What exactly is a demo?

Unless you want to do it just for fun and, a demo is basically a BUSINESS OPPORTUNITY!!! This opportunity is not only yours, it is also the business opportunity of the other part (A&R people, publishers, agents, managers, record labels). Think of the other side that you want to reach, and how it sees the business opportunity in dealing with you! 

So, make the life of the person receiving your demo easy! The demo (be it CD or any other format that can be sent over internet) is basically the tool to facilitate the opening of a business, with the purpose of making money, because selling music is a business! If you need work, you have to have it!    

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