the economics laid out with the idea of artists posting the songs on their own websites is misleading. sure, that way they might take in triple per song sold, but the band would now be responsible for all kinds of costs - they'd have to pay for their own recording, marketing, promotion, publicity, advedrtsing, etc. this could easily eat up the extra money, and if the band isn't good at it, could guarantee that in actuality the band will make a lot less money, and a lot fewer fans in the meantime. fewer fans mean less ticket sales and less merchandise sales, two other ways bands make money. most bands don't want the full responsibility for their own promotion, they'd rather concentrate on songwriting, recording, and performing, and furthermore most bands believe that a company who specializes in these things is liable to do a better job - they call this kind of specialty company that invests in sound recordings and then specializes in marketing and promoting these recordings a "record label." most artists have good reason to want a partnership with one of these.

The bands already pay for their own marketing, promotion, publicity, advertising, etc.

Some artists do make money at much smaller volumes then they would sell with a label, and there is no guarantee that a major label will ensure large scale success or profitability for the band. Music is the Gold Rush of the last half century and the labels are the general stores that are getting rich.

This is actually the discussion that let me to Eric's blog and eventually to blogcritics. The economic model of the labels isn't what it once was. The barriers to entry are way down (cost, expertise, etc), the distribution channel is being threatened by the Internet, and marketing is the only remaining stronghold of the traditional labels.

The value proposition to a band is way down, but the industry doesn't have a new model in place. I think it's reaching a change-or-die crisis, but I'm not sure when it'll happen.

Michael (#2), yes, the artists pay, but they pay out of an advance, not out of pocket. There is a big difference, which is why the labels are still the Holy Grail for almost all artists, and why even the big artists unhappy with their labels (prince) eventually sign with another big label. Even with huge name recognition and a monstrous fan base, the labels still provide the "best" way for artists to make their money.

But as I pointed out in the article, they're not the only way to go.