Online retailers sell music through the web in various formats including digital downloads on a per track or album basis or through subscription services that provides access to the retailers entire catalog for a monthly fee. The experience of buying music through a digital retailer can be much more convenient than going to a traditional retailer for many music fans. Online retailers have promotional programs, site positioning and specialty features to promote the artists in their catalog. Most promotional emphasis is placed on new releases and exclusive content.

The digital retailers typically request that the distributors submit their music and metadata (artist, album, track name, art, publisher and related information) in a specific file format and many provide tools that make the job of uploading the information in bulk easier. The digital retailers keep a percentage of each sale and pass the balance back to the distributor. The distributor will pay the appropriate record label for each sale that in turn will pay the artist according to the terms of their recording contract .

Digital sales are currently the biggest growth area in the music industry as sales of the CD format continue to decline. The cost of getting a record to market for digital distribution is much less than through traditional retailers since there is no need to manufacture, warehouse or ship CD’s to digital retailers. However the revenue recognized by distributors, labels and artists on a per release basis is less than a sale of a traditional CD. Fans will often times now only buy the tracks they like on a new release instead of an entire bundled record, thereby reducing the overall revenue on a given release.

There are numerous digital retailers however the more influential ones are iTunes, eMusic, Napster and Real / Rhapsody.

Music videos first became popular with the launch of MTV in August of 1981 and they had an immediate and sustained influence on pop culture. Record labels were not paid for use of their videos and considered them strictly a promotional tool. MTV ultimately moved almost entirely away from the music video format to focus on other programming giving way to the rise of cable stations MTV2 and FUSE , but the influence of the music video waned.

The emergence of the Internet and widespread availability of broadband technology provided new outlets for music videos. AOL and Launchcast were two of the first services to make videos over the Internet available on demand. In 2005 iTunes became the first digital retailer to begin selling music videos as downloads.

Digital recording and PC based editing technology began to become very affordable around the same time that Youtube was launched again giving rise to the importance music videos as a promotional tool for artists and record labels. Music videos, artist interviews, video blogs and footage of live shows now provide an artist several options for creating promotional content and utilizing new channels of distribution that allow them to directly reach their fans. Music fans now regularly create their own videos using music from their favorite artists and upload them to popular video sharing sites. The rise of video sharing websites has opened new debates on the legal use of copyrighted material.

If an artist’s record label pays for the production of a music video the costs are typically a recoupable expense for the record label and charged against the artist’s royalties from sales.

The mobile distribution of music has been one of the fastest growing sectors in the music business and mobile carriers such as Verizon, Sprint and Vodafone are positioning themselves to be important players in the industry. Mobile rintones and ringbacks have become a very popular trend and allow music fans to personalize their phone. Mobile downloads directly to a phone hold the promise of ease and convenience but have seen much more success in Asia and the European Union than in the United States to date.

Ringtones were one of the first paid mobile products to gain wide acceptance and quickly developed into a multi-billion dollar worldwide industry. The first ringtones were simple tones that played the same notes of so a particular song when a user’s mobile phone rang. True tones or actual samples of a song were the next evolution of ringtones and in some cases propelled the revenue generated from the sale of a ringtone ahead of actual CD or single sales. Ringbacks allow the owner of a phone to personalize the ring a caller hears when they call the owner’s phone. Instead of hearing the traditional ringing sound a caller will hear a song selected by the phone’s owner. Owners can customize the ringback so a specific song will play for different callers that are saved on their phone.

Mobile track downloads, ringtones and ringbacks typically cost more (2-3 times in some cases) than a traditional digital track download from a PC. Mobile carriers make purchasing much more convenient than purchasing through a credit card by simply applying the fees for downloads to their customer’s next monthly mobile service bill. Although the gross revenue generated by mobile downloads is much greater than a typical download from a digital retailer an artist might not see a significant increase in their royalties from sales since the mobile carrier, ringtone provider, distributor and record label share in the revenue before the artist gets paid per the terms of their recording contract .

Text messaging continues to grow in popularity as a fast and easy way to communicate. Some artists and record labels are now using text messaging as a promotional tool to reach music fans via promotions and giveaways.

The launch of Napster in 1999 forever changed both the expectations of music fans and the music business as a whole. For the first time music fans could search, access and download a virtually unlimited number of songs in MP3 format directly to their PC, without paying for them. Napster was ultimately shut down through a court order after being sued by several major label artists and the Recording Industry Association of America (RIAA) for copyright infringement but not before millions of music fans experienced the peer-to-peer (P2P) or file sharing.

The success and ultimate demise of Napster lead to new P2P networks being launched to meet the demand for online music downloads. The growing use of P2P networks sparked a heated debate between artists who believed that file sharing provided a tremendous promotional opportunity, especially for lesser-known artists, and those who viewed file sharing as outright theft. The launch of iTunes in early 2001 finally gave music fans a way to legally purchase songs directly from their PC.

