Bleak House Books said:
Those are your words from your mouth.
I was talking about your argument, which is a false argument. That's the "cheat." You're trying to claim that I was talking about your contract. That claim, itself, is a cheat.
This argument that you're making right now, like others you have presented, is false and misleading. Not only that, it is obviously false and misleading. Listening to your attempts at rhetoric is like watching a six-year-old trying to deal off the bottom of the deck.
When I say your arguments are false and misleading, this says nothing whatever about your contracts or your business dealings. Only about your arguments.
Are you totally clear on the difference?
Here are some numbers that prove my point.
Your numbers (which are quite similar to the ones I've already presented) prove my point. Up until the time a book earns out, whether the deal is pay on net or pay on cover is immaterial. Your example requires a foolish author and an incompetent publisher.
You're asking whether it's better for a writer to sell better than expected or worse than expected, and you want me to say that I should want to sell worse than expected.
In your own hypothetical there's no reason the publisher shouldn't have offered royalties on gross in the second example: It would cost him exactly the same. What does that do to the rest of your arguments? To help you out: It undermines them.
Here's where the math got away from you: You're setting up an equation where the sides aren't equivalent. You're also setting up a hypothetical that requires the author to bet that his book won't sell. Betting against yourself is a poor long-term career choice.
(I will note, parenthetically, that you're ignoring a lot of factors -- I might accept a lower advance and worse royalties from a publisher whose works regularly get major award nominations and put on year's-best lists. You're also ignoring the subsidiary rights (the topic of this thread, if you'll recall). A publisher can lose money on a hardcover and still make a profit on the book if he keeps the mass market rights, sells them to a decent place, and keeps 50% of the income. When you sell mass market rights, don't you look for a publisher that pays on gross rather than net?)
But you aren't looking for career advice from me: You're looking to justify what you've already decided to do, which is to pay royalties on net. I'm sure you'll find writers who will take your deal. Writers take worse deals than that every day and smile about it.
A long time ago, in this very thread, before you showed up, I said that if a writer had to take a pays-on-net deal that he should push for the highest advance possible because the advance money is the only money he'll see. That advice still stands.