Today MySpace rolled out their digital distribution system. To the relief of basically everyone on earth, they decided to outsource the actual technology to somone else instead of rolling it themselves. SNOCAP, the company that will handle the transactions and downloads, is run by Shawn Fanning, who created Napster.
I haven't signed up, because I actually like giving music away for free. But the terms don't look brutal--there's a $.10 or 15% broker fee (whichever is bigger), a $.45 wholesale fee (probably to keep songs from undercutting iTunes and other music services), and a $30 yearly charge for unsigned artists (waived the first year of membership). If you sold 1000 songs at $1 a piece ($.40 of which would land in your pocket), you'd make enough money to pay the yearly fees.
On the other hand, that requires you to sell 1000 songs just to break even. I know we're supposed to believe that online downloads are the wave of the future, but I'm not sure that people are really "discovering" bands through MySpace as much as the media wants us to believe. My suspicion is that most bands still get most of their exposure through gigs, and can make more money by selling CDs for $5 or $10 a piece. Small bands that can get away with homemade CD-R could make a lot more money in a hurry. You'd be surprised how good a CD-R and a cheap label can look with a little care. Even going with a discount duplicator like DiskFaktory might only cost $1-4 per CD. It takes many fewer CDs than songs to make a profit.
Digital distribution doesn't just change how companies sell music, or how we buy it. Online, per-song purchases are also altering how we think about music. Bassist Max Valentino commented in the Lowdown forum that album sequencing might be turning into a thing of the past, since people will probably just buy the songs they want and listen to them in shuffle mode. To this day, I hate listening to Nine Inch Nails on shuffle. More importantly, we've complained for years about the amount of filler on music albums, but ignore the songs we might not have enjoyed at first, but grew to love.
I don't know. I feel bad for buying CDs, in a way: all those plastic disks eventually end up in a landfill. But once you get past the techno-lust, I think conscientious listeners need to sit down and ask themselves how they can best support the artists that they enjoy. Maybe we need a completely new mechanism.