It's not exactly 98% of the profits; but, it still seems egregious.
From what I've noticed, royalties are generally about 10% of gross against advances (if any), or $1 on a $10 soft-cover. The publisher spends money on the acquisition, editing, printing, and distribution; in brick-and-morter land, this isn't cheap. Remember that the store needs to make a couple of bucks, too.
Additionally, major retailers include a buyback clause—if the book doesn't sell, the retailer can sell up to something like 15% of the initial purchase order back to the publisher. The publisher often forwards your share of that burden into your royalty payment schedule.
Though, ultimately, while authors might get screwed financially in a lot of ways, publishing does, as a consumer, keep a lot of crap out of your purchasing decisions. Publishers (on the whole) do provide a lot of value to you: are you going to buy Gruen's AWESOME guide to Ruby or The Ruby Programming Language from O'Reilly Publishing with its venerable woodcut cover treatment?
If you're trying to get your work out there (which is why people write in the first place) you're probably willing to take the traditional publishing deal.
QLabs rapidly produces new web properties every 8 weeks. We're growing teams for the following portfolio projects:
http://huntsy.com - Jobhunter's CRM (subdomain's beta if you want to see it in action)
http://framey.com - Put a video Recorder on any website.
http://brom.ly - Find *all* of the events! (API Product.)
...and we're looking for the following roles for each project:
Marketing Associate (NYC) — Solid understanding of web technologies and a strong ability to market them with a keen eye towards social technologies and effective ad spend. Healthy budgets allocated.
Software Engineer Ruby on Rails (NYC. Remote OK) — Current on latest RoR technologies and common gems. Typical production stack:
Rails 3.1/3.2 w/Asset Pipeline, HAML and SASS
EC2 + Heroku
Redis
Chef (we forked a lot of cookbooks and the cluster is re-deployable in minutes)
Candidates: send a 50-word note to work@qlabs.com and include any pdf resumes, portfolio, etc. that you think would be useful.
Also of note, we have a beautiful office on Bond and Broadway, stocked with free and nutritious snacks.
