Salon has an interesting story up today called Vanity Book Awards about one specific award that appears to make a winner or finalist of every book that enters and pays the entry fee.
What many members of the book-reading public may not be aware of is that some very legitimate book awards require entry fees. According to its website, there's a $125 entry fee for the National Book Awards (not $69 as the Salon article indicates) and publishers, who must enter the books, have to agree to come up with another $1,000 if the book becomes a finalist. Some of the state book awards (not to be confused with the state readers' choice awards for children's books) also require an entry fee.
There's nothing wrong with this, but I think the public should be aware that awards are given for the best book entered in the event, that not every book out there is considered. It wouldn't be possible to consider every book out there (the Salon article says 400,000 books are published each year in the U.S), and, sure, not every book out there is worthy of consideration. But money comes into the picture when making the decision about what is worthy to consider. And that means the people putting up the money have to make some shrewd decisions about which books they're going to gamble on.