Amy Koppelman had always wanted to be a writer, even after all those years she spent slogging away on a first novel in her closet—the only “office” space available in her cramped Upper West Side apartment. “It was the closest thing I had to ‘a room of one’s own,’ ” she says. She still wanted to be a writer even after she got turned down by Columbia’s prestigious master’s-of-fine-arts fiction program. Twice.

For seven years, she hunched over her manuscript, a tale of post-partum depression and infanticide. The work spanned the course of two pregnancies and several thousand nagging doubts. Even after Koppelman, now 33, finally made the cut at Columbia in 1998, the doubts would grow so thunderous that she considered giving up and opening a coffee shop.

During the darkest of those spells, she happened across a “Page Six” item in thePost concerning noise complaints in Cindy Crawford’s apartment building; it mentioned in passing that Koppelman’s idol, Joan Didion, served on the building’s board. Although she had never met Didion, Koppelman tracked down the handsome East Seventies prewar and left a copy of her manuscript with the doorman. Tucked in the package was a note, meekly asking Didion if she should just quit altogether. Three days later, Koppelman received a reply on solemn gray stationery that started, “Yes, you are a real writer … ” And so Koppelman pressed on. It was only when she tried to sell the book, however, that she learned what it means to be a “real writer” these days.

She began by mailing out dozens of sample chapters of the book she had come to titleDon’t Fall Apart on Me Tonight—later changed toA Mouthful of Air. As the answers started to trickle back, Koppelman detected an unsettling trend. “All the big New York agents and publishing houses told me the same thing: ‘Look at the movies. You need a happy ending,’ ” she recalls. “I showed it to one big agent who agreed to read the first eighteen pages. She told me to stick it in a drawer, nobody cares about dead babies—and that was her being nice. I sent a copy to a friend who works in Hollywood. He said, ‘You don’t really want to get this published, right? Just write the nextBridget Jones’s Diary.’ ”

It was clear to Koppelman that publishers not only didn’t seem interested in a modest first novel but also showed no interest in the idea of developing a writer over time, who might, several books down the road, produce something really stellar. Instead, even from unknown writers, they seemed to want only blockbusters. Not fitting that category, Koppelman finally found a small, independent publisher called MacAdam/Cage in San Francisco that believed in building a writer’s career.A Mouthful of Air was published in April, and the New YorkObserver was quick to call it an “exquisitely dark debut novel.” It is only now that Koppelman can pause long enough to contemplate the bigger question: Was it all worth it?

“I got a $3,000 advance for the book,” she says. “I’m not even sure that covers the postage on the queries I sent out.”

In other words, of course it was.

For thousands of would-be novelists like Koppelman, the dream of living the New York writer’s life will never die, even if it nearly kills them to pursue it. But that doesn’t mean the nature of that pursuit is in any way constant. And as always, the goal of carving out a life of letters in the city—shared by thousands of Sarah Lawrence graduates, Starbucks baristas, and drop-out tax attorneys alike—is inextricably linked to the chilly realities of the publishing business. But rarely have the realities of the marketplace changed so jarringly as they have over the past five years. While the major publishing conglomerates continue to cut back on “midlist” authors, they’re increasingly willing to lavish astronomical sums on unknowns. So many, in fact, that since the late nineties, half a million dollars is de rigueur for a first novelist who’s perceived to have hot prospects.

