With the Internet now being a viable source for obtaining music, netlabels have emerged. Depending on the ideals of the net label, music files from the artists may be downloaded free of charge or for a fee that is paid via Paypal or an online payment system. Some of these labels also offer hard copy CDs in addition to direct download. Most net labels acknowledge the Creative Commons licensing system thus reserving certain rights for the artist. Digital Labels are the latest version of a 'net' label. Whereas 'net' labels were started as a free site or just a hobby point, digital labels seek to give the major record industry a real run for their money.

A netlabel, also called online label, web label or MP3 label, distributes its music in digital audio formats (mainly MP3 or Ogg) online. Netlabels often work like traditional record labels to produce and promote music projects (such as albums or compilations). Most employ guerrilla marketing to promote their work. Few netlabels earn money for participants.

The primary difference between netlabels and record labels is that netlabels emphasize free downloads, as opposed to physical publishing (CD, vinyl or DVD). The music, sometimes also called netaudio, is often released under licenses that encourage sharing, such as the Creative Commons Licenses. Artists typically retain the copyright.