I was pointed at this article today, and headed over to give it a read. It's definitely worth looking at.http://www.sfwa.org/for-authors/writer-beware/electronic/
Not a bad article. Based on my experience and reading, I agree with most of what was said there... Especially about the cautionary bits. There are a LOT of folks ramping up startup "publishing houses" to get ebooks out there. They take your book, toss a cover on it (I can do a decent ebook cover in a couple of hours - admittedly, I have a graphic arts background, but these are NOT hard), spend two minutes converting the book with free software and fifteen minutes proofing the conversion (hopefully), and then plop it out there on various sites.
For their one day of work, they generally net about 30-40% of your book's retail price for the duration you sign over copyright.
So I'd go a step past SFWA's advice. If you want to publish traditionally, GREAT. But remember that having a publisher has three main advantages - only three things publishers can really do much better than authors alone: 1) Market your book to reviewers, put up ads, organize tours, etc - in general, get readers to know about your book. 2) Get your book into the large brick and mortar stores. This is losing value (fast!) as ebook and online sales of print books expand, but will retain good value for at least another few years, I think. 3) Offer substantial advances.
If you're not getting at least two out of three of those, I would recommend self-publishing over going with a publisher. Why?
1) You control your work and copyright, not someone else. You can set price. We see publishers trying to squeeze $9.99 an ebook out of readers, even though we know sales go up 10x or more by dropping the price to $2.99. Even $3.99 or $4.99 sees enough boost in sales, in most cases, to earn more money - and each sale made boosts the book's visibility as well, and draws more readers to that book and your other books! There's a growing number of large press editors scanning Amazon for self-published works to acquire, too. Can't do that if a small house owns the rights.
2) You earn more per book, generally a LOT more. Amazon and Apple pay 70% of each sale. B&N pays 65%. Smashwords pays 70-85%. Publishing through an independent epublisher generally pays 25-50% of the publisher's take - so 17.5-35% for Amazon, etc. You need to make 2-4 times as many sales to earn the same amount of money. If they are not giving you enough publicity to get you 2-4 times as many sales as you could get yourself, you are losing money going with a small publisher. POD sales also tend to garner 2-4 times as much as standard author royalties for a similar print book.
3) Setting up a print book for sale via Createspace is now basically free (although signing up with their Pro program will break even with very few sales), and not very expensive via Lightning Source. Lightning Source is the same press used by the majority of small publishers, by the way... Same POD system. Same outlets. Same audience. In other words, by spending $20 at your local Sec of State office and getting a business name, you too can become a small publisher and every book you publish - print or ebook - will have the same potential audience as most (all but the best established) small publishers. Incidentally, I was just reading that the audience reached via placing an ebook in the major vendors plus using print on demand to reach the three major online bookstores is about 50% of the current US readership. And growing.
4) Converting to ebook is simple and fast. A number of publishers are out there pushing the idea that it's hard. It's not. I downloaded Calibre for free (one of the better conversion packages), and without ever reading a manual or viewing their many training videos, I had my novel converted into .mobi and epub format in under five minutes. This is not rocket science. My four year old could do these conversions. And - if you've done an ebook conversion, you most likely already have a print-ready PDF done - which is the format you want to submit to a POD publisher for the print version of your book. (There are formats for which conversion is much harder, specialty formats using odd layouts or lots of pictures, for instance. For these, an expert can be crucial. Most novels, however, are flat out simple.)
5) You can get to press on your own much more quickly. With traditional press, you might have to wait a year to find a buyer, and another year or two before the book is in print and ebook. On your own, once the book is done, proofed, and ready, you can get it up for sale in an afternoon and have people buying within weeks. For some books, that might not matter. For others, it could matter a great deal to have that level of control. And of course, you begin making sales that much sooner...
It's a big decision. I strongly believe that the bottom line is those three key advantages though: marketing, big bookstores, and big advances. If you know the small press does a bang-up job of marketing, really gets the word out there, maybe they're worth handing half of your share of the book. If you think they can double your sales, then they're almost certainly worth it - remember, because of the way online bookstores handle searching and recommendations, each online sale boosts visibility and builds more sales. If they can get you into the big bookstores, then it might be worth doing as a loss leader even if you *lose* money over self-pub, because of the extra exposure in those venues. Most people who browse big bookstores today also buy online, and if they like your book from the brick store they might well buy your other self-published works online. Good stuff. And if a publisher offers a good advance, well - make the call: is getting the money in advance worth possibly getting less in the long run? Sometimes yes, sometimes no.
Get informed, though. We're seeing incredibly fast change sweeping over the industry. I spotted at least a half dozen things in that article that are no longer really solid anymore, just since 9/20/10! It's changing that fast. I don't pretend to guess where things are going to end up, in the long run. In the meantime, take advantage of the good parts that you can, work with traditional publishers whenever you see good value there, keep control of your book rights when you can, and be prepared for things to continue to move quickly. The only sure thing right now is that nothing is certain.