Via Books Inq. and one degree of separation, Dave Lull, I read an article in the Wall St Journal about how the big book publishers are still going to be paying massive advances for what they hope to be best sellers, even in this time of financial crisis, mess and general insecurity. Broadly speaking, Anita Elberse's persuasive argument goes like this: book publishers generate 80 per cent of their revenues from 20 per cent of their sales; a huge best seller (the main example given is Dewey, Vicki Myron's book about an orange tabby cat, now deceased, that lived in the library) repays the advance and more; if a publisher pays a lot for a book, it will also pay a great deal to market it and push it to success; and to stay ahead of the game, a publisher cannot afford to drop out of the auctions in which agents pitch their best books, as if they do, other publishers will snap up these titles and the best editors will follow.
This explains why, then, HarperCollins has just "sent comedian Sarah Silverman a contract of $2.5 million for her first book". Of course, the strategy does not work all or even most of the time. In my recent trips round the sales, all the Christmas celebrity books are half-price or less – Dawn French, Jamie Oliver, Nigella Lawson, Jeremy Clarkson, Julie Walters, Barak Obama (;-) ), Paul McKenna and so on. Some of these are probably quite good, by people who have actually spent a few years having a career, are interesting people and have something to say as a result - e.g. Julie Walters and Dawn French, and are not your usual Christmas rubbish celeb book by a nineteen year old model/wobblyhorserider/Big Brother runner-up/person famous for wearing clothes and marrying a footballer/person famous for being rude to other people.
So, even though the "outrageous advance" strategy is clearly not always working, and not only that but is clearly working less often than it did before people no longer had as much money to buy fripperies such as ghost-written tat, it is still working often enough from the publishers' perspective for the practice to continue.