I read that one of the biggest risks for everyone in the business—publishers as well as authors- is advances that don't ever earn out. This makes me think editors (even if they like a submission) will not buy a manuscript from an author that has had a previous book that did not earn out. However, I wonder, how could an editor at another house know that a book did not earn out?We can't. If you tell us what you got paid and how many copies the book sold, we'll be able to take a guess.
Would word spread on the "Editor's Grapevine" so that editors at other houses would also not want to buy a new manuscript from an author whose previous book did not sell out?!Unlikely.
Also, I heard on Book TV on c-span many years back, that if your first 3 books did not sell out, that you should change your name. True? And on the same subject, how do editors feel about taking on an author whose book sells out, but makes little or no more money?Ah, we seem to have experienced a change in terminology here. We've gone from talking about earning out to selling out. "Selling out" means nothing for publishers, so I'm not sure what you meant by it.
If you mean selling through; ie if bookstores returned your first three books in high numbers, then yes, a change in name might be a good idea. Booksellers look at the track record of books by an author, and if the record they see is "nobody wanted this; just nobody", then they're going to be pretty hesitant to take anything new.
Clarification: I mean changing your name on the printed book. That is, for booksellers, not your publisher. You still have to tell your publisher who you are.