In moves that bore echoes of the much-hyped pounds 500,000 received by Martin Amis for his book, The Information - which has so far failed to recoup the outlay - Hornby became the latest in a string of authors to join the millionaires' club for novels that have not yet been written.
The former teacher, whose other books, High Fidelity and About A Boy, have also become bestsellers, is understood to have been poached from Gollancz by Penguin in a deal that will see him deliver two more books in the first couple of years of the next century.
Hornby's track record - sales of 700,000 paperback copies of his first two novels and 110,000 hardback copies of his third - has convinced Penguin that he is worth the money. But industry watchers predicted the deal could have a knock-on effect among poorer writers as they are squeezed out of the limelight by better-established authors who believe they can earn more by switching publishers.
Already this year, Sue Townsend, creator of Adrian Mole, has moved from Methuen after 17 years, also to Penguin, and Transworld has signed up Ben Elton, author of Popcorn, in a pounds 1.5m deal that took him from Simon & Schuster.
The big-money bidding has left some writers concerned that the publishing houses are spending too much money on too few authors.
"What concerns me is that in the past, when authors have not recouped the money spent on them, there has been evidence a while later of job losses in the industry - and it isn't the people at the top who lose their jobs," said A S (Antonia) Byatt, the Booker Prize winning novelist.
"Nick Hornby seems to be one of the few people who can make the money back, so he probably deserves whatever he can get. The deals that really concern me are the advances given to some authors on the strength of a 2,000-word outline.
"When they don't work, the publishing houses spend all their time and money hyping them in order to achieve sales. When that happens, perfectly good authors on their third or fourth book are ignored and don't get the exposure they deserve."
Last year, two publishing houses were bidding up to pounds 600,000 for the rights to publish the first two - unwritten - books by Amy Jenkins, creator of the television series This Life. All they had seen was a 2,000-word first chapter and an accompanying outline.
Similarly, the amounts bid for some first and second novels from unproven writers send chills down the spine of some industry-watchers. Robert Mawson, a former pilot, was given a pounds 420,000 advance for The Lazarus Child after a bidding war. But the story of a couple's attempts to bring their child out of a coma sold disappointingly in hardback and will have to be hyped again when the paperback comes out in the spring if it is to recoup costs.
Last year Richard Mason, a 20-year-old Oxford undergraduate, attracted pounds 200,000 bids for his first two novels - having written only one of them, The Drowning People, when he was 18.
That, alongside the pounds 15m Jeffrey Archer tied up in a three-book deal three years ago, makes Amis's pounds 500,000 advance for The Information and a book of short stories - after an acclaimed career spanning more than two decades - look positively frugal. (Amis has quietly returned to Random House in a pounds 1m four-book deal.)
But the sums still worry the likes of Martyn Goff, administrator of the Booker Prize.
"In the case of the bigger publishing houses, I believe many of these advances are given simply to enhance their image and attract more agents and their authors," he said. "It is like a loss-leader and I suspect more don't recoup the outlay than do recoup it.
"The effect on other authors is quite subtle. When it comes to selling these titles in spring and early autumn, all the marketing attention is devoted to absurdly puffed up efforts on them, at the expense of perfectly good books by good authors who deserve more attention."
Sometimes, however, gambles work. Nicholas Evans's book, The Horse Whisperer, attracted frenzied bidding over film rights even before it was written. Eventually, he received pounds 2.3m for US publication rights and pounds 350,000 (from Transworld) to publish in the UK. And now that Robert Redford has made that film, the book is selling well.
When a pounds 250,000 advance was given to Vikram Seth for his first novel, A Suitable Boy, many thought the sum was insane. But the book went on to sell more than 120,000 hardback copies in the UK alone and hundreds of thousands more in paperback worldwide.
Nicholas Clee, deputy editor of The Bookseller, believes the Hornby deal is a good one for Penguin and not a bad one for the rest of the industry. "If you consider the sales of his other novels and the fact that they are transferring well to the screen, I can't imagine any accountant saying pounds 2m wasn't a good investment," he said.
Besides, as Lord Archer of Weston-super-Mare might say, what's pounds 2m anyway?
Especially when you see the advances earned by America's heavyweights: Stephen King, pounds 23m for three books; Barbara Taylor Bradford, pounds 17m for three; and John Grisham, rumoured in the business to be able to beat even King.Reuse content