A vanity press is not a publishing house. Self-published books look exactly the same to us coming into slush as any other manuscript, maybe a little crazier.
That said, I do think self-publishing has its place.
No, really.
First, if you have a built-in market like an immensely popular blog, you can make some money that way. There are benefits and drawbacks to working with a publishing house, and you might decide to do it on your own. (But I'd hire a freelance editor to polish it; vanity presses aren't known for quality editorial contributions.)
The other situation is very different. I read submissions about neighborhood history or family stories (especially animal rescues), and I want to tell their writers to self-publish. I don't, of course, because thou shalt not encourage the masses, but I want to. Stuff that's relevant to a specific and connected group of people might deserve a record in book form. It could be priceless to that small circle of people, worth far more than the cost to produce. If there are pictures, even more so.
There is very little overlap between this kind of story and a commercially viable one. Can you spot the difference?
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