There's a lot of buzz nowadays as to whether it's more beneficial for authors to self-publish their books or secure a contract with a traditional publishing company. Proponents of traditional publishing often have a prejudice against self-published books (and many times rightly so) because of the poor quality of books being produced, while self-publishing advocates tend to think the traditional method of publishing is unnecessary and not always in the best interest of the author.
So who's right? Well, sometimes they both are.
I believe that for most authors, traditional publishing is usually the best route to go. Publishers invest thousands of dollars into each book they publish. They lay out all the money for expenses like editing, book design, cover design, advertising, publicity, etc. You also can't underestimate the value of the relationships publishers have with booksellers and other entities that are crucial to the success of a book.
However, there are more and more authors who have found financial success through self-publishing, including authors like Joe Konrath and Amanda Hocking. Hocking and Konrath are both fiction authors who have made a lot of money through self-publishing.
What do they have in common? First of all, both of them are prolific authors. They have written a lot of novels, not just one or two. Second, they are both very savvy about marketing. As I'm sure they, and any successful self-publishing author, would say, marketing your book is just as important and time consuming as writing it if you want to be successful.
Unfortunately, most authors don't have the time and resources necessary to be successful at self-publishing. I personally would recommend to first-time authors especially that they seek a traditional publishing contract first and then consider self-publishing.