There are a few online music distribution companies out there, each professing it’s service and it’s model to be the cheapest and the best: what you need to do is figure out which of them is going to be the best for you. How many tracks can you reasonably expect to sell? What can you afford to outlay? Figure those things out and then decide which deal is best for you.
The basic models of distributor are:
Subscription – Keep your royalties, but pay a maintenance or subscription fee to keep your music online. Good if you’re going to be selling a lot of tracks. (CD Baby operate this model, also charging an upload fee)
Percentage – Don’t pay any fees, but pay for the service with a percentage of the royalties from sales (this is the model we use at RouteNote). Good if you don’t want to risk losing any money, or your sales aren’t likely to be massive just yet.
Upload fee – A flat fee for uploading your music, and then keep your royalties. Again, good if you’re hoping to sell a lot of tracks, but there’s no incentive for the distributor to promote your music, as they’ve already made their money, and can’t profit further from helping you out. (EmuBands do this)
Managed – The next best thing to being signed to a record label, some digital distribution companies will take labels and larger bands on, and for a larger cut of the royalties from sales, will make more of an effort to promote their music, or offer other benefits to their partners. It’s up to you to decide whether their efforts are likely to be worth the cut. (The Orchard operate this model)
Controlling your own output means that you don’t have to go with the same partner for multiple releases, you can pick and choose different partners for different releases. If you find that the music distribution deal you’re on with one company is working better for one release than another, you can change partners for the one that’s losing out.
Also consider that digital music sales increase your presence in the marketplace, and a record label will look at the level of your sales of both physical and digital music, and of your live gig audiences when they’re looking at signing you (if that’s what you’re after).