The Music Biz - RockOnColorado.com
Since the selling of CDs has decreased a great deal in recent years we feel it's important to discuss selling your music online as downloads rather than as CDs. Because one avoids the often costly expenses of manufacturing and shipping your CDs, this can be a lucrative source of income for a popular act. On the downside, you need to sell a lot of downloads to make a significant amount of money. You'll probably be selling the songs in MP3 format so there is no way to know what the customer might do with your music after it's sold. Most people don't want to buy music in other formats (except the popular iTunes format) and digital rights management hasn't caught on yet, so there's no real way to control that MP3 file after you sell it. However, in reality, this is not much different than what happens after you sell a CD. Copies can be made and distributed without your permission. Hopefully, this will only make those people want to see your live show that much more.
In our experience (a decade in the online music biz) we've never seen or talked to anyone who said their music was stolen and resold as someone else's. However, we have seen CDs ripped to MP3s and then distributed for free on file sharing sites. Since you can't control everything out there on the internet, it's a better approach to embrace this phenomena. Give away a track or two here and there (maybe live tracks or studio tracks that didn't make it onto the CD - stuff you're not trying to sell anyway.) and hope it gets spread around and wins over some new fans who will be willing to pay to see your live show or buy some merch.
For the sake of brevity we will assume you already know how to convert your music to MP3 format.
There are three approaches you can take to selling downloads:
1. Build or buy an online shopping cart system of your own and sell your downloads directly to the public. This can be quite expensive to set up, but will reap the highest percentage of the sales dollar. Once the system is set up and running (we're assuming you've already shelled out a lot of money to get to this point), you set the price of your downloads, and apart form the cost of processing the credit card transactions and any other related banking fees, you keep everything the customer pays for the download. Additionally, you will also have everything in place to sell other merchandise, such as t-shirts, hats, CDs, etc. The shopping cart is usually a very complicated piece of programming because it will require a database to keep track of who bought what song and have they downloaded it yet or not, etc. You will also have the flexibility to set your own prices and offer your own discounts and come up with your own promotions. This approach will not get your songs on to any other music download sites, like iTunes.
2. Go through an online distributor. If you can get a good distributor to sell your CDs in stores, then they will probably also have online connections and can get your music onto iTunes and many other music download sites. If you don't have a distributor or a label, then try CDBaby.com. They can also get your music onto iTunes. iTunes does not allow independent artists to sell their music directly, preferring to work with labels and distributors. You will not get paid much per download. iTunes sell songs for $0.99 and you can't change that. iTunes takes a cut of that, then so does the distributor. You'll be lucky to get ten cents of that ninety nine. If you don't sell thousands of downloads, you're not going to make much money.
3. Sell directly from your website/facebook pageusing a third party application or widget. Myspace has their Snocap Application which helps you sell downloads on Myspace.com and there are similar apps that will work almost exactly the same way, but on your real website instead. A couple of these are: PayPlay (payplay.fm) and Nimbit (nimbit.com) These services do take a cut, but they also do all the hard work of processing the credit cards and keeping track of who bought what. Some of them offer extra services, too, like selling CDs and other merch for you, too and submission to iTunes, Rhapsody, eMusic.com, Napster, AmazonMP3.com, etc. While these kind of services (and there are a lot of them out there) are usually free or cheap to install and easy to set up, you never know how long they are going to be around. Since you have to trust them to keep track of your sales and send you a check, if they go out of business, you aren't going to get paid anything. Generally, the more often they send out checks and the lower the threshold is before they will pay you, the more likely you are to get your cut. Also, make sure you understand the fee structure before you sign up, if they are too high or your sales are too low, it might be a money losing venture for you.
Hint: You can increase your online sales by recording and selling downloads of popular cover tunes. You will have to pay the mechanical licensing fees (You pay them to the Harry Fox Agency). Many people will search for their favorite song on iTunes and other places and if you have a particularly good or creative version of that song, it can attract new listeners who will, hopefully, listen to some of your original stuff, too.
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