The New York Times recently ran this article about the latest book-to-blog success story, Stuff White People Like. The blog was launched in January, quickly ran up the Technorati Top 100 list and is currently in the 40's-50's, depending on when you look it up.
Converting a blog to a book isn't exactly new, but paying the author a $300K is pretty bold, especially when you're talking about a $14 book. The article notes that Random House would have to sell about 75K copies to earn back that advance. That's a pretty healthy sales number but I question whether even 75K copies will earn back the $300K author advance.
Let's start with the $14 cover price. The typical discount to retailers is 50%, but I could see this one going into more mass outlets than usual and probably being part of some other deeper discount promotions. Let's assume the average discount is about 55%, which is still probably conservative. That leaves the publisher with 45% of the cover price, or $6.30 per copy.
The author's royalty rate is unknown and there are other factors that could come into play on this part of the calculation. So, rather than speculate on this variable, let's just look at the author advance divided by the publisher's net revenue against the 75K units cited in the article. Using the $6.30/unit from above, sales of 75K copies would produce $472,500 in publisher revenue. Divide the $300K author advance by the $473K publisher receipts and you get 63%. In other words, Random House would have to pay the author a royalty rate of 63% (against net) in order for the author to earn out that $300K advance after selling 75K copies.
That seems pretty darned unlikely to me. And although this blog has a lot of momentum right now, a $300K advance seems extremely rich and highly speculative for this one. I'll be curious to monitor the book's sell-through results in Bookscan when it comes out later this summer.