Quote Originally Posted by SYMPTOM RECORDS
No there isn't a reason, but if you like to sleep at nights it could be wiser to make a non-exclusive deal with some existing smaller digimusic shop - there's probably more profit for the label in it than if trying to run it yourself when you calculate all the costs. First of all the amount of work when building a working and reliable (plus secure, it's peoples money we're dealing with here) digital music shop isn't a joke. For example, there were three of us working on our Foryourears.com and it took us about 6 months to put together the first version. Even PayPal payments aren't that easy when done properly (real-time payments).
Hosting (bandwidth, backups..) is going to cost you. You can distribute files, but that requires more technical solutions (how to make sure files cannot be downloaded without payments). Credit card payment option is probably going to cost you $$$ per year. Add paying taxes to the calculation and remember to pay GEMA or a similar copyright association so they won't have to shut you down.
Well, I never implied it would be easy. But, that shouldn't be a factor. Regardless, I don't think it's quite as dificult either if you take advantage of what is already available. For example, I stumbled across a PHP script that creats links which both hide the true location of a file and expire. It can also be set up to e-mail such hidden links to a user witha time limit and IP address restriction once a successful Paypal transfer goes through. The files can be stored on any server. The script costs a whopping $24 as I recall. Pursuing the existig digital distribution is a good idea too. But, in the quick scan I did for them, most seem to want exclusive deals. For example, CDBaby.com will submit your work to a number of them. But, this costs $40-$50 initially and they take 9% of every sale made. So, the digital stores they supply must take less or they'd make no profit. I just haven't seen an exact number/percentage figure for what Itunes take out of a sale. The only problem I see with the paypal route is in a technical implementation to make it profitable and competitive. If someone buys one song for a buck and that's it, paypal is going to take $0.33 off that dollar. So, if you set something up along a points type system where the initial minimum payment was $5, and you charged $1 per track, Paypal would take $0.45 out of the transfer and, dividing the remaining cash by 5,you end up making $0.91 per track which is exactly the same range as you'd get through something like CDBaby without the larger startup fee. As fr distributing and hosting the files, how many people here have webspace they'd be willing to donate? I know I've got plenty.

The most hardest thing however is the support and maintenance. Something like this requires someone to look over the shop every day - the hosting company might have problems, a hard disc can break down, there could be a programming error, someone doesn't know how to download and is pissed if you don't reply in a couple of hours max. Adding new stuff and producing content takes time. The point being: if a customer pays money to download tracks, the thing must operate 100% reliable. And when it's people + computers, things are going to break down and need immediate actions, mostly every day.
It's still doable. It's just a matter of people putting their heads together and testing systems out. The nice thing is that, when it comes to e-commerce, lots of people have forged a path for it already and have made their code public. Nothing works 100% effective ever. But, even taking the negative into consideration, I just don't see how it's a losing situation.