There are no hard and fast rules in this game but there are a few strong ones.
Put your best tune on first and shorten the intro if needs be so that something happens as soon as possible. It's unlikely that anyone with a big stack of tapes to plough through is going to listen to more than the first 20 seconds of each tune, so don't rely on something happening further in than this to sell your music.
If you do have some long tracks that you want to send out promote yourself think about doing an edit. Making a special version with the chorus first could make all the difference.
Three tunes is the absolute maximum. Two is even better. Any more and it just looks like you're indecisive rather than laden with too many tunes to choose the best. If someone's interested, they'll ask you for more. Recording fewer tunes means you can concentrate on getting them just right, too.
Avoid covers. A demo is a thing to sell your playing style and musicianship. Labels will also want to hear your song writing ability so stick to your own material.
When you're thinking about which songs to use, ask yourself if the ones that come over best live are likely to do well in the studio. Sometimes the visual elements and the energy of a live show add a lot and they'll be missed in a studio recording.
"Do some research before you go into the studio. I found that our favourite song was always the one we'd just written. Ask your audience, the people who see you often, which ones are their favourites because they won't be so tied up with your music. Do stuff that's good rather than new."
Paul Burns - Studio 64, Middlesbrough