This kind of thing happens a lot. A favorite trick is to "bundle" your app with some useless add-on, and then split the revenue between your app and the add-on, halving your royalty. The way to get past that is to have a minimum royalty per unit, and a minimum aggregate royalty per quarter.
I was even vaguely aware of this possibility, but of course the publisher refused to agree on a minimum royalty per unit. Somehow I still agreed on the contract - engineers and negotiation... They actually mentioned the bundling option as an argument, but it was supposed to be a long tail thing for later on.
At least I insisted on having a fixed share (percentage) of the actual sale price, because I had read before that it is common to have so much losses by accounting that there is nothing left to have a share from. It didn't occur to me that they would give away the app for free.
Of course it is almost impossible to disentangle: they could have given the app away for free to some other company, but actually have some shares in that company. Maybe I should have evaluated the value of the advertising they received and demand a share of that.
