Here’s a story from the world of traditional publishing that serves as a useful reminder of how that world operates. The Smoking Gun reports that Penguin is suing several prominent writers in an effort to recover advances for book deals that, for a variety of reasons, seem not to have turned out how Penguin expected.
The key point here, as Dean Wesley Smith explains, is that advances are effectively a type of loan, paid out on the understanding that the money will be recouped once the book is released. Initial royalties go towards paying off this loan, and the author will usually only get actual royalties on profits over and above the amount of the advance.
Each of the cases is slightly different. In some instances, books apparently weren’t written at all, while in others the finished titles weren’t what Penguin wanted. Lumping them together isn’t necessarily very useful. The lawsuits might not be great PR for Penguin, but it’s worth asking: if you paid an advance for someone to write for you, you’d expect them to deliver, wouldn’t you?