Kylotan
 My guess is that sadly there isn't much of a demand for music-specific e-commerce sites because music sales are dropping. New technology tends to follow the rising star, not the falling one.

I agree, The market for hard copy CD's is just about as dead as it will ever be. It might retun in the same way Vinyl is returning but don't count on it any day (decade) soon.
 
iTunes rules the music market.
 
Downloads of mp3. But how will people find you..
 
The best market for CD's will remain off the stage sales at live gigs.
Any musician/ band who are not out there playing live stand very little chance of anyone noticing their music.
Just browse Reverbnation/ Sound cloud/Sound CLick and you'll find 1,000's of unnoticed original recordings. It's sad as there is sometimes some real good stuff happening there. But I think only other musicians go to these sites. The public? It has to be an app on their cell phone or they aren't listening.
 
Some very good sudjestions above. Wordpress is worth looking into for sure.

CDBaby sucks. I could tell you a few horror stories...

Templatemonster.com has thousands of templates under $100. They will also customize them, but can also have another modify....

Custom work can be contracted on elance.com (typically done by someone in India very cheaply). A friend had their company website built <$300 from scratch that way. As with all contracting, be very specific about what you want.

For hosting I use StartLogic.com They have added a lot of support services over the years and have unlimited bandwidth (unless you abuse it). Not sure if you need this, but threw it out anyway.

CakeAlexS
CDBaby sucks. I could tell you a few horror stories...

I've not had a problem with CDBaby.  Although I haven't had any dealings with them since the original owner sold the company. 

Konrad, I've a web developer who works with a lot of small businesses within the budget you're looking at. Would love to do a music related site and help a fellow musician out. If you're interested in discussing this, let me know how I can contact you...I'd suggest a PM but I can't send them. Longtime lurker, don't post much.
 
Mark
 

konradh
and keep records so I can be sure I ship to everyone who buys and so I have the mailing list info later.
 

1) Use PayPal
It's no more expensive that a Merchant Account for Credit Cards.
PayPal keeps records for you in that they send you an email for every thing that happens.
After that you need the discover a solution to create a database of customers contact information.
Excel would work.
I use Act! originally by symantic and I'm still using an old OLD version and it's great.
 
Streaming audio with a "Buy" button ...
This player works great for that. Here's the player and the Buy button with a demo page that opens when you click it. Of course it could open in a new tab, or better yet a frame so that the music keeps playing. Both are easy fixes. http://www.sightsea.com/music/sotd/trudy_world.html

Network Solutions ??? ehhhh ... if you're paying more than $19.xx a month then I'd say get a better host.
webmasters.com is great ... totally unlimited upload space and 24/7 phone support.

Streaming video might be most easily done by embedding youtube or Vimeo videos into the page like so:
http://www.sightsea.com/player.html

For online shops that don't sell too much I have to agree that you can't beat Paypal and when I'm buying online it's my preferred method of payment.  I've been using it on the Field Records site for year with a number of iterations of the site including Wordpress, Joomla and OpenCart. At the moment I'm rebuilding the site in Drupal with the Commerce Kickstarted module because it gives me the most flexibility on how to build the site without having to code everything.  In the past I have worked on big online shops written in a bespoke .Net platform for VisitBritain and RAC so I have lots of experience of creating sites to sell products.

I would like to hear more about these CDbaby horror stories and/or degradation of service. They were kind of my shining light at the end of the tunnel in regards to how to eventually distribute my stuff independently in a cost effective manner. If they are going down the pooper or there are things I need to watch out for I would like to know. My needs and expectations are rather simple so what might be a problem for some may not necessarily affect me or be as problematic.
 
Cheers.
 
Edit: And this is particularly important now that I think about it because I recently recommended them to someone to pass along to some of the underground and "unsignable" acts they deal with.

Thanks.  I know how to insert the PayPal button into HTML.  The problem is that I don't have time to layout the site, write the HTML, optimize for different platforms, insert the shopping cart, upload to my provider, ensure I am getting records of purchases, ensure everything is integrated, point all the domain names, set-up email, etc.  Someone who does this for a living could do it easily.
 
Bandcamp is OK as the sell page within a larger site; but there again, I have to build the main site, link to Bandcamp (that part is easy), ensure everything works together, ensure the Bandcamp page looks like my other pages, etc. 
 
This is a job for a specialist; not for someone trying to do it in-between 50 other things.
 
In response to comments above, downloads sell more than physical CDs, but many people want CDs and merchandise.  Also, you need CDs for events.  If you've never done this before, note that most aggregators require you to sell on Amazon and to provide a CD with a universally recognized bar code, which is why I belong to GS-1 and use them to produce bar codes.
 
BTW, I know how to sell on iTunes via an aggregator, but, while you need to exist on iTunes for credibility and in case someone looks for you there, it is not profitable; and without a huge advertising budget, you will be lost there.
 
PS I used to be an online movie reviewer as a sideline, and I built my site in WordPress.  I heavily customized the code and the site looked great; but it did not sell anything and it took a huge amount of time to maintain. 

I feel your pain.
 
<forum url filter engaged>
 
     nimbit dot com has been around for a while and may be a consideration although I cannot speak from personal experience. 
 
<end forum url filter> 
 
Enlisting local resources or some of the offers in this post might work as well, but obviously require more of a time commitment from your side to get what you want.
 
I ended up rolling my own as part of optimizing the experience for the target demographic.