I listen to Kannada music a lot. I mostly end up buying CDs and then rip them so I can use it on my ipod or Nexus1. Its such a waste of resources. CD (eWaste) plus my time and money. Last few months I was searching for a good Kannada online music store where I could buy the mp3s directly. This way I can buy only those songs I like than the whole album. Even though my search was not completely successful, here are a few I found for your reference. As far as I know I have listed only legal sites here.
I am sure, I have missed many others. Let me know.