The RIAA continued it’s legal action against P2P networks and their individual users. Ultimately several file sharing networks were closed by court order and some including Kazaa, Limewire , iMesh and Bearshare were converted to legal models and some licensed their content from the appropriate distributors and labels.

Today the RIAA continues to wage an ongoing legal battle with file sharing networks that make music available without paying for it and those individuals who use them.

Online radio has grown greatly in popularity as terrestrial radio becomes increasingly uniform. Many radio stations have greatly expanded their listeners by simultaneously broadcasting over the airwaves and the Internet. Some non-commercial radio stations like KEXP, KCRW and WUTK have developed an extensive worldwide audience by broadcasting over the web and become very influential in breaking new artists. Some online radio stations like SomaFM and WOXY provide a wide array of programming that isn’t typically heard through commercial radio stations. Music fans can now enjoy a wide variety of free radio listening options directly from their PC.

Digital technology has provided music fans with online radio services such as  Pandora that allow users to create, personalize and enjoy their own radio stations. Some online radio services like Last.FM and Social.FM combine music discovery and artist recommendations with social networking. Live365 provides an online radio service and has “broadcaster” tools to help users setup their own radio station including professional broadcaster options complete with the appropriate royalty and licensing packages.

Social networking websites typically allow community members to post profiles of themselves that feature pictures, preferences, background and other information with the goal of connecting online with people of similar interests. The launch of Friendster in 2002 and MySpace in 2003 marked the beginning of social networking phenomenon and their community member’s strong influence on popular culture. Community members can post and share accolades for their favorite bands, movies or TV shows and in some cases help build awareness and momentum to influence and expand a fan base.

MySpace added a separate music section to their community that allow artists and bands to have their own MySpace page complete with streaming or downloadable music, tour dates and blogs. MySpace’s music community has developed into one of the best ways for artists to connect with their fans and other artists and is widely considered to be a “must do” within the music business. Many artists are much more likely to update their band’s MySpace page than their own website and some have bypassed developing a separate website altogether and only use MySpace to connect with their fans online.

Artist websites first starting emerging on the Internet in the mid 1990’s and for the first time gave artists the ability to communicate directly with their fans on a worldwide basis. Music fans will often times do a web search when they first hear about an artist they are interested in and having an official artist site makes it easy to find an artist on the web. Fans can access information they are interested in such as the artist’s biography, tour dates, discography, news, engage with other fans on the site forums and follow artist’s blog through RSS feeds.

Artist websites can also be a good source of high margin revenue through selling CD’s, downloads, concert tickets, merchandise and specialty items directly to fans. Designing, building, hosting and managing a website can be overwhelming and expensive for artists. Several companies like Hostbaby and Echomusic now specialize artist website solutions complete with the latest site features and marketing tools.

Many fans have launched websites or online fan clubs dedicated to their favorite artist that can help build up an artist’s online community.

Regularly emailing fans about artist news, tour dates, contests and new releases has proven to be a reliable method of communicating with fans and keeping them up to date on the latest events in an artist’s career. Many artists actively recruit fans to sign up for their email list at live shows and on their websites. Some artists and labels launch promotional contests and giveaways to encourage fans to sign up for an email list giving them the opportunity to add fans to their email list. Record labels often manage the email lists for the artists on the active roster as part of their promotional efforts.

The prevalence of unwanted email or spam has made it more difficult to use email for communicating with fans. Many Internet Service Providers and email systems now block or route emails sent in bulk to a separate junk mail folder in an effort to filter spam out of their users inbox. Many artists and labels have turned to email marketing tools and companies in an effort to successfully deliver email to their fans and manage the new complex details of their email efforts. RSS technology now allows interested fans to sign up to receive artist news and tour updates through their web browser and bypass their congested email inbox altogether.

Blogs or web logs allow an artist to share their thoughts and views on a wide verity of topics directly with their fans. Music fans are often very eager for any insights into artists they enjoy and blogs often create a strong virtual connection between an artist and their fans. RSS technology allows fans to easily subscribe to blogs they are interested in reading on a regular basis.

Creating an online blog is very easy, requires no knowledge of web technology and can be set up using services such as Blogger. The proliferation of online blogs has lead to a large number of music fans who blog about music and the artists they like. Some of these blogs develop large followings and become influential in building grassroots support for certain artists by posting MP3’s of their music or videos they enjoy. The posting of MP3’s on blogs has been controversial within the music business since the songs can often be downloaded without paying for them but the promotional / publicty power of being posted on highly influential music blog is very powerful. Some record labels have their publicity departments send demos and artist information to high profile bloggers in the same way they would service an influential print publication or eZine .

Sites like The Hype Machine aggregate a wide variety of music related blogs and allow users to listen to and purchase songs or artists that are being blogged in the music blog community.