And the recession that has caused sales of all but a few books to flat-line hasn’t slowed the run on mega-advances; if anything, the desperation to find the next Alice Sebold has only upped the ante. In the past two years, a steady stream of first-time authors have joined the club. Yale Law professor Stephen Carter may have made headlines when Knopf coughed up an astonishing $4 million for his first two novels, but he is by no means alone. Medical student Daniel Mason received $1.2 million for a two-book deal from Knopf on the strength of his manuscript forThe Piano Tuner, which appeared last fall. Hari Kunzru, a former editor atWired UK, received nearly $1 million for the U.S. rights to his first novel,The Impressionist; Khaled Hosseni, an Afghan-American, whose first book,The Kite Runner, concerns life under the Taliban, pulled in a substantial six-figure sum, as did Alisa Valdes-Rodriguez, who received $475,000 forThe Dirty Girls Social Club, which took the former New Mexico reporter six days to write (yes, that’s $80,000 a day). Arthur Phillips, a Minnesota-bred Gen-Xer, earned a similar sum with his debut smash,Prague. And the youngest recipient of publishing’s new largesse, local poster boy Jonathan Safran Foer—a 26-year-old Princeton grad living in Jackson Heights—received a clean half-million from Houghton Mifflin (not to speak of a very quick $925,000 for the paperback rights) for his first novel,Everything Is Illuminated.

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The magnitude of Safran Foer’s advance, combined with his tender age, drew so much attention it served to demonstrate to publishers just how powerful a marketing tool the advance itself could be. The larger the advance, the louder the publisher’s declaration that this is the book the house is gambling on this season. The marketplace has become a literary lottery, not just for the authors but for the publishing houses too. A modest advance, which used to signal the intention to invest in a long-term relationship, now indicates lack of commitment. As one senior editor at a major house says: “The hardest thing to do is to buy a book for no money. The money is a function of enthusiasm. If there’s no enthusiasm, why bother?”

The book that really changed publishers’ minds about the commercial potential of literary fiction, and in particular the possibilities of first novels, was Charles Frazier’sCold Mountain. Published by Grove/Atlantic in 1997, this Civil War tale was a groundbreaking success—a serious book that held its own on the Wal-Mart shelves, selling an incredible 1.5 million copies in hardback and following up with another 1.3 million in paperback. It was one of the biggest debuts in publishing history. The cry from every publisher in town was “Get me the new Charles Frazier!”

Suddenly, literary fiction was no longer thought of as a high-prestige but low-profit venture in an industry largely propelled by cookbooks, self-help tomes, and pulpy thrillers. Of course, literary authors like Norman Mailer, Toni Morrison, and John Updike were guaranteed generators of revenue, but they had built their reputations over a course of years. What had changed was publishing’s embrace of the unknown.

Last year, a record fifteen debut novels shipped more than 100,000 copies each. The most notable of these, of course, is Sebold’sThe Lovely Bones—a surprising novel whose narrator is a murdered girl—which has sold more than 2 million copies in hardback and last week logged its fifty-third week on the New YorkTimes best-seller list.

Even if the crossover smash was still the exception, such books encouraged the idea that any promising young nobody might be transformed into a very big somebody with the right promotion, and ironically, a big-enough advance could help serve as that promotion. The problem was, with everyone swinging for the fences, publishers could no longer afford to have much patience for young writers who show only warning-track power. “It’s the ‘blockbuster’ mentality applied to literature,” says New York literary agent Jody Hotchkiss. “The middle is falling out, but the financial upside is far, far greater. It’s exactly what’s happening in Hollywood right now.”

But what’s good for the author’s bank account—and the publisher’s—in the short term is not necessarily best for his career in the long term. “At Doubleday, we believe in investing in a career,” insists Bill Thomas, editor-in-chief of Random House’s Doubleday Broadway group. “That gets harder to do with the money that’s being thrown around these days. It’s closing your eyes and praying. And that can hurt the writer.”

Jonathan Burnham, president of Miramax Books, who startled the publishing world last fall by forking out $625,000 for a novel calledBergdorf Blondes byVogue editor Plum Sykes, concurs. “There’s no doubt that publishers will be prepared to overpay for a major new literary voice,” he says. “But a big advance puts a huge pressure on the novel to succeed. This peculiar marketplace entrance-performance is something that everybody has to do now. William Faulkner didn’t go around and meet ten publishers, who then participated in a heated auction that was publicized by Keith Kelly in thePost the next day.”

