Literary agent Rachelle Gardner had a post a while back about why authors still want deals with trade publishers. I'm going to point out a few other things that come with traditional publishing that are unavailable to self-published authors, and which translate into real benefits:
1. (Perceived) Legitimacy
A lot of authors say they want to publish commercially because they want "validation" from a trade publisher. This may sound like a vanity concern, but reviewers and readers also perceive a validity inherent to trade-published books that is not automatically assumed of self-publishers.
All writers think they're talented, and that their books are good. Most of them are wrong. Readers want to see some endorsement of a book's quality other than the author's high opinion of himself. When a publishing house puts a book out, there's an expectation that it will at least meet a certain standard of competence.
There's nobody standing behind a self-published book except the author. For new self-published authors, it can be very difficult to get anyone else to look at the book, even if it's actually good. Many readers -- perhaps most -- won't read self-published books at all. Many online reader forums, including Amazon's customer discussions, have made rules excluding authors from participating in forum threads because readers don't want to interact with self-published authors or have their discussions spammed with self-promotion.
In 2011, Bowker counted 211,000 new ISBN numbers for self-published books. That's a huge number of people competing for readers' attention. Even bloggers and reader-reviewer communities who are dedicated to spreading the word about self-published books can't possibly sift all that slush.
The solution to this problem has been for self-published authors to give away a ton of e-books. The hope is that, by giving away 5000 downloads, maybe a couple of hundred people will actually read the book and five or ten will review it on Amazon or on their blogs, or recommend it to friends. But with so many authors giving away books, even the audience for free e-books is swamped.
All the things that might have helped a book stand out eighteen months ago, like buying professionally designed covers, running large-scale giveaways, and pursuing pricing strategies to manage Amazon's internal recommendation system are becoming standard practice across a much larger chunk of the market, so it's getting harder for self-published authors to gain traction.
A survey of self-published authors by Taleist found that the median self-published author earns $500 per year. In fact, that number is probably high; the survey uses self-reported data, so unsuccessful authors may have lied about their sales or may have been less likely to respond to the survey. And since Taleist found self-published romance authors make twice as much as other self-published authors, if you're writing in any other genre, your results will probably be even worse.
If the median self-published author pays a freelance editor for copy-editing and hires a freelance jacket designer, the cost of these services will likely exceed the royalties from the author's book.
2. Trade Reviews
There are four major trade publications that review books ahead of their release: Publishers Weekly, Kirkus, Booklist and Library Journal. Each of these magazines reviews about 7500 trade-published books a year, so if your novel is published by a big publisher, there's a good chance you'll be reviewed by a trade. If your novel is published in hardcover by a Big-6 house, you're likely to be reviewed by all of them.
For traditionally published books, these reviews are free if your publisher sends galleys for the trades to review. But the booksellers and librarians who subscribe to the trades don't stock self-published books and aren't interested in reading about them. The freelance critics who review galleys for the trades don't especially want to read self-published books. The only people who want to see self-published books reviewed in trades are the authors, and that means self-published authors have to pay the trades to review their books.
If your book is self-published, you can pay a fee for a listing in Publishers' Weekly's quarterly supplement about self-pubbed titles. They also select some titles for review, but buying a listing does not guarantee a review. Kirkus charges a significant fee to review self-published books, and they post these reviews in a segregated part of the Kirkus website. Kirkus calls prides itself on employing "the world's toughest book critics;" so even if you pay them, they may not say nice things about you. If you don't like your review, Kirkus won't post it, but they'll keep your money. Booklist and Library Journal do not review self-published books.
A positive review from a trade gives you a good pull-quote to use for promotional purposes, and earns you notice from booksellers in librarians. Fewer than 10% of the books reviewed by any given trade will earn a starred review. DON'T EVER GET OLD was starred by all four trades, which is very rare, and really jump-started my sales.
Libraries are a major revenue stream for the publishing industry and for trade-published authors, and they're almost entirely inaccessible for self-published authors.
There are 9200 public library systems in the US and nearly 17,000 library facilities. They buy a lot of books. Many hardcover releases from Big-6 publishers sell thousands of copies into libraries. To put this in perspective: if you sell about 20 self-published e-books a day, you'll maintain a Kindle store rank of around 5,000, which is very good. That moves about 600 copies a month, so it takes you 5 months at that rank to sell 3000 copies. If only 1 out of every 5 library branches buys just a single copy of a traditionally published author's book, he's matched your 5 months of Amazon self-published success before he sells his first retail hardcover or e-book.
DON'T EVER GET OLD sold very well into libraries, likely on the strength of the starred trade reviews. Librarians have also been very enthusiastic promoters of the book to their readers and on their blogs.
4. Foreign/Subsidiary Rights
Some self-published authors have secured foreign rights sales, but it's uncommon, and your self-published sales have to be extremely strong to generate international interest.
Translation and other rights are often very lucrative for traditionally published authors. DON'T EVER GET OLD has sold Portuguese, Japanese and French translation rights, as well as large print, audio and film rights.
5. Events/Speaking Engagements
There are literary festivals all around the country, and a number of famous and bestselling authors spend a lot of time traveling among them. These trips offer great opportunities to attract new readers, and the costs are often partly defrayed by event organizers or publishers.
I've been invited to the Decatur Book Festival outside Atlanta over Labor Day weekend, and the Southern Festival of Books in Nashville in October.
While some of these events do include self-published authors, the indies are often put in a separate tent or have their readings scheduled on a separate stage, and they may have to pay the festival for space to exhibit their books.