Yesterday, self-publishing wunderkind Hugh Howey launched a new site called Author Earnings, with a really fascinating report that suggests self-published authors earn as much as traditional publishers do -- in fact, his numbers suggest they earn more.
I have a few reservations about this data. For one thing, it leaves out other income streams available to traditionally published authors -- foreign rights sales, film sales, distribution on store shelves, and the like. I also find it extremely problematic to extrapolate actual dollar figures from Amazon rankings. One book might be at #2 selling 1500 copies in a day where the #1 is selling 1600. Or if there's a book that's selling 4000 copies, another selling 3800, another selling 3600, etc., those might be #12 and #13. Rankings are relative, not absolute, so the experience of a handful of books that hit the top of the charts simply can't give you a meaningful sales volume for other books at those ranks.
Related to that -- it's my experience that a book can float up to a higher rank on one good sales day, then sink like a stone. So extrapolating a full year of sales income based on a single Amazon sales rank is a very dicey proposition. Some of those books may have sold a hundred copies, and may never sell more than five in a day ever again; that doesn't mean those authors are guaranteed to make $10K for the year.
That said, these are problems with the methodology that would appear to affect both traditional and self-published books equally. What the data does show me isn't so much that self-publishing is a better bet, so much as that self-publishing isn't a bad bet. These books have an equal shot at the best-seller lists on Amazon. They move a comparable number of volumes. It may even be fair to assume the higher royalty figures on a self-published novel are enough to offset foreign rights sales and distribution on store shelves.
How, then, does an author decide what path to pursue? Let's take the issue of whether you can make comparable amounts of money off the table. What's left to think about?
Editing and Production. A good author-publisher is hiring an editor to help polish up the novel before it sees a reader. But a good traditional publisher is going to give you an editing pass to tighten up the story, and a separate copy-editing pass to fix the grammar, spelling and punctuation. Few author-publishers are hiring two separate editors, and while some talented editors have equal facility with macro- and microscopic issues, by no means do all of them. On the other hand, multiple passes over the same volume are a lot of work for the author. In my experience, doing a full review of multiple editing passes of the same book plus looking at your print galleys for any final changes is, eh, about as much work as producing an ebook your own self.
So in the end, the same amount of work is involved with both kinds of publishing. One has more eyes on the ball, and might produce a marginally higher-quality result, but if you hire a very skilled editor, you may well get the same result either way.
Promotion. This can have an enormous influence over the success of your book. It's nice to think that an excellent book will find an audience with or without promotion, but frankly this isn't true. The cream does not always rise on the internet; there's simply not enough room at the top, and too much stuff fighting for our attention.
Simply having a publisher carries some degree of promotion with it right away. Once you're on a publication schedule, you'll automatically get more interest from reviewers and inside-baseball readers. Word of mouth can spread from there; a traditionally published book starts with a leg up.
Self-published books are harder to promote, because not as many paths are open and you mostly have to go it alone. Many reviewers won't look at a self-pubbed book. Advertising is widely regarded as ineffective. Promoting by hanging out on forums and boards about self-publishing strikes me as trying to sell Avon at an Amway convention. If you have a great social media platform and the ear of a couple of bloggers, you can make some waves, but it takes a lot of hustle -- more hustle than many of us have in us. You can always hire a publicist, if you have the cash, but it's by no means certain that the book would earn enough to justify that expense.
Advantage: traditional publishing. More doors are open.
Awards Eligibility. ...And this is a stand-in for legitimacy as a whole. It's not clear how self-publishing affects your eligibility nor your odds of being nominated for major genre awards -- the Campbell, the Hugos. But I don't think it's doing anything good for your chances. And a million self-published volumes sold still won't get you into SFWA.
This is going to be a very personal element in the equation. Some of us couldn't care less about awards and organizations; we're in it for the readers, for the income stream, for the fun of it. But some of us crave these signifiers of accomplishment. How you come down on this one is entirely up to you.
Time and Flexibility. Traditional publishing is painfully slow. You're looking at several months to get an agent, several months to submit to publishers and get a contract, several months to get to publish. If you self-publish, you can get a book out there faster, see how readers respond to it, and take that into account as you're writing the next book. You don't suffer the risk of (for example) discovering that nobody wants a series only after you've completed the third volume, or the fifth.
And assuming that money is equal -- getting a book out sooner rather than later is a victory. If a book is going to sell five thousand copies the first year and two hundred a year every year after that, and you wait three years before publishing, you've lost six hundred sales.
Investment and Return. One of the crazy scary things about self-publishing is that to produce a quality book, you have to invest some of your own money into it. You need a quality cover. You need a skilled editor. These things cost. If you're self-publishing, you're out of pocket for it. If you're traditionally published, not only does your publisher cover these costs, but they're also giving you an advance.
This means that you're guaranteed to make money on a traditionally published book. It's possible to actively lose money on a self-published work, if you put investment in it and it just doesn't sell.
This is another one of those very personal decisions. Are you comfortable betting your own money on your book? Then self-publishing is great for you. If not, traditional publishing might be a better fit. (Or if you have an existing audience, you might be able to crowdfund and mitigate those costs through what are essentially pre-sales.)
Availability. And here's the rub: these two publishing paths aren't going to be equally available to all authors for all books. Conventional wisdom is that a good book will always surface in the end, but we've all seen reports of authors who didn't get an agent or a contract until their second, third, fifth book... and then the earlier volumes sold gangbusters. Some writers never get representation at all, never strike an agent nor an editor the right way. Some of them probably give up. That doesn't mean they couldn't have found audiences if they'd gone it alone.
That gatekeeping function can serve as an important warning to you that your book is poorly written, trite, boring, or a half a dozen other kinds of terrible. Sometimes you're being rejected for a damn good reason. A lot of the time! And if your book is really bad, you don't want to hurry to put it in front of readers. Once burned with a bad book, they may not be inclined to try your next one. You only get one chance to make your reputation.
But if you want to publish with a traditional publisher, and you get a lot of nibbles but no flat-out bites... if you get the sense that you're almost there? Maybe it's time to shift gears. It's looking like it's by no means a career-killer to self-publish, not anymore.
There's not one true path at this point. There are clear advantages to both routes, and a lot of elements that come down to personal taste. You can relax and stop worrying about picking the wrong thing, I think; just make your decision and roll the dice. It's already a gamble anyway.