Another publisher is even more blunt: “The writer has got two or three years to make the money back. If he doesn’t, that big advance might be the last nickel he ever earns in the book business.” So maybe it’s no longer publish or perish; now it’s also possible to publish and perish. The time-honored tradition of a novelist’s serving an apprenticeship through his early thirties is waning quickly, says Morgan Entrekin of Grove/Atlantic, who gave the world Frazier’sCold Mountain six years ago.

“It used to be that you had pretty modest expectations for a first novel, and the idea was to get the writer in print and the writer would be allowed to develop,” Entrekin explains. He points to John Irving, who was shepherded by the industry through a number of promising but uncommercial early novels (who remembersSetting Free the Bears orThe 158-Pound Marriage?) before bursting onto the airport newsstand withThe World According to Garp. “That experience has been turned on its head. All publishers are looking for fresh new voices. It’s great if you have a positive sales record, but it’s better to have no sales record than a poor one.

Consequently, it’s easier to go out with an unknown writer than it is with a second or third book from a writer who hasn’t done very well.”

As Daniel Mason’s agent, Christy Fletcher, puts it: “It’s like credit. It’s better to have no credit than bad credit.”

One writer who wound up almost buried by a book-industry jackpot is Lori Lansens, an unpublished novelist from rural Chatham, Ontario, who four years ago found herself in the midtown Sheraton, the subject of a fierce bidding war among seven major New York houses. At that point, Lansens, now 40, thought she had already given up her career in the arts, having quit acting after fifteen years (the highlight: a scene opposite Al Pacino inSea of Love that was later cut). Although she neither studied literature nor attended any writing programs, Lansens decided to attempt a novel—eventually titledRush Home Road—chronicling the relationship between a black grandmother in an Ontario trailer park and the abandoned white girl she adopts. The writing went surprisingly fast—the first draft took her about a year. “I had read in some book that five to ten thousand dollars would be an average advance on a good book,” Lansens recalls. “And that was if, as was my dream, it was published at all. My husband and I were seriously talking about self-publishing.”

It never came to that. Unsolicited, Lansens sent her manuscript to a Toronto-based literary agent, who quickly sold the Canadian rights. Almost instantly, the big New York houses were squaring off over the world rights. “The deal happened within a day,” Lansens says. “I was meeting my agent at another publisher’s office in midtown Manhattan, and she stopped me at the door and said, ‘We can’t go in there. We have to talk.’ ” Little, Brown, the agent said, had made a preemptive offer: $500,000, for two books. “I was amazed,” Lansens says. “I was unknown.”

The euphoria didn’t last long. “It was a wonderful story, beautifully written, but they could hardly get the book reviewed, even with that advance,” recalls Jody Hotchkiss, Lansens’s New York film agent. “The book came out, had a beautiful half-page ad in theNew York Times Book Review, which is very expensive, but essentially disappeared. She couldn’t get reviewed in theTimes daily, which is still the Holy Grail. So now she’s on contract for this second book, and she’s due $250,000. But believe me, Little, Brown is sitting there saying, ‘Whoa, we better hope we can pull a rabbit out of a hat.’”

Lansens felt the pressure as she scrambled to find a suitably marketable topic for her second book. “After this big deal happened, I guess we did all have expectations,” she says. “It was frustrating, because nobody could really answer why.”

But just before Lansens became a casualty of publishing’s new economics, her luck turned violently, again. Hotchkiss, in New York, got a call from Whoopi Goldberg’s production company. She wanted to buy the movie rights and Whoopi herself wanted to play the lead. For Lansens, the deal meant another six-figure sum, not to mention an unimaginable windfall of publicity for the book, now in paperback.

Once again, and just as unimaginably, she was a poster child for the Hollywoodification of the book business—but this time, literally. Now anointed a significant literary voice, Lansens, who spent some time just processing all the drama, is now one fifth of her way through a second book. “This was my first book,” she says, still astonished. “If it were my tenth book, I wouldn’t have expected this.”

