I linked to this in my previous post, but it's a Wall Street Journal article, which means it probably won't be available to read for long. So I wanted to go into a little more detail on it.
Here's the gist:
Author Michael Ennis submitted a draft of his novel, "The Malice of Fortune," to New York publishing houses but was rejected. He revised, edited and submitted once more but was rejected again.
Then he got a tip from his agent: Try booksellers first.
Mr. Ennis and agent Daniel Lazar of Writers House self-published bound galleys of the novel using Lulu.com and a local print shop, and sent 48 copies to influential booksellers such as Mitchell Kaplan of Books & Books in Miami and Sarah Harvey of Tattered Cover in Denver.
Out of those, 23 booksellers responded enthusiastically, writing strong praise for the book. Using such quotes, Messrs. Ennis and Lazar submitted the manuscript a third time to publishers. Within days, Knopf Doubleday snapped up U.S. rights to the book for a six-figure sum. Doubleday, an imprint of Bertelsmann AG's Random House unit, will release "The Malice of Fortune" on Sept. 11, with a first-print run of 75,000 copies.
This might at first seem different from someone self-publishing, building a up a sales record, and then getting a contract, but really it's not. It's someone using their self-published book to indicate to publishers that it does indeed appeal to a particular audience: Bookstore owners. Doubleday is willing to gamble that a book that appeals to that niche will have big sales.
Once again, actually having a book available is key. There's value in that.