- We did.
- Did you ever work with Mr. Weiss prior to Author Solutions?
- Did you report to Mr. Weiss until he left Author Solutions?
- I did.
- Who do you currently report to?
- The current CEO.
- Andrew Phillips?
Deposition of Kevin Weiss, former Chief Executive Officer, ASI (November 20th, 2014)
(Mr. Giskan is questioning Keith Weiss about the company’s takeover of Xlibris and Trafford Publishing as well as its operations in Cebu, Philippines.)
- Do you recall when Author Solutions acquired Xlibris?
- I believe it was in January of 2010.
- Why did Author Solutions acquire Xlibris?
- We — our desire was to make several acquisitions in the assisted self-publishing space to try to increase revenues and grow our business.
- Was that the purpose of the Trafford acquisition as well?
- What was the other purpose of the Trafford or purposes of the Trafford acquisition?
- Trafford was bordering on insolvency and I was concerned that if they became insolvent there would be many authors who would be left out in the cold. And I didn’t think that was a good thing for the authors or for the industry.
- Why wouldn’t it be good for the industry?
- You know, people would point to Trafford as having taken people’s money and never delivered a service.
- Was it your intent when you were increasing revenues and growing the business to position Author Solutions to go public?
- That was an option.
- Were you positioning Author Solutions for an acquisition?
- Is that what Bertram Capital does?
- Was that made clear to you at the time of your hire?
- Were there any difficulties in integrating Xlibris into the operations in Indiana?
- Not that I can recall.
- During the time you were CEO at Author Solutions did Author Solutions have employees in the Philippines?
- When did Author Solutions start operations in the Philippines?
- When we acquired Xlibris.
- Did Xlibris have employees in the Philippines?
- Was that one of the reasons that you acquired Xlibris?
- That was beginning in 2010?
- Yes, I believe that was.
- Did Author Solutions expand its operations in the Philippines after the acquisition of Xlibris?
- Why was that?
- Access to quality employees, growth in their business.
- Was the labor cheaper in the Philippines?
- It is.
- How much cheaper is it?
- I couldn’t tell you.
- What operations were conducted in C-E-B-U, is that the name of the place in the Philippines?
- What operations were conducted in Cebu as of the time you left Author Solutions?
- Sales, marketing, production services.
- Can you explain what you mean by sales in that context?
- Sales of publishing packages, marketing services, and book sales.
- Are you referring to book sales to the authors themselves?
(The last piece of this section of questioning is incomplete. Going by the previous depositions and how ASI works, one can only assume that the final inference above regarding book sales is sales to the author.)
(Mr. Giskan moves on to the roll of marketing consultants and marketing services.)
- Okay. And is that a good time to approach authors to sell marketing services, shortly before their manuscript is published?
- I think generally, to understand what the plan is, so that when your book launches, and if you are interested in marketing it, that you are marketing it at the time of launch.
- Are salespeople instructed not to pitch marketing services to authors until the author’s manuscript is close to publication?
- I believe so.
- Are you aware of authors complaining they were switched around from consultant to consultant; have you ever heard that before?
- I’ve heard that from time to time.
- Are authors approached by marketing consultants made aware that the consultant has a quota?
- I don’t know.
- You don’t know one way or the other?
- Who would know that?
- The author would know.
- Are marketing consultants trained to explain that to authors?
- I’m not aware of that.
- Would you agree that Author Solutions aggressively sells marketing services?
- Why not?
- I don’t believe we do.
- What do you base that on?
- My involvement with the company while I was there.
- How often does an author contact you for the purpose of selling the author marketing services?
- I have no idea.
- Do you know what percentage of Author Solutions’ authors make more money from the sale of books than they spend on services from Author Solutions?
- I do not know.
- Has Author Solutions ever done that analysis?
- Not that I am aware of.
- Is that — would that information be relevant to the business of Author Solutions?
- I don’t believe so.
- Do you know what percentage of books that Author Solutions’ publishers make money for Author Solutions?
- Could you ask that question again?
- What percentage of books does Author Solutions make money off of?
(At this point counsel for ASI object and ask for clarity on what is being asked.)
- Yeah, I’m having trouble understanding.
- Do you make money when you publish a book? Did you make money when you published a book?
- You make money on — I think we make money on some books. I mean, we don’t make money on other books.
- Which books don’t you make money off of?
- I suspect if a book took a long, long time in the production process and was very complicated to assemble and we spent an enormous amount of time working with the author to get the book done, I would guess in some cases that we didn’t make money.
