I have exactly two contracts under my belt, so don't take my experience as overall truths.
Does the advance need to be paid back if book sales fail?
I've always been told this is one of those myths that flies around about publishing but isn't true (or hasn't been true for a long, long time). Personally, I wouldn't be inclined to sign with a publisher who did this.
Do you have confidence in the book?
This, unfortunately, won't have any influence over how well it does, no matter the publisher's contributions. (If all it took was faith in our work, we'd all be millionaires!
)
Will the publisher work equally hard if no advance was paid?
I was told by my former agent that publishers are inclined to pay more attention to books they've paid for ahead of time. I have no idea if it's true, but it does make some sense. As a writer, I don't mind having the publisher have a bit more skin in the game.
And a question for our experienced members: Is 17-20% average for royalties?
Depends on whether it's gross, net, or after other expenses (besides the advance). It's higher than I got on print from a big 5, and lower than I got on audiobooks and ebooks (although ebook royalties were calculated on sale price rather than list).
And are these contracts negotiable?
Every contract is negotiable! I far prefer having an agent do it, but I did negotiate one on my own, and the publisher's lawyers were perfectly cheerful and accommodating. One thing Ex-Agent said to me that I've taken to heart: Nobody signs the boilerplate. (Which probably isn't true, but it did give me courage when I had to do it on my own.)