(FORTUNE Small Business) – The String Cheese incident is a Boulder-based band known for its extended jazzy improvisations—but there's nothing impulsive about its moneymaking methods. During 11 years of nonstop touring, the five-member group has developed a devoted following—while also, behind the scenes, building a multimillion-dollar business with 45 employees. Between 1999 and 2003, while much of the music industry struggled with digital piracy and suffered declining sales, String Cheese revenues grew to $14.5 million a year from about $2 million. The band's secret: uniquely exploiting the Internet, even selling downloads of live concerts. "Our goal from the beginning has been to control our own destiny," says bassist Keith Moseley, "and to maintain artistic control."

From its early days performing in Colorado's resort towns, the String Cheese Incident was entrepreneurial. "We looked at this from a serious business perspective from the beginning," says Moseley, 39. On the road, band members would grill successful musicians about how they managed their careers, from record deals to tour operations. They were not impressed by the answers they received. "The music industry's business model was falling apart," says band manager Jeremy Stein, 33. "We wanted a new model for ourselves."

For that model, they borrowed from the Grateful Dead, which they knew had built brand loyalty by serving its die-hard customers—keeping ticket prices low and even allowing them to tape performances (for another band that followed that example, see "How Panic Spreads" on fsb.com). String Cheese saw the chance to build a similarly customer-friendly business—with the Internet as its backbone.

The band depends on live shows for 50% of its revenue (for a more detailed financial breakdown, see box). After settling a lawsuit against Ticketmaster in May, String Cheese secured the right to sell online between 10% and 100% of the tickets for its various shows. Fans can save around 10% on ticket packages by booking through String Cheese and avoiding Ticketmaster's fees. With ticketing in place, the band took what it thought of as the next logical step: setting up a travel agency, which it co-owns with Madison House, a music-management company. The business helps fans plan trips on the road—for String Cheese shows and the gigs of 20 other like-minded bands. "It's all born from the idea of putting ourselves in our fans' shoes and doing what we can to make their experiences more comfortable," says Moseley.

Music sales, more than any other area, are benefiting from the online push. Since the band launched its own label, SCI Records, in 1998, roughly 20% of its total CD sales have come via the Internet. Such direct sales are about 20% more profitable for the band than selling through retail shelves. Inspired by the rising interest in digital music, the band started selling downloads of its live concerts this year through its website (sciontheroad.com) for about $10 a show; though there's no copy protection, buyers get a password that expires after each download. The pay-to-play numbers are relatively small —roughly 300 downloads of each new concert have been sold—but the band has no plans to buckle under to fears of piracy. "We're going to continue to make music available, even if that means giving it away," says Moseley. "The more people are exposed to the music, the better it is for the band."

The whizzes behind the String Cheese Incident aren't just experimental when it comes to their music. The five-member band has also explored money-making opportunities beyond its lucrative live shows—including charging $10 for downloads of its concerts this year. Here is a breakdown of the group's 2003 revenues.