Dorchester was one of the large publishers who had an undefined reserve against returns clause. Basically, once a reserve was established, they were under no obligation to EVER return those royalties to the authors. Yes, they were sued, and yes, they lost. The clause was rewritten and all was well.
I've known a number of authors who pubbed with Dorchester over the years, and most all have been happy there. This whole situation is a total shock to them and they're understandably worried.
My personal opinion of what's happening is that they're asset-rich/cash-poor right now. Printers often want up front money for offset printing and especially if they've been really slow paying, the creditors (printer) might be insisting they cough up. But where to get the money? Why...ebooks! Amazon pays pretty darned promptly for the industry, as do the other ebook players. With the upfront cash, they could pay the fees for the print TO demand run.
Make note of this, folks, because everything I've read tells me it's not POD they're talking about but PTD. Print to Demand is not all that different from what every other publisher out there does. They receive orders from distributors and book chains and determine how many books they need to fulfill. Then they print an extra . . . oh, say 10-20% for fast reorders if the title flies off the shelves. Instead of printing a flat 5,000 or 50,000 of a title and warehousing it, they're printing a smaller number using digital technology that is very close to "just in time" shipping that's happening in all other areas of manufacture in the world. Digital means they're not tied to a specific print run. If they need 3,624 copies instead of 5,000, they can do that without any effect.
What I
fear is going to happen is that they're going to use the "ebook first" option as an indicator of future print sales, and not put out some titles as print books EVER because of low e-sales---and that's a mistake. Dorchester is widely known for grocery and discount chain sales in mass. They often don't have the racks available for trade size. That's going to cut into their business. Plus, with more and more brick and mortar stores closing in small or rural areas, it's going to turn into a situation where the tighter they pull back financially, the less sales they'll wind up getting.
Although, Amazon is quickly outpacing several of the major chains on print sales, so maybe it's not such a bad thing. As veinglory said, trade books aren't returned as often, and are returned intact. That can save a TON of money for a publisher in the long run.
I'm leery, but willing to see what happens. I don't think people should stop subbing or it really WILL wind up the end of the publisher.