- Would you factor into that equation whether you sold that author marketing services?
- I guess you could, but that would depend on the author.
- Has Author Solutions ever done an analysis of what percentage of the authors it publishes it makes money from?
- Not that I am aware of.
(Of all the deposition pieces, I think the above is one of the most illuminating into how ASI operates.)
(Mr. Giskan moves on to ASI’s one-on-one support for authors. This exchange could almost be straight from a TV comedy sketch!)
- Mr. Weiss, are you familiar with Author Solutions statements that it provides one-on-one support for authors?
- I believe so.
- What is your understanding of what that statement means?
- That you have the ability to speak with an individual when you are working on your book.
- Is a particular individual assigned to the author for that purpose?
- Depending on the function. I believe depending on the function.
- We’ve gone over a few of the consultants that an author interacts with, the marketing consultant, the publishing consultant. We are going to get to others. That’s already more than one person. So I’m trying to understand what one-on-one support means for an author. Is there a single point person for all issues for an author to communicate with?
- I mean, that’s — I can’t answer the question. I’m not sure I understand what you are asking.
- I’m asking what does one-on-one support mean. One-on-one to me means there is one person that deals with one author. It doesn’t appear that that’s the case. So I’m trying to understand what it means in the minds of Author Solutions or its employees or at least your mind.
- Okay. In my mind it means that when I’m in the middle of a publishing process, that I have one — generally one publishing consultant that I work with throughout that process. I say generally because someone could change jobs or someone could lose — but generally that’s what you want. Or if you know you are in the marketing consultant, we would generally like to have one person so that you establish a relationship, know the book and so on. Same thing with book consultant. That’s the intention.
- And in what percentage of cases does that play out?
- I don’t know.
- More than 50 percent?
- I don’t know.
- Could it be less than five percent?
- I doubt it.
(Mr. Giskan is questioning Kevin Weiss on metric quotas consultants at ASI have to work to every month. The XXXX parts are redacted in the original court depositions.)
- So the, if you look in the metrics here, the quota here XXXXXX is a month?
- And if my math is correct, they are expected to sell an average order of XXXX to, would that be 100 authors?
- Was the author himself or herself the biggest source of sales on average for any given book?
- I would generally say, yes.
- What percentage of authors were the biggest customer for their own books?
- I don’t know.
- And I think we understand each other, but what I mean, what we call book sales are greater than channel sales?
(Mr. Giskan returns to the issue of whether marketing services are sold to authors with a poor editorial evaluation.)
- Does it have — does Author Solutions have a policy of not selling services to books with poor editorial evaluation?
- I don’t know.
- During your time at Author Solutions, other than the experience with, did any book come to your attention that was so poorly written that Author Solutions made the determination not to try to sell marketing services to that author?
- I can’t recall.
- Not a single instance?
- I can’t recall a specific.
- Do you recall that happening generally?
- I’m sure there were cases when that [happened].
(And to a crucial question every author should ask their self-publishing service provider.)
- Do you provide the author with any explanation of how many books they might need to sell to recoup their investment?
- I don’t know. It depends on whether the author was interested in that.
- If the author asked the consultant would you tell them?
- I’m sure that the consultant would work with them to understand how many books they would need to sell to pay for the service.
- How many other instances can you recall where authors indicated to you that they were not interested in book sales and were purchasing the services for other reasons like the grandfather you described?
- I didn’t speak to authors on a day-in and day-out basis. That was an example of somebody that said that to me.
- I’m asking how many others told you similar stories.
- I can’t recall. That was one that sticks out. I’m a recent grandfather and I remembered it.
- Thank you.
- Can you recall any other instances of similar stories?
- Not in specifics.
- And the number above COGS on the chart on the left is the revenue from sale of publishing services and author marketing services to authors?
- Not really. It’s the revenue associated with the fulfillment of services sold to the authors; in other words, if you — if I were to buy a publishing package, $900, there is no revenue associated with that for the company. We don’t receive any revenue for that transaction until we fulfill the services, generally. And so this is when we have fulfilled the service that was sold. Does that make sense?
- I think so. I think you are drawing a distinction in timing.
