Since the earliest days of mechanized publishing, when Herr Gutenberg was putting ink to paper in what for the time was a staggering pace, there have been printers and publishers and, as noted earlier, these were usually two different people. The publisher paid the printer to produce the book, and the publisher made his money on sales of the book. If the author was lucky, he got a cut, too, but for a long time, especially in the states, this was iffy. No one likes to admit it these days, but a big portion of the profits of publishers in the 19th century came from bootleg copies of books by British authors like Charles Dickens.
The royalty system most modern publishers use was developed in the mid-19th century by George Palmer Putnam, who paid Thomas Carlyle a royalty on Letters and Speeches of Oliver Cromwell (1845). This was reportedly a “straight percentage on the retail selling price of all copies marketed.” No word on whether Carlyle got an advance on that.
Nowadays, the publisher is likely to be a guy in a corner office and the printer is a guy in the basement running the press. They’re different functions within a single company. The publisher makes decisions about which books to invest in. The submission process publishers use to make these decisions is lengthy and involves a lot of people. It’s not based so much on finding the best-written book, as it is on finding the books that will make the most profit. That’s why good books are often rejected because the author lacks “platform.”
Once the publisher choses to publish a book, he’ll contract the author. Celebrities often get six-figure advances on their books. Unknown authors are lucky to get four figures these days.
The publication process is different at Big Six publishers compared with smaller publishers. Those differences reveal a lot about why the publishing industry is in such upheaval. Big publishers have high costs because of overhead. Decisions take a long time because they have to go through multiple committees. Small presses run lean and there are often fewer people making each decision. There are advantages to both systems, and it’s a mistake to think of either one as right or wrong, better or worse. They’re just different.
 Lehmann-Haupt, Hellmut, The Book in America: A History of the Making and Selling of Books in the United States (New York: R.R. Bowker Co., 1951), 112