A few things regarding this story.
I know a lot of people liked Kiran Desai's The Inheritance of Loss (I didn't. At all.), but holy cow: 2.5 million dollars advance? For a book? Haven't publisher learned their lesson by now? Does anybody else remember that story about that book that got something like a million dollar advance and then nobody really bought it? (uh... uhh... um. [response: The Kindly Ones]) Not that this will be the case with Desai - I'm certain the cover will have a bland but pretty cover and will advertise loudly and prominantly that Desai is the author of the Booker Prize winning yawn-fest - but it seems like such a foolish, pointless move. Publishers repeatedly complain that their industry is struggling with the advancements of technology and with falling sales. Seems like pointlessly expensive advances on books that may or may not be good aren't helping (I offer the poor reception Yann Martel's Beatrice and Virgil got as an example of this).
Some people may call this a gamble but on the short run they're wrong. Knopf will make money - rest assured. The book will be hyped and people will buy it, just like people ultimately buy almost every massively hyped book (I'm thinking books like The Passage or Freedom). The question shouldn't be about whether or not Knopf will be able to sell the book with the title that sounds kind of like The Inheritance of Loss (oh, right... The Loneliness of Sonia and Sunny...), but whether or not the book is really worth the hype. This being Desai's second novel, fans of The Inheritance of Loss will almost certainly pay up (no matter what reviews say: again, see Beatrice and Virgil). Again the question: should they?
At this point I cannot judge the quality of a book I have not read. Again, I wasn't a fan of The Inheritance of Loss so I'm a little biased against Kiran Desai, but it frustrates me to know that publishing honestly believes that high publicity advances and paying lots of money for books that will short term rake in cash is the right way to go. If Knopf pays so much money for one book, doesn't that mean that they're less able to publicize and prop up new authors? If they pay fewer advances and let the public decide how much money the author deserves (based on how well the book sells, also relatively under the publicist's control...), doesn't everybody win? And don't they learn from past mistakes? I mean, seriously guys - hasn't history taught us that high advances don't guarantee a good book? A bestseller, maybe, but I do believe we should expect only the highest quality literature from our publishers. Sadly, I'm starting to think that's only wishful thinking.