- No. Let me try to do a hypothetical. I buy a publishing package from AuthorHouse for $1,000 today. And I submit my manuscript tomorrow. And AuthorHouse starts working on my manuscript. AuthorHouse doesn’t receive revenue on that package, we don’t get to claim revenue until we fulfill that service. Just a generalization, we don’t. So it’s in our best interest to work with me to get this done, not to drag it out. So what this is a — what we are planning on fulfilling for marketing services and publishing services — publishing packages, publishing services in 2012. It’s nothing to do with what is sold. It has to do with what’s fulfilled. Does that make sense?
- It does. And the revenue is, if you paid $1,000 for your package, once it’s fulfilled that $1,000 goes in the revenue box?
- Generally, it depends on the mixture of what’s in the package but the $1,000 is recognized, which is why there is no incentive whatsoever for Author Solutions to delay any.
This is the deposition of author Jodi Foster who purchased publishing services from iUniverse, a self-publishing imprint owned and run by ASI (January 16th, 2015)
(Mr. Karagheuzoff, acting counsel for ASI, questions Jodi Foster.)
- [What publishing package did you] purchase from iUniverse?
- It was Premiere Pro.
- Bookstore Premiere Pro Package?
- That was in or around March of 2010, right?
- How did you learn about iUniverse?
- I did an internet search.
- Had you ever tried to have a book published through a traditional publisher before you decided to use an assisted self-publisher?
(Mr. Giskan objected to the form of the question.)
- I am going to — so the record is clear, I am going to define what I mean by traditional publisher. Let’s start with that.
- By a traditional publisher, I mean a publisher who obtains rights to your manuscript and publishes and pays you in advance or royalties. An example of a traditional publisher would be Penguin, Random House, Llewellyn. Do you understand what I mean by traditional publisher?
- What did you understand?
- At the time they had not read my manuscript at this point, so what they were doing was saying that they were going to provide me a — provide to me equal comparatively to the publishers who have published Anne Rice and Stephen King quality work. They were going to give me the same quality work, and they worked with the same people —
- — in the editing world.
- Did they discuss more than one package with you?
- I believe they were, most of the time, promoting a Premiere Pro package with me for $2,500. And what they were saying was that it had returnability, and so therefore I should buy this package because returnability was very important when you have a book out in the world. So when you had it at a bookstore, they can return it if it doesn’t sell. The bookstore can return it to iUniverse.
- What did you pay for the Bookstore Premiere Pro package?
- She gave me a discounted price of 1,490 and something dollars.
- Okay. And when you spoke with Kathi, what did she tell you about that?
- Basically, she said if I purchased this package, that it would give me the opportunity to qualify for Editor’s Choice and Rising Star program. That if I did not purchase this, that I would not be able to qualify for those two programs.
- Let me ask you, because I think my question was a little different than that. My question was — I asked you a moment ago if you ever complained in writing that the services that were part of the $4,000 package, the editorial services, you thought were included in your $1,500 package. The answer to that —
- Okay. I have to stop you for a minute because you’re kind of making this a big, long question. Can you just ask me, like, directly one question at a time.
- Sure. You purchased a $4,000 package, correct?
- Prior to that, you purchased a $1,500 package; correct?
- You indicated earlier that you were told by Kathi — that you had indicated that you thought you would have a book ready to go, and she said you should be purchasing these additional services as part of the Developmental Edit, correct?
- Okay. You indicated to her that you were surprised because you thought that the book was ready to go and that some of these services were already part of your prior package, is that correct?
- So given that — in other words, given that you have said that you thought that these services were previously going to be included and you were surprised, why did you purchase additional services?
- Because I was on a time schedule, and at this point they had my book kind of held hostage…
- The question is: Does it refresh your recollection as to what you were told and when you were told it?
- Now it does. I’m reading it.
- That was around August of 2010, correct?
- And you purchased the Developmental Edit in January of 2011, right?
- I think we had talked about it at this point in time, but I couldn’t afford it.
- And so she made a payment arrangement for me.
- In any event, whenever the payment plan began, it was after August of 2010, wasn’t it?
- I believe so.
- In fact, whatever was told to you about Editor’s Choice and your ability to get it or not get it in connection with Developmental Edit, you first received your evaluation with respect to it before you made the purchase decision; correct?
(Mr. Giskan objected to this question from ASI’s counsel. Editor’s Choice is a paid service offered by ASI to highlight certain books for distinction and is the first step on the Rising Star and Star editorial programs, with the ultimate goal that the book will be ‘pitched’ to a buyer – an employee – at a bookstore. The program is at the heart of iUniverse editorial services and the argument is that it is deliberately designed to rope authors into paying for more and more expensive editorial upgrades for the kudos of possible store shelf placement. Books are only stamped with the ‘editorial’ approval within ASI. The accolade ultimately means nothing to a senior buyer of titles in a bookstore. Buyers buy books based on demand for a title, author recognition, media spotlight, and the promotional windowing a publisher is willing to take out per title.)
