Here is my answer...
Royalties are usually between 5 to 10% of the cover price of the book. (The exception is an eBook publisher. They offer a higher royalty because they generally don't offer an advance.) For example, a paperback sells for $20. The author receives $1 or $2. And if you have a literary agent she gets 15% of your royalties. It doesn't look like much when you think in terms of a small number of books. But remember most publishers make large print runs.
Yes, you can make money writing. Two examples: J.K. Rowling and Stephen King.
This weekend I bought an excellent book on the craft of writing: The Breakout Novelist: Craft and Strategies for Career Fiction Writers by Donald Maass (literary agent). And I immediately skimming though it. I stopped dead in my tracks when I got to chapter 25--a chapter called Numbers, Numbers, Numbers.
Donald Maass writes: 'Advances are an estimate of eventual royalties .. A nonreturnable advance is money you keep, but advances levels are not permanent [and]...can go down suddenly and sharply.' He explains that the publisher's estimation on the amount you will earn is based on the net sales of 'your last novel.'
'[B]ookstore chain buyers...order new novels by the numbers, meaning according to the net sale of your last book. [If] [y]our last book sold poorly...there's no reason for a chain buyer to imagine that things will [improve]... So well known is this pattern that publishers' sales reps have a term for it: selling into the net...
'Weak sales on one book become a self-fulfilling prophecy on the next, and so on and so on...
'[And] there's no bouncing back.
[The solution:] Earn out. That starts with an advance that you can exceed in royalty earnings.' [p. 307 - 308]