The digital age has obviously been a boon to those who want to self-publish their work. Self-publishing has never been as inexpensive and easy as it is now, and the author gets complete creative control as well as financial control.
Many authors self-publish their work on, say, Amazon’s Kindle Direct platform in the hopes of 
building a reputation and making some money, while others may write for free sites, like Wattpad to build a reputation and engage with readers.
We all hear success stories about self-published writers who have had their work picked up by major publishing houses and sometimes even film and television companies.
Some successful authors who initially self-publish end up working in what might be called a “hybrid” model of publishing where they keep control over their original work but might retain an agent to sell sub-rights (including things like foreign rights, audio, film and television). They may also keep self-publishing some work and have an agent submit other work to publishers in a more traditional way.
Several publishers have gotten in on the act of spotting online talent. Macmillan’s Swoon Reads imprint allows writers to post their work and readers to comment, with an eye to the imprint picking up the most popular pieces for traditional publication. Wattpad has an arrangement with Sourcebooks to allow writers who post on the site to be considered for traditional publishing agreements with Sourcebooks.
However, most independent authors are not picked up by traditional publishers despite the publicity the success stories receive. So the question arises as to whether there’s a downside to self-publishing if your ultimate aim is to be picked up by an agent and/or traditional publisher.
The short answer is yes, unfortunately, there is a downside.
Unless your self-published work is very successful, you are unlikely to be able to attract an agent or publisher. There are a number of reasons for that, some commercial and some legal. The commercial reasons should be obvious. If a piece has not done well as a self-published work, it already effectively has a strike against it in the marketplace, whether deservedly or not. To the effect that the work has any track record in the marketplace, it will likely be perceived as a negative track record. If a book has not sold well, a publisher will not likely be convinced that if only it had the right marketing and PR behind it, it would have been a hit.
The fact that you may have sold 200 or 300 copies will not likely mean much to a publisher that often needs to sell thousands and sometimes tens of thousands of copies of a book to make significant profits.
On the legal side of the house, one thing publishers like to ask for in a traditional publishing contract is an exclusive right of first publication (in fact, usually a lot more exclusive rights than that!). You cannot give them an exclusive right of first publication if you have already released the work into the marketplace. You may face problems of this kind even if you only publish portions of the book on your own website. You’ve still effectively “published” it in the legal sense.
If you are self-publishing to cut your teeth in the publishing world and try it out, I always say go for it, but if you want a traditional publishing deal, you may have to submit a different book to agents and editors to gain any traction.
Obviously, this discussion is generalized and there are exceptions to any piece of advice! And of course my usual disclaimer applies: nothing in this column is intended as formal legal advice, but hopefully it is helpful by way of background information.
You shouldn’t “not write” for fear of not being picked up by a big publisher. No writing is ever wasted. But it is definitely worth approaching self-publishing strategically and realistically if you’re thinking of pursuing a hybrid or traditional publishing career down the line.