The new pressures are very clear to many young writers. A few years ago, Arthur Bradford, now 33, moved from Austin, Texas, where he was working as a school gym teacher. He quickly made his mark, earning an O. Henry Award for a short story in his collection,Dogwalker, and invitations to barbecues at Dave Eggers’s house. Already, however, Bradford’s worrying about following that artistic success with a commercial one. “If your first book or two is not widely read, it can ruin your chances of publishing anything else,” Bradford says. “You don’t want a small debut. You need to hit them over the head right away.” For some, the new equivalent of a writer’s apprenticeship seems more like a hazing ritual. Novelist Mary Morris is something of a Mother Superior to Brooklyn’s exploding writers’ scene. The author of thirteen highly readable midlist books, Morris presides over an exclusive writers’ group, which meets weekly in her Park Slope brownstone. Among the Slope’s legions of Next Jonathan Lethems, admission alone is something of a literary debut, a major step toward a first contract. Lately, however, Morris is finding it tougher to offer the sunny encouragement that young writers need to survive.

“There’s really more of a bottom-line mentality now,” Morris says wearily. “When I started out, publishers could still commit to a writer. Now they’re publishing a book. All any publisher has to do is push a button and get all the numbers from the big book chains. And those numbers,” she adds darkly, “will track you forever.”

Nelly Reifler is a typical young writer living in Brooklyn. Now 35, she spent the first fourteen years of her “professional” life working the register at a store that sold wind-up toys on Columbus Avenue, or walking dogs for Paul Auster—anything that allowed her time to write. She published ambitious short fiction in underground journals likePressed Wafer and the better-known Bomb. Then Reifler signed on with Leigh Feldman, the agent who sold Arthur Golden’s best-sellingMemoirs of a Geisha andCold Mountain. Feldman sold Reifler’s first collection of stories—See Through—to Simon & Schuster, albeit for a sum that would barely be large enough to buy a new replacement for her 1987 Toyota Camry. While the irrepressible Reifler considers a sum like that heroic compared with her previous paychecks, she acknowledges that the concept of living a midlist writer’s life like Morris’s—nice brownstone, regular contracts—is looking ever more difficult to attain.

“It helps to have low expectations.” Reifler says with a shrug. “It’s a crazy way to live. It’s just a gamble. You’re just betting on a way of life.”

But while writers like Mary Morris consider the blockbuster mentality something of a sickness in the book business, others insist it’s a measure of health. “Some of the worst cynics tend to be people who maybe are never going to get published for a reason,” says Nicole Aragi, the superagent-of-the-moment who brokered Jonathan Safran Foer’s handsome payday. Aragi embodies the blockbuster mentality better than most. She claims not to bother with midlist clients and takes on at most one or two new authors a year, and then only the superhot (she also represents Junot Díaz). Winning Aragi’s approval in itself is a benediction of sorts.

“I’ve heard some very nasty accusations from people, then you look at their work and think,Well, there’s a reason fifteen rejections are sitting in your box,” Aragi says. “I’m very cruel about that, though, so I’m not going to start sounding like an old bitch. There have always been bean-counters in the industry, because it’s a business. We need them to behave in a businesslike way.”

Though Bill Thomas of Doubleday disagrees that this shift in publishing has created better fiction writers, he suggests it has coincided with a really good crop of emerging American novelists. “I think American fiction is in a very good place right now,” says Thomas, who edited Jonathan Lethem’s commercial breakthrough,Motherless Brooklyn, before ascending to his current post. “If you look at Jonathan Safran Foer, no one said, ‘Well, this is a difficult postmodern novel by an unknown writer, we’re not going to get involved.’ Everyone bid on it. That feeling of excitement when you start turning pages of a manuscript and you want to share this with the world, that still drives the business.”