This is the deposition of author Mary C. Simmons who purchased publishing services having communicated with both iUniverse and Xlibris without realizing both were owned by ASI, (December 10th, 2014)
(Again, Mr. Karagheuzoff, acting counsel for ASI, is asking the questions.)
- How did you first hear about iUniverse or Author Solutions?
- I heard about Author Solutions because I had been working on writing this book for a while, and I decided that it was time to make a commitment to publish it. So I researched the various opportunities, and I understood from paying attention out there and I have a friend who is an author, that the publishing industry has really changed and it’s very difficult to find an agent. So I am a rather independent sort, and I kind of liked this change, so I said, “Well, who’s out there?” and I wanted to find a company that would provide editorial services as well as publishing services. And so I did a little research, and that is how I found iUniverse, and I had talked to the people at Xlibris. I didn’t understand at the time that they are owned by the same company, but that is how I researched it on the Internet.
- Was that survey that you filled out in connection with the Rising Star program?
- I don’t know necessarily that it was. I think it was just — the way that I thought of it at the time was: “Here’s the next step. You’ve written this book. They don’t sell themselves. So how do you plan on marketing it?” And so I filled it out.
- What did you understand about the Rising Star program, if anything?
- I understood that it was a program that the author had to qualify for, and I didn’t really understand what the qualifications were, and I didn’t until well after. What I thought it was – was that they have this program for a new author, first book, first publication, and that they really liked my book and that it would be in their interest as well to promote my book to sell it because we’re all in this to sell books.
Exhibits 13 to 32 are mostly affirmations or copies of printed documents (emails, screenshots, accounts records etc) already presented to witnesses during sworn depositions. Where relevant in previous extracts of depositions, we made reference to these documents.
I am convinced by all I have examined in the court papers and depositions that Judge Denise Cote will grant certification to a class action lawsuit against Author Solutions and this case will go to trial later this year. Giskan Solotaroff Anderson & Stewart (GSAS) certainly show no signs that there won’t be further cases lodged on behalf of author clients in other state jurisdictions (currently Indiana and New York) and this could indeed rumble on for several years.
Some may find the details in the depositions compelling evidence that Author Solutions deceived into believing they were dealing with a publisher that would operate and provide all the services a traditional publisher would. But proving that Author Solutions (ASI) and its imprints and partnership imprints are run like telemarketing companies is not proof in itself of deception. After all, these authors signed up and paid for services under Author Solutions’ contractual terms. Much of the evidence we have examined strikes me as circumstantial, though cumulative. This wasn’t a case of authors not knowing they were entering into a contract which covered the provision of paid services. I guess much of this will come down to GSAS proving that claims made in some services were misleading to authors. In fact even after reading through the available depositions, I remain unconvinced that GSAS has so far presented a compelling enough case in favor of its author clients.
There are some things we have learned about ASI’s methods of operation and interaction with authors.
- The depositions and my own experience in talking to authors shows that the vast majority find self-publishing service providers (not just ASI) through Internet searches, and further checks beyond this are at best cursory. Many authors are also oblivious to the ASI connection with multiple imprints like Xlibris, iUniverse, Trafford and Balboa.
- While ASI may be a publishing solutions provider, it certainly appears to be structured like a telemarketing company that just happens to supply publishing and marketing services. The various layers of consultants are set monthly quotas based on the sale of publishing, editing and marketing packages. But we should not forget that this is the way many companies selling services and products operate, including many other publishing solutions providers and so-called self-publishing companies.
- ASI’s structure and profit stream is primarily focused on the sale of services to authors, including the sale of books to their authors. The sale of books to trade and retail channels is secondary. Indeed we have read depositions suggesting there effort or will to assess the benefits of marketing packages to sell authors’ books. But again, I don’t believe for a minute that this casual affair with marketing vs. books sales is restricted to ASI.
- Several times when I read through the depositions of senior staff at ASI, if left me wondering whether I was listening to someone with a lack of knowledge in an area they should have plenty, or whether it was just sheer obfuscation.
Ultimately, let’s hope we get some form of resolution for the authors in this case later this year. TIPM will of course continue to follow the court proceedings.