Serious question. I know the issue is ripe for one-liners, etc :P
Initially, they existed for marketing and demo purposes - labels had access to stores and shelf-space, and the funds to front the money for things like LP, tape and CD costs, and then recover those on the backend.
However, today, a band simply needs to stick a song on the web, and if it's good, everyone learns about it. There's no licencing issues, no legal things about it can play here, can't play there ... If it's good, people download it.
So, the purpose of the labels seems to have been largely eliminated.
Obviously, bands can't make money if people are downloading their songs for free, so some sort of money-generating system is still required. This could be through music downloads (itunes, spotify, etc), or through concerts.
Artists do still need a vehicle for organizing things like tours and concerts, but that requires a MUCH smaller infrastructure. also, tours pay for themselves (ie, the managers are paid from what the tour brings in).
Can anyone thing of a reason why labels as they exist now are actually needed?
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