The short answer to this question of course is: Yes. The longer answer, which we shall get to presently, is “Treat writing like a business and do a Cost Benefit Analysis”.
There are plenty of services that will take advantage of you otherwise. Literary agencies that charge reading fees, bogus fee-charging contests, and unscrupulous Vanity Presses are traps that immediately spring to mind. By adhering to this rule, the novice writer can avoid being bilked of both their time and their money.
Like any rule, though, if the phrase “Money always flows towards the writer” is adhered to too rigidly, it can actually hurt you. See, there’s actual intrinsic value to publicity. It’s hard to quantify, but put it this way, would you pay $50 to be a part of Oprah’s book club? Of course you would. No brainer. Of course, this situation could never happen, could it? Okay, let’s change it up a little. Would you pay a publicist $5000 to get you on the Today Show? Again, this should be an “absolutely”. But look! Money is moving away from the writer!!!
Further, agents charge you 15% of your fees. Just because they see it before you do, doesn’t mean you aren’t paying them that money. Money is moving away from the writer, but again agents provide a service with real value. No one objects to paying your agent, so why object to paying for publicity?
Now, in the YouTube video I linked to above Harlan mentions that the interviewer tells him that he should do the interview for free because of the publicity he’d get. Now, he’s freaking Harlan Ellison and he doesn’t need the extra publicity, but you do, and, if confronted by that situation, you should probably agree to do the interview for free.
Because of my Writers of the Future win, I’ve been doing a lot of interviews lately, each of which has taken me a fairly substantial amount of time to complete or arrange, and as we all know, time is money. But how do you think Sirius Radio would have reacted if I’d asked for payment? Maybe I should have charged my good friend Dave Steffen for the time I spent on his interview at Diabolical Plots? No effen way.
See, what Harlan Ellison neglects to consider in his interview is that the relation of money to publicity is inversely proportional to your level of fame. When you’re a nobody, publicity is damn expensive.
What you need to do as a new author is price it out yourself. Treat it like any business investment, because remember, what you are running is a business. Should you pay $10 to enter a contest? Do a Cost Benefit Analysis. Try and calculate your odds of winning (look at previous winning entries, the number of entries received, etc, etc. Be as scientific as possibly). Then look at the amount of publicity you’d get from a win. Will you story be published by an online site with a massive circulation? Be in print? [Again, circulation is important. POD houses don't count (unless it's Cyberwizard Productions 
)]. Assign a dollar value to that level of publicity, say, $10,000 for a WotF win and maybe as little as $1 for a win at a smaller venue. Now take your odds of winning as a decimal percentage and multiply by the amount of publicity you’d get to figure out if it’s worth your time to enter.
Let’s take a concrete example: The Glimmer Train Short Story Award for New Writers.
Privately, I calculated my odds of winning at 1%. I’ve won a national contest before, this one is for new writers only, and I had a particularly strong story. On the other hand Glimmer Train doesn’t like Spec Fic, and while my piece was extremely literary, it still had a spec element.
Glimmer Train has a circulation of 5K, and these are all Wise Readers (Dudes that will nominate you for awards, or at least remember your name). So I figure a win is worth 1K in publicity (I’d have to pay a publicist that much to get a commensurate amount of fame). Add in the $1250 in prize money and you have $2250 in real value in a win.
Here is the formula again:
(Real Value) X (Odds of Winning) = (Maximum Fee Paid)
$2250 X .01 = $22.5. The Entry Fee is $15, which is less than $22.5, therefore, my business sense tells me I should enter, even though I’ve calculated my odds of winning at 1%. This is a Cost-Benefit Analysis.
There is one writing rule that trumps all others (including “Money Always Flows Towards the Writer”), and that is “writing rules should be adhered to rigidly by the beginner, and treated as a loose guideline by the master”.