Lyric discussion by venus in mohair 

Cover art for Mermaid lyrics by Regina Spektor

FWIW, the idea of the mermaid selling her voice for a pair of bleeding feet is from "The Little Sea-Maid" by Hans Christian Andersen. The little sea-maid is in love with the prince and wants to be human, so she sells her voice (just like the Disney version) and receives a pair of feet that bleed when she walks or dances (not quite like the Disney version =P).

As for the meaning of the song, I think adkonz is dead on.