Don’t be afraid, because the process is painless. You say “Hey I’d like to get (this) published.” Publisher: “Okay! Submit the finished product.” Submit. Is it pure rancid poop? No? “We’ll print it!” The worst they can say is “No”.
Does being a novella writer limit my ability to publish as an author?
In the fandom? No. I write mainly short stories and aside from Handcuffs & Lace, that's all I've had published. But not just short stories - novellas work in the fandom. Kandrel recently published [i]Pile[/i], which is 25K words, and Handcuffs & Lace is 36K.
IMO the issue a super short novella (25K or less) sold by themselves is price. Pile is $10. That’s a LOT for only 60 pages of text (and if you’re not getting it at a con, that’s $5 extra for shipping). But that’s how the publisher’s price their stuff - $10 for under 50-60,000 words, $20 for above. But to me, a novella of 40-60K at $10 is very, very attractive; I’m more willing to drop ten dollars down on a book than twenty.
If you have stories that are up to 30,000 words, there are a few things you can do.
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Anthologies. Typically anthologies take stories of 10K or less. The challenge here is finding a story that fits the theme of the anthology.
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Hot Dish, put out by Sofawolf, is an anthology of stories too long for Heat; their stories run about 10-15,000 words. Bare in mind they are all adult, so if it’s 15K and clean you’re out of luck.
Another example of this is Five Fortunes, which is an anthology of 5 novellas. Poetigress, how many words was your story in that book?
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Make a collection. If you have two or three stories, each about 15-30K, put those together and boom, you have a book. I myself am working on a short story collection, and I’m trying to hit 60K simply because that’s the roof for charging $10 for a book. Now, you want those stories to be somehow related; genre, theme, setting, characters, SOMETHING. Otherwise “Hey here’s three stories but they’ve got nothing in common” is hard to market.
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Ebooks. Ebooks are SUPER popular and easy (as long as you get the formatting down). The fandom even has its own ebook site (BaddogBooks.com). Now, ebooks are a whole kettle of fish about how to do them successfully, but it’s one avenue to take, even within the fandom.
I was wondering if any of the big three publishers take audio books. Usually I can get about an hour of high quality audio, and, though I'm not certain, this should be one CD's worth of audio. Is there a market for this kind of work?
I would LIKE to know the answer to this, but I don’t know how much it would cost to MAKE a CD and how much you could get off each sales (I know various artists make art CDs, but you don’t see a lot of them so maybe it’s not workable there). If the cost of production is too much, I don’t think publishers would do it. Now, Unless the CD was priced low ($3-5), I personally would prefer a CD with several stories on it, not just 1 story worth 20 minutes to hour; a 4 hour CD is far more palatable to me personally. IMO online would likely be a much better method (no production costs, instant delivery, etc) but you’re not getting sales at cons.
About whether they could sell, period (CD or online), I can’t personally comment. But I did ask M C A Hogarth about this last year; she has several audiobooks on Audible.com and (I think) on her site. Her response via email was this:
Audiobooks are a new endeavor for me; I just started them middle of last year. So this is very much still an experiment!
You ask how well audiobooks do, and I’ll say that sales are quite slow! Unfortunately, this is why I don’t offer too many of them at present. I’m still committed to doing them when I can afford them, but a novel-length audiobook starts at $1500 and often is more like $3500 once you’re done hiring the actor and editor. I’m lucky enough to have run into some excellent actors, so I hire them when I can–we all have to eat–but unfortunately the titles move only one or two units a month, so I have to be conservative about what I invest in.
I think part of this, though, is that there isn’t much discussion about audiobooks in the furry community! I keep searching for someone to review audiobooks (maybe for Flayrah) or talk about them on furry podcasts, but I haven’t run into anyone yet. Do you know anyone like that? I could spare the change for some review copies of the audiobooks if I could get them more publicity. 
Bare in mind I suspect Hogarth went to professional VAs/audio editors. I imagine you could get someone to handle that much cheaper in the fandom - podcasters typically do their own audio editing, so you could probably pay one of them to handle it much cheaper than having it done professionally. Were it me (and bare in mind, I would like to see Handcuffs & Lace in audio), I would split royalties with the VA, so that would cut down costs.
Another avenue you can take if you want to emphasize your performing aspect: offer to read other works in audio. I think that’s one of the challenges that fandom authors trying to get their books in audio have faced: finding a voice actor, and then finding one who will actually finish the product.