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Steve, who do you think pays the advances back? If Hachette increases the royalty percent for the author, then Hachette would recover that money back so much faster. If they pay out advances with money they don't have in the hope of getting it back, then they are doing it wrong. It is pretty risk free if they only pay out advances with money that is already profit. If they can't make the advance back (the book flopped) they did not lose any money, they made less profit. Also with higher royalties the book is more likely a success - as it takes fewer copies of the book until the author paid back the advance. The author doesn't get any royalties until the advance is paid back.
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