Excerpt from The Writing World Defined--A to Z: (www.stuartmarket.com)
Book auction. A virtual auction taking place when more than one publisher wants to publish the same book. In some cases, an important or desirable manuscript will be bid on by more than one publisher who wants to publish it. Generally, such an auction will be orchestrated by the agent who represents the author. Typically the author is well known, but in some cases it may be the high marketability of the topic of a manuscript from an unknown author that prompts the auction. The agent will send the proposal simultaneously to a number of publishers who would likely be interested. They are not bidding a specific dollar amount in these private auctions, but offering an amount for the advance, plus additional terms such as royalty percentages, guaranteed promotion budget, and any other promises that may entice the author to accept their bid. It is auctions such as this that result in the high advances we hear about. The book auction is still fairly rare in Christian publishing, but is seen more often in the general market. For details on how book auctions work, go to: http://www.dailyfinance.com/2011/02/19/bidding-for-authors-when-books-sell-at-auction.