Via the Bandcamp blog, I just rediscovered PayPal’s micropayment option

When I first wrote about Bandcamp, one of my few qualifications was that the PayPal transaction costs severely limited the pricing options for single-song downloads. While a self-released artist selling a 99-cent download via Bandcamp (or the artist’s own website) would net, after the PayPal fees, about as much as a 99-cent download sold at iTunes, the 30-cent portion of the fee meant that pricing a download below 99 cents meant earning less on direct sale. And you could forget about direct sales of tracks at eMusic prices, as a 25-cent download wouldn’t even cover the PayPal fees.

But with the micropayment option, the self-released artists would net 89 cents on a 99-cent download. Or, you could undercut iTunes by 20 cents and still receive around 70 cents a track.

The micropayment fees also allows for some extremely aggressive pricing: If an artist wants to offer eMusic-equivalent prices for direct downloads, a 25-cent track will still net almost 19 cents. That’s much less than what an iTunes sale puts in the pocket of a self-released artist, though my guess is that it’s more than most major-label artists receive for songs sold on iTunes.

For a $9.99 album, the PayPal micropayment fees would reduce the net to $9.44, as opposed to $9.40 with the standard PayPal fees, making it something of a wash. Once the selling price reaches $11.90, the micropayment option becomes more expensive to the seller. So while it’s perfect for digital tracks and albums, if you’re selling $15 t-shirts you’d probably want to opt — as suggested by the Bandcamp blog post — to use a separate PayPal account for those sales.

via digital audio insider