How can musicians and artists collect real money in an "electronic tip jar"?

If you're a musician and you'd like fans to be able to contribute money to you for your MP3s, how do you make that possible?

On this page, we will review the ways artists and musicians can receive payment directly online for their work. Please let us know if we've missed any new developments. At some point this will become an interactive review section where people can relate their own impressions and experiences.

PayPal

One option is PayPal (http://www.paypal.com), an email-based system recently acquired by X.com. Here's how it works: the fan goes to the PayPal website and signs up for an account. The fan can then send an email to the musician with a few dollars - or any amount from one cent up - attached (which will be billed to the fan's credit card, or deducted from a bank account or an amount prepaid by check), and when the musician receives the email, s/he will then be able to "withdraw" the money via a check from PayPal or direct deposit to a bank account.

There are currently no fees for this service.

So to create your "tip jar" with PayPal, here's what you need to do:

1. Visit the PayPal site and sign up for a free account. All you need is an email address and a street address. (There's a special limited-time bargain: If you sign up from the TipJar site listed below, you will receive a $10 "signing bonus" instead of the $5 offered by PayPal.)

2. On your website, let your fans know how easy it is to contribute a few bucks to your tip jar:

   1. sign up for an account,

   2. then log in at the PayPal site, fill in the amount and your email address on the "send money" page, and click! - payment has been made.

3. When you receive an email payment from PayPal, you may have it mailed to you as a check or deposited directly to your bank account.

TipJar.com

TipJar (www.tipjar.com), following the lead of (now-defunct) First Virtual, pioneered an email-based payment model in 1996 that is very similar to what was recently implemented by PayPal (and if you sign up for PayPal via the TipJar home page, you will receive $5 from PayPal, plus the $5 referral fee PayPal gives to the TipJar proprietor).

Under the TipJar system, the fan just clicks on a button or link to send money by an email to the musician. The fan is then prompted for payment information (or a TipJar nickname for registered users), and when the fan replies to a verification email, payment is sent to the musician. When the musician receives the email, s/he will then be able to "withdraw" the money via a check from TipJar.

See http://www.tipjar.com/content/seanbrantley/vgd/ for an example.

Email transactions are free. There are small service charges for requesting/processing checks of under $50, or requesting/processing checks more than once every four weeks. TipJar processes PayPal payments at no charge.

Security is ensured via emailed verification codes. See the About TipJar page for further details.

So to create your online tip jar with TipJar.com, here's all you need to do:

1. Visit the TipJar site and sign up for a free account. All you need is an email address and a street address.

2. Place a TipJar button or link on your website for fans to click on.

3. When you receive an email payment from TipJar, you may have it mailed to you as a check.

e-gold.com

E-gold (www.e-gold.com) stores the entire 'e-metals' (gold, silver, platinum, and palladium) account you purchase (by check, wire transfer, or money order) and allows you to conduct electronic transactions of all sizes with other account holders. E-gold charges small fees for storage of metals and for transactions.

Transactions are conducted via secure servers, and accounts are backed 100% by real precious metals stored in the Bank of Nova Scotia, Toronto, ON, Canada.

See http://www.e-gold.com/samplestore/samplestore.html for an example of how e-gold accountholders can sell music or artwork (any web-friendly file) on the Internet, using e-gold's shopping cart interface. The buyer enters account information on the e-gold payment order form, and once payment is verified, the buyer is redirected (via client-side JavaScript) to a "hidden" directory to receive the file. The buyer, of course, must have JavaScript enabled for this method to work.

A sufficiently motivated and programming-savvy person could most likely find her/his way to the file without paying, so if the price of the music or artwork exceeds the difficulty of eluding the JavaScript, the content is open to possible theft.

Fairtunes

Fairtunes - www.fairtunes.com - is a free, simple, and easy-to-use service that allows musicians to receive voluntary contributions or payments from their fans.

Fans simply visit the Fairtunes website (or use the Winamp music player plugin) to search for their favorite artist. They can then type in a message and specify how much they'd like to send. Payments can be made with a credit card, wire transfer, or PayPal (and e-gold payments will soon be accepted). Fairtunes then either sends a cheque or electronically transfers the money to the artist. Note for credit card users: Fairtunes deducts the credit card processing fee charged by Visa from your contribution to the artist.

To ensure your fans can send you money with Fairtunes,

1. Check to see if you're in the Fairtunes database. Most artists are, but if you're not, follow the instructions on the site to set yourself up: http://www.fairtunes.com/addartist.jsp.

2. Tell your fans about it. You can do this by either providing a simple link to Fairtunes or a more complex one. Follow the instructions at http://www.fairtunes.com/linkto.jsp.

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