A primer on the subject from The Atlantic:
Talking about how he makes money, the independent musician Jonathan Coulton has compared his business to a “special engineered cow who eats music and poops money.” Coulton doesn’t have any idea what happens inside the cow’s gut, but that’s okay. Money comes out the business end.
And that’s how it is for most online musicians, or artists generally, in today’s digital economy. If they’re lucky enough to make money, they may not heavily analyze the particulars. They feed the cow music, and out comes the money.
So it’s rare that we, as consumers or fans or fellow artists, get the ability to see exactly how successful makers support themselves: to look at the source of their earnings, and to glance up into the cow’s — well, I’ll cut this metaphor now.