Basics for a good demo

It depends!

Ain't it always that way?

To answer your question with general thoughts...

1) unless you are trying to show off your engineering chops I don't think it is necessary to have a demo reel mastered. While most of civilization seems to have lost the necessary imagination required to listen to a demo, there is still some level of understanding amongst some folks that a demo is a demo.
2) Figure out what you are trying to sell - songs, performances, engineering, or whatever, and make that the focus.
3) Most demo reels (at least the old ones) were short, and assembled snippets of the three or four pieces (or more if you are trying to show off your composition or production chops). However, I always include the full pieces after the demo track.
4) FOCUS! You will have limited time to get someone's attention!

I find the demo reel to be one of the most difficult tasks in music production!

Hi Bill & Albert, thanks for the input. I'm making the demo primarily for booking gigs and radio stations for the band here around Portland and Seattle. The songs I am considering are on our soundclick:
 
Am Ba Vlan Dance
http://soundclick.com/share?songid=8024751
 
Rivers of Babylon
http://soundclick.com/share?songid=7633045
 
One Thing I Ask
http://soundclick.com/share?songid=6838520
 
There is one more song we are finishing that is not yet posted. There will be three originals and one cover as stated before. I will probably have it produced by discmakers with a digipak or slim case, it is very reasonable for 100 copies.
Thanks again. Karalie & IJenNeh

So, Karalie, the obvious answer, or at least the obvious answer to me would be to either cut a cd of the same type of snippets they use on the cdbaby site, thirty second tastes of each song, or take/mail a full cd. If you are going in person, take a full cd, have a demo "snippet" cd to leave behind, have a good business card, put together a tri-fold leaflet that has all of the important information in it, glossy or semi glossy paper, you can create a professional looking piece with software you can down load for free (I use this in the real estate business to highlight a special property). If it is a mail out, have an introduction letter, business card and snippet cd in a bubble pack. Spend some time with the intro letter and/or leaflet, shoot for professional appearance, make sure all the important information, including websites and contact info is there, spell check several times and have a third of fourth person check your grammar and spelling.

If you have someone else write and print your letters and other documents, spell and grammar check them. I see adds on the internet, adds in the paper, adds posted in store windows and in magazines, and the amount of misspelled words and incomplete sentences is astounding. It can kill a deal, and you would never know, 'cause they will not take the time to call you and tell you to correct yourself, but simply toss your material without further consideration.

I have passed on deals, thrown away things without consideration, simply because of the improper use of "there, their, they're", stuff like that.

Later
Albert 

Hi again,
Thanks Dave for the encouraging words.
Albert, thanks for the additional information on the promo pak to leave with the potential gig.
Hey Guitarhacker, I was thinking of not our songs playing on radio but doing live radio. We have had other spots on NPR and VOA and our local KBOO station in Portland. We have one cd out(which we had mastered by someone) with this group and our new cd will feature 15 songs so that is why I was thinking of doing a demo of a few strong songs. Maybe I should get the demo mastered...........................
Thanks, Karalie & IJenNeh