AEG, Strategic, Eloquent, etc.
I checked Writer Beware and contacted its co-owner V. Strauss and learned that AEG and all these other company names are indeed associated with the same Robert Fletcher.
The editing "test" that I took was much shorter than yours, Calmuse -- about 6 pages.
I don't believe that their intent is to rip off the editors directly. I have a friend who just did some production-related work for them, and she was paid promptly. What concerns me is becoming an accessory -- legal, moral, or otherwise -- to their questionable business practices. Add to that their horrible rate of pay ($0.006 per word -- yes, that's right, six tenths of a cent per word, less than half the industry standard), and there's not much incentive to help them abuse ignorant, optimistic authors.
Plus, they're cutting their rates. Here's an interesting letter from "Robert" (no last name) that the company just sent to their editors, production folks and other freelances:
Dear All:
I need to ask you a favor. The economic downturn has reached us and while our overall business model is still solid, weekly billings have dropped precipitously. In a rapidly growing, bootstrapped company like ours, there is very little wiggle room if revenues take a dip, which has happened in the last two weeks.
We have a pretty good early warning system, and it is telling us to make contingency plans NOW, which is why I am writing this email to you (and everyone).
To make a long story short, to get through the upcoming holiday period, we need to make some adjustments to how we pay our payroll. We hope to keep the same pay rate, but we need to take into account weekly fluctuations in deposits.
Payroll is our biggest expense and while we have made payroll every week, it runs so close that if the deposits hit on Friday, but the payroll checks hit on Wednesday, then our bank fees are outrageous.
As you know, our corporate culture is to pay everyone a 'living wage'. If you think about it, we have been generous with starting compensation, and raises for those employees that have worked with us over time. Frankly, I have tried to pay everyone a little bit better than is necessary because I want to be surrounded by good people for a long time.
On the flip side, the unfortunate fact is that other than the retraining costs, and due to the large number of people looking for work, we can hire for much less than we pay now.
But, I don't want to hire all new people. I am trying to avoid layoffs. Lulu.com just laid off 25% of it's workforce. We have such a good team of people, that I really don't want to lay anyone off. Everyone is doing a great job, and we really are working as a team, so I am very reluctant to make any major changes to the way we do business and to the people that work for us.
So, my first plan of action is to ask everyone for a temporary reduction in their base hourly rate and to tie everyone's compensation to the billings of the company, and issue a monthly 'bonus' that is based on the company's health. Hopefully, the monthly bonus will equalize your pay, just be time-shifted a bit.
The way it will work is this. This will be the temporary plan between now and 12/31/2008. I am hopeful that we can revisit the plan at that time. (I am extremely worried about the upcoming Thanksgiving week and Christmas week). So, hopefully, other than changing the dates/times that you get your check, the overall effect will be minimized and spread out across everyone equally.
Everyone will receive a reduction in their base rate of 25%. This means that if you were making $20/hr, then 25% of $20 is $5, so the new base rate is $15/hr. If you are an editor, then if you billed us $400 for a job, the pay will be $300. This is your new rate. There is no legal obligation on the company to pay more than this via the bonus. (Sorry, but I legally have to say that).
Vicki will keep track of your payroll billings for the monthly time period. At the end of each month, based on deposits, I will give Vicki what the bonus amount is. Every month, based on revenues, we will issue a bonus check to each person that has been on payroll for the prior month that will hopefully be the same as what you would have normally made, and you will be back to prior rates, and the company will have avoided $500 a week in check fees at the bank.
Note: We will pay you as per our agreement for the prior time periods. It might take a couple of weeks to get everyone squared away, but you will get paid at the agreed upon rate, for the prior weeks. and I do ask your patience in getting you the money for the prior pay periods.
I hate to ask for something like this, without giving something in return, so let me share with you a bit of a longer term vision for the company.
By the end of next year, I plan to setup an employee stock option plan, and add benefits. I have a vision that this can become a company that we can retire from, and that we will be in operation for the next 50 years. So, I promise you, that if you can hang in there with us, the sacrifices will be worth it.
Let me explain why I am so bullish on the business model. Sales of books are exceeding our expectations. We are publishing about 20 authors a week, and we will reach 1000 authors by next summer. If we average 200 books per year, per author, that's 200,000 books sold and at a net of about $4-5 each, that's about $1 MM net profit annually. That kind of net profit goes a long way towards smoothing out these ups and downs in our weekly cash flow.
So, in conclusion, please get back to me or Vicki with any comments or concerns that you may have and whether you can live with this plan. I am happy to do what I can to try to help you, but staying alive is my primary concern.
If you cannot, or choose not, to proceed, I trust you will exit professionally and help us hand off your work and retrain, and we will keep the door open for you if you wish to come back later.
Thank you again for your understanding. This is a tough time however, I know that we will overcome it.
Thanks again for what you have done for us so far.
Sincerely,
Robert
Funny how they're demanding a 25% reduction in fees, when the problem is stated to be slow business, not rising costs. (Since this is freelance piece-work, the logical response is to keep the same rate of pay, and simply hand off fewer jobs to freelancers.) And how he brags about how strong sales and profits are, contradicting his justification that the fee reduction is necessary because sales are slow. And how they expect freelancers who don't wish to accept the pay cut to work, apparently for free, to "retrain" (sic) their replacements. And, for that matter, how they consistently refer to freelancers as "employees."