Some background: When an editor acquires a book, he or she sits down with a spreadsheet that calculates the costs for the book and the likely profit to figure out whether the book might actually make any money. Since a large number of variables go into this calculation, it's not an entirely straightforward thing. However, you don't need to be able to do advanced calculus in order to figure it out. Anna's breakdown is much more sunccint and funnier than the one my publishing 101 prof gave.
The whole thing is excellent. Beyond excellent is Patrick Nielsen Hayden's condensed explanation of how mass-market distribution came about:
[1890 through 1941:]
WOULD-BE PAPERBACK PIONEERS: "Stock our 25-cent paperbacks, please!"
BOOKSTORES: "Nothing doing. Two or three of them take up the same shelf space we could use for a $2.95 hardcover. Begone with you!"
[Exeunt omnes, pursued by World War II.]
WOULD-BE PAPERBACK PIONEERS: "Hey, it's the postwar period! Here's an idea: forget the damn bookstores, let's sell our 25-cent paperbacks through the same system of jobbers and wholesalers that distributes magazines and newspapers to every newsstand, drugstore, bus station, and grocery store in America."
MAGAZINE JOBBERS AND WHOLESALERS: "Okay, Mac, but you gotta make 'em strippable, just like COLLIER'S and LOOK. Also, make your lists monthly. None of this carriage-trade 'season' stuff for us burly, down-to-earth practical men."
PAPERBACK PIONEERS: "No problem. Here, have a couple of dozen titles."
AMERICAN PUBLIC: "OMG! SQUEE!"
Do not drink before reading.