A friend of mine leads a surf rock band and I use him often as a help in terms of questions. He does cut albums and his music is available on CDs and iTunes. He told me that he uses CD Baby.
Going that route means that I can call myself a recording "label."
In summary here is how it seems to work:
- They stock 5 of your CDs for a $35 per CD processing fee.
- For CD sales you name your album price and they take $4 per CD.
- For digital distribution (i.e., iTunes) they take 9% commission.
- You need to collect money that means you need to take a credit-card. I use Google Checkout and that's easy enough. You could also open your own Amazon shop but the commission significantly higher than doing through CD Baby.
- People do fraudulent or semi-fraudulent things like claiming not receiving the orders. Google Checkout and Amazon shop can largely shield you from taking orders from repeat offenders and provide a convenient way of refunding but again the time is something you need to consider.
And never take a personal check unless it is from your close friends (and if they are close friends, give your CDs or send them the MP3 file. Word of mouth is a huge marketing tool.) - You also need to fulfill the order. That means you need to ship the order. This is a lot of leg work. Most of us work a full-time day job so when do we got a time to go to the post office? Also what if you go on a vacation or a long business trip from your company? You cannot make your customers wait. It is best to have the distributor deal with that sort of things and you concentrate on your own production.
- You may need to deal with cranky customers who have received damaged orders.
- How are you going to go on iTunes?
One important thing to note on distribution deal, especially digital media, is that it is highly discouraged to sign up multiple distributors for the same song or album you create. This will cause a confusion in the distribution and retail channels.