In Australia, for many writers, 30 September is royalties time. We only get them every six months usually (unlike the US where I believe a lot of publishers pay quarterly), so when the time gets close, you tend to hold your breath. There are a number of ways you can find yourself on the big slide down. One is that just when you were expecting to start earning out your advance on a book and receiving more money, there were a lot of returns back to the warehouse. (For those of you who might not know, bookshops are just about the only retail outlet - that I know of, anyway - where if they don't sell what they order, they're allowed to return the books and get a credit.) So you end up back in the red.
Another slide down occurs when something happens at the publisher (such as they go out of business, or are running at a loss) and they decide to remainder your book. Either a big lump of copies, or the whole lot. Suddenly, instead of them paying you money, you have to pay them in order to get hold of what you can before your book goes to the great pulping machine. Or there aren't many copies of your book left so the publisher decides it's not worth reprinting and they deem the book out of print, and again you're offered what's left. If you're lucky.
What can also happen is that your book has been out for quite a while, and is no longer selling more than the odd copy. So you receive royalty statements, like I did this week, for minimal amounts. One of mine was for $2.13, the other for 48 cents. If I put them both together, I can buy myself an icecream!
This is all in the nature of publishing, of course. It's a business. Just as I wouldn't go down the street and buy a pair of jeans that was manufactured in 1994 and been sitting on the shelf ever since, neither do I expect people to keep buying my old books when all those bright, shiny new ones are out there now. I'm not going to buy Agatha Christie in preference to the new Stieg Larssen (and I am so happy my copy of The Girl Who Kicked the Hornets' Nest arrived today - yaayyyy!).
There is a constant debate, somewhat quieter at the moment with the economic worries, about the size of advances. Should you push for a big advance? The logic is that if you get lots up front, it pushes the publisher into doing more marketing of your book. But it can backfire. You could be offered $8000 and manage to get $20,000 instead, but if you don't sell enough copies and earn out that advance, the publisher eyes you a bit negatively. Marketing budgets are tight, authors now are expected to do plenty of publicity on their own. Everyone is responsible! That can make you feel as depressed as a $2.00 royalty payment.
With new technologies coming in - ebooks are only the tip of the iceberg - royalties will become even more of an issue. How much should an author get? The standard on a book is 10% here, but that takes into account how much a book costs to physically produce. When you start talking internet downloads onto Kindles and such, why shouldn't authors reap some of the benefits of cheaper production costs? Ah yes, the future will be very interesting indeed. I'm not making bets on anything. Can't afford to. I've only got $2.61 to gamble with!