The publishing industry has never been so sharply divided. In the week when the erotica writer Sylvia Day signed a staggering eight-figure two-book deal with St Martin's Press, a survey reveals that 54% of traditionally-published authors and almost 80% of go-it-alone writers are making less than $1,000 (£600) a year.

More than 9,000 writers, from aspiring authors to seasoned pros, took part in the 2014 Digital Book World and Writer's Digest Author Survey, presented at this week's Digital Book World conference. The survey divided the 9,210 respondents into four camps: aspiring, self-published only, traditionally-published only, and hybrid (both self-published and traditionally-published). More than 65% of those who filled out the survey described themselves as aspiring authors, with 18% self-published, 8% traditionally-published and 6% saying they were pursuing hybrid careers.

Just over 77% of self-published writers make $1,000 or less a year, according to the survey, with a startlingly high 53.9% of traditionally-published authors, and 43.6% of hybrid authors, reporting their earnings are below the same threshold. A tiny proportion – 0.7% of self-published writers, 1.3% of traditionally-published, and 5.7% of hybrid writers – reported making more than $100,000 a year from their writing. The profile of the typical author in the sample was "a commercial fiction writer who might also write non-fiction and who had a project in the works that might soon be ready to publish", according to the report.

Fortunately only a minority of respondents listed making money as "extremely important" – around 20% of self-published writers, and about a quarter of traditionally-published authors. But authors' top priority was not divorced from commercial concerns, with around 56% of self-pubbers, and almost 60% of traditional authors, judging it "extremely important" to "publish a book that people will buy".

According to the report's co-author and Digital Book World editorial director Jeremy Greenfield, the report confirms the finding that "authors of all stripes, but particularly self-published authors, don't earn huge sums of money doing what they do".

"Most authors write because they want to share something with the world or gain recognition of some sort," Greenfield said. "There are, of course, outliers. The top 2% or so of authors make a good living and the most successful authors – including self-published authors – make a tremendous amount of money."

"The question of money is a tricky one," agreed Greenfield's co-author, professor Dana Weinberg. "Publishing a book for sale is a matter of both art and commerce. I would argue that for most writers publishing is not only about money; it's about a lot of other things including touching readers and sharing stories, but the money is important in a lot of ways."

The dream of quitting the day job to pursue writing is only a reality for a tiny fraction of writers, she continued. "Writing good books is a big time commitment, as much for many writers in the survey as a part-time job, and income gives writers something to show their family and friends for all of their effort and hard work. Some writers are looking for validation, and in the world of self-publishing, where you don't have the prestige of being chosen by a press, the money is a tangible and rewarding substitute. While writers aren't motivated purely by money, the money does matter on many levels. The high royalty rates in self-publishing also give writers higher expectations about their potential income."

So too, do success stories like that of Day, who originally self-published her erotic novel Bared to You, or the author Hugh Howey, who sold hundreds of thousands of copies of his dystopian novel Wool himself on Amazon before landing a publisher. But according to Howey, the survey casts self-publishing in too gloomy a light.

"This survey does not capture the fact that self-publishing is going through a renaissance," Howey said. "It expects a group of authors with two or three years of experience and market maturity to line up against the top 1% of authors who have had several generations' head start. Remember that not all books that go the traditional route are counted here, just the few who get published. Meanwhile, every self-published book is tallied."

For Howey, self-publishing plays a vital role by allowing writers to "hone" their skills. "I would say the results of this survey cloud how nearly impossible it is to make a single cent through traditional publishing (because only the top 1% who 'make it' are tallied). The simple fact is this: getting paid for your writing is not easy. But self-publishing is making it easier. How much easier? We don't have sufficient data to know. But a conservative estimate would be that five to 10 times as many people are paying bills with their craft today as there was just a few years ago. And that should be celebrated."