|Lt. Dan from "Forest Gump"|
Starting out as a writer, I had a hella hard time finding critique partners that read in my specific sub-genre. So I entered special-interest groups' contests that--for a modest entrance fee--would have three judges critique the first 50 pages. Winners of the contest would get their submissions in front of an agent or acquiring editor specific to the genre. The contests that provided critiques from published authors were more valuable to me than those who sent it to unpublished peers; though, both were helpful. While winning would have been nice, what I wanted from the contest was the feedback. And for $25-$50, 3 reviews completed in a finite period was totally worth it.
Eventually, due to litigious individuals, those contests stopped providing actual marked-up docs and/or development summary sheets. They had to revert to useless numbers on a sliding scale. Those contests became utterly worthless to me.
At the other end of the spectrum, is a writer's craft magazine with wide national and international distribution. Their contest offers a nice cash prize, a feature article in the mag--both digital and print versions, your book sent to big name review houses, and inclusion into a sales catalog distributed to mainstream and indie booksellers. They also pay your way to their annual conference and give you access to a handful of their in-house experts on marketing, branding, sales, etc. Cost to enter is ~$100. Not a bad price for the grand prize package mentioned above. However, the pool of participants is vast and the contest is not genre specific. Hell, it's not even restricted to fiction. Odds of winning that grand prize? On par with winning the Powerball. Once you submit, you never hear from them unless you win. No feedback. Nothing. What do I really want from that contest? The cash would be nice, not gonna lie. The amped up opportunities for discovery--those are really appealing, but if you read how they phrase the winnings, they're not guaranteeing you a review from the big houses. They're not giving you a full-page slot in the catalog either, you'll be lucky if you get a 1/16th slot. And as wonderful as their in-house experts probably are, what I want are new readers not advice on building a platform. So, while there are three levels of "winning" this contest, if what I'm really after are new readers, I'm better off spending my $100 on targeted facebook ads.
Now, the third point on my triangle of contests is run by a best-selling author in my genre. It's open only to self-published fantasy works that are either stand-alones or first-in-series. It's free to enter, all I have to send is a digital copy of my book. I'm not giving up rights, I'm not paying an entrance fee. I'm not going to find my work pirated by participating. The grand prize is 10 reviews by respected bloggers in the genre. It's a minimum of six months before knowing if I've passed the semi-finals. Probably a year before the winner is known. Might be sooner. Might not be. Everyone involved is a volunteer. Worst case for me? Dead silence. Good case? I don't win, but I still garner a review from a person entrenched in the community--aka, my book gets exposed to my ideal audience. Not even facebook can target their ads that precisely.
So, are contests that demand an entry fee "unethical"? Are their awards somehow less valuable or respectable? It's not the fee that defines that. It's you--the author--who assigns value to 3rd party accolades. It's the organization behind the contests that paint or taint the issue of ethics.
Just make sure you retain the rights to your work. Don't pay someone to take your rights from you.