To be fair, when you build a house, there is a defined end-state and you're getting paid by one individual. You can negotiate an agreed amount and you are guaranteed (at least contractually) that you will receive that amount. This situation is quite a bit different, his work is ongoing with no defined end-state, and whether or not he makes enough to cover his costs is down to whether or not enough people buy.
If double the number of people had purchased LewdMod1, it may not have been necessary to split it.
That "Eat the loss" is a lot easier to justify when you're talking about a project that can take a year at most, not when this may be a commitment that you keep for years into the future.