Using the digital content as basically a loss leader for things that can't be distributed digitally, namely live performances and merch that you'd sell at those live performances.
It's artists also have a little success with digital 'busking' - where you intentionally deliver high quality content for free, along with a message that asks people to toss a few bucks your way if they think you're worth it.
The best written one I've ever seen was Benn Jordan's "Hello Downloader", which is included in all of his self-released torrents: http://www.alphabasic.com/Please_read.html