i think you should do a cost analysis from a user standpoint of competing services. once a "fair" or "market" rate has been established, i'd then adjust your price significantly below that (of course you can't forget to maintain sufficient cash flow to stay afloat). then market the hell out of your service (make sure your service is on par with that of your competition). once you've established yourself as a leading marketplace for online music, develop a significant competitive edge and you'll be free to adjust your pricing structures upwards, as long as you monitor your attrition rates to make sure the market believes your tax increases to be "reasonable". keep in mind your competitive edge could be something as simple as "well, we've made ourselves the largest marketplace for online music". etc, etc, hire me as a consultant and give me an equity stake. etc, etc.
"So far we've agreed that we should distribute 70% of the revenue generated from song sales to artists.
I don't think this is enough though -- I think we should distribute some specific percentage of our total revenue (including song sale revenues and advertising revenues)"
>not important
"Anyways, it's difficult to find a balance between how much revenue we're pulling in and how much we're willing to pay out."
>this is the real issue. forget your first question.