Having second thoughts about that whole tour bus idea. Photo via Flickr.

Ellora’s Cave, publisher of erotica, was for a long time a great success story of the electronic publishing age. Founded in 2000, they published stories and novels that contained material that was more explicit than mainstream romance publishers would touch. And because this was the pre-ebook age, they published them as PDFs, emailed to readers. Their audience turned out to be huge and undaunted by the format, and their revenues grew accordingly.

But those days are gone: this week brought the widely reported news that Ellora’s Cave has sued the Dear Author blog and the blogger who runs it, Jane Litte, for writing about Ellora’s ballooning financial problems, including not paying royalties to authors and also not paying editors and cover designers (so, mostly just not paying any of the people a publishing house is supposed to pay).

This issues have been raised by authors and freelancers for months, even years; Litte wasn’t the first to write publicly about them. But her comprehensive and hard-hitting post laid out just how bad things were, and Ellora’s Cave responded shortly after it went up by suing for defamation, asking for an injunction, monetary damages, and the identities of anonymous commenters on the post.

Litte (who is a lawyer as well as romance blogger) is fighting back, and has hired Marc Randazzza, a lawyer known for First Amendment cases. In the meantime, bloggers in the romance community and outside of it immediately rallied round the cause, tweeting with the hashtag #notchilled and providing updates and advice for anyone affected or interested in what is clearly an attempt to intimidate and harass anyone who says things that Ellora’s Cave doesn’t want the world to hear.

On September 30^th, there was a temporary injunction hearing: the judge didn’t grant the injunction but asked that the plaintiff and defendant come back for another hearing to present evidence. At this point, Litte has asked anyone who’s willing to give evidence to step forward.

Posts like the one by Kayelle Allen, founder of the site Marketing for Romance Writers, give a sense of what’s going to come out when these stories start being told: Allen published a novel with Ellora’s Cave in 2013 and was faced with, first, having to hassle the publisher just to get a royalty check (which, when it came, was for $17) and then a series of disturbing developments, like learning that her editor was being let go, that executives were leaving, and that many, many other Ellora’s Cave authors had also had problems with missing royalties.

Each story adds to a larger picture of a company in dire straits. Which is weird. Because the perplexing thing about Ellora’s Cave (as Litte pointed out in her original post) is that as the ebook market has matured, the fortunes of the company — so good at ebook publishing they ruled it even before there were actual ebooks —have gone the opposite direction.

Growth stagnated. In 2010, it was revealed that EC’s revenues were $5 million but a reported $6.7 million in 2006. How on earth was a digital publisher’s income declining in the biggest boom period of digital books?

So what happened here? Ellora’s Cave has bestselling authors. It has a fanbase that knows the company and the product. It even has the Cavemen, Ellora’s cover models (responsible for a lot of awkward run-ins at BEA this year, where they hung out in a booth behind some pillars and startled people just trying to go from one side of the hall to the other).

Well, funny you asked. Because in a story that doesn’t appear to be about Amazon (and we only let ourselves write stories that aren’t about Amazon when swayed by a) dogs and b) Satan), this tracks back at least partly to everyone’s favorite purveyor of  pet sweaters.

Earlier this year, Ellora’s Cave saw steep declines in their Amazon sales. Calvin Reid reported on it for Publishers Weekly:

[CEO Patty Marks] said Ellora’s Cave sales via Amazon have dropped by as much as 75%. “We’re talking to Amazon and trying to figure out why this is happening,” Marks explained, noting that Amazon is the biggest sales channel for the digital-first erotic-romance publisher.

According to Marks, the issue is likely related to a change in Amazon’s search algorithm. Many of Ellora’s Cave’s bestselling authors and titles simply don’t show up in the Amazon search engine anymore. She pointed to one of the house’s most popular authors, Laurann Dohner, whose books are New York Times bestellers, noting that a search for her titles on Amazon initially retrieves only free giveaways.

Why’s this going on? There are a couple of possibilities: it could be a morals issue—Amazon’s algorithms filter out content that’s deemed pornographic, and the covers of Ellora’s Cave titles, which generally involve a fair amount of skin and groping, could send alarm signals. (But if so, why wasn’t this an issue earlier? And couldn’t it be controlled by taming down the covers?)

Or it could be about money—discussions on romance messageboards describe the high prices of EC titles on Amazon, compared to buying the books through the company’s website, and it’s mentioned that Ellora’s Cave refused to give Amazon the discount they were asking for, which meant that prices were sometimes double on Amazon versus the EC site. Could Amazon have retaliated by making the Ellora’s Cave titles harder to find? Or was it a misjudgment of their strength on Ellora’s Cave side? A commenter on Litte’s post suggests the following explanation:

They’d been almost the only place that people could go to for that type of product for so long, that when competitors opened and started actually competing for authors and readers, and when Amazon became the third party seller powerhouse, it was like EC threw a tantrum, like, “No, *I* want to be the only one!” and packed up its toys and hoarded them, instead of trying to find a way to be part of this new way of selling books.

In any case, whether the house’s troubles are due to their own decisions or to outside factors, they’re a stark example of how much publishers are dependent on Amazon, and how much of the market it controls. When those sales disappear, all the abs and cowboy hats promised at Romanticon – EC’s annual conference, happening next week in Canton, Ohio – aren’t going to change the picture for authors.