There are only 2 ways that books can be published. Either a publisher pays or the author pays.
Most of this comes from: http://www.sfwa.org/beware/vanitypublishers.html
1. Publisher Pays
Traditional or Commercial Publisher (Royalty)
A commercial publisher purchases the right to publish a manuscript (usually together with other rights, known as subsidiary rights), and pays the author a royalty on sales. Most also pay an advance on royalties. Commercial publishers are highly selective, publishing only a tiny percentage of manuscripts submitted. They handle every aspect of editing, publication, distribution, and marketing. There are no costs to the author.2. Author Pays
Vanity – (Dorrance Publishing)A vanity publisher prints and binds a book at the author's sole expense. Costs include the publisher's profit and overhead, so vanity publishing is usually a good deal more expensive than self-publishing. The completed books are the property of the author, and the author retains all proceeds from sales. Vanity publishers may exclude objectionable content such as pornography, but otherwise do not screen for quality--they publish anyone who can pay. For an extra fee, some may offer editing, marketing, warehousing, distribution, and/or promotional services (often of dubious quality), or they may provide variously-priced service packages that include differing menus of extras.
Subsidy (many commercial publishers will entertain a subsidy manuscript)
A subsidy publisher also takes payment from the author to print and bind a book, but contributes a portion of the cost and/or adjunct services such as editing, distribution, warehousing, and marketing. Theoretically, subsidy publishers are at least somewhat selective. The completed books are the property of the publisher, and remain in the publisher's possession until sold. Income to the writer comes in the form of a royalty.
POD (Xulon, Pleasant Word, AuthorHouse, iUniverse, Trafford)
Print on demand-based publishing service providers (POD services for short) aren't publishers in the traditional sense, but purveyors of publishing services to writers. They charge a fee for publication, ranging anywhere from a few hundred to several thousand dollars. They don't screen submissions (except perhaps to exclude pornography or hate literature)--anyone who is willing to pay will be published. They don't routinely provide editing, proofreading, or book marketing (though some offer these as add-ons to the basic publishing package, at additional cost). Title to the books belongs to the publisher, often nonexclusively (which means the book could theoretically be sold elsewhere) but not always; some POD services make a nonexclusive or exclusive claim on subsidiary rights. Income to the author is a royalty on sales.
However, there are important differences between the POD services and true self-publishing:
Control. With self-publishing, the writer controls all aspects of the publishing process, from cover art to print style to pricing. With POD services, choice is limited to the package of services the publisher offers.
Revenue. With self-publishing, the writer keeps all proceeds from sales. With POD services, payment comes in the form of a royalty. Basically, you're paying the publisher twice: once upfront, and once with each book produced and sold.
Rights. With self-publishing, all rights remain with the writer, who has full ownership of his/her books. With most POD services, rights are held by the POD service, which has an exclusive or nonexclusive claim on them for a set period of time.
In practice, POD services more closely resemble vanity publishers--which is how they're generally regarded by readers, reviewers, and booksellers.
Independent or Self-publishing
Self-publishing, like vanity publishing, requires the author to bear the entire cost of publication, and also to handle all marketing, distribution, storage, etc. However, rather than paying for a pre-set package of services, the author puts those services together himself. Because every aspect of the process can be out to bid, self-publishing can be much more cost effective than vanity publishing; it can also result in a higher-quality product. Completed books are owned by the author, who keeps all proceeds from sales.
Custom Book Publishing
For the author who prefers to contract the publishing services. The rights are held by the author and completed books are owned by the author who keeps all proceeds from sales. Forever Books offers custom book publishing.