Time for a quick pop quiz. Do you remember the record company of the most recent music you bought or downloaded? I bet not. I sure don't. Record companies are mere shadows of what they once were. They no longer matter. Some folks revel in their demise. I'm ambivalent. On the one hand, very few large record labels added value to the music they sold. On the other hand some magical combinations of producer, engineer, and artist could only have happened in the old label/AR/studio system.
I had dinner with Pat Leonard courtesy of DTS recently. We had a discussion about home studios, and self-production. We had diametrically opposed opinions on whether the technological advancements that made it so almost anybody can afford to assemble a top-flight studio were positive for the art of music. One of a record companies' primary reasons to exist was because their deep pockets could afford to buy/rent top studios. Now that kind of money isn't needed to make an album. An artist can produce a recording with such minimal outlay of cash that they can afford to self-produce their recordings. And that is a problem because just as a lawyer who represents himself has a fool for a client, most musicians who self-produce an album lack the perspective needed to create optimum recordings. Only an experienced producer can bring a seasoned musical perspective to a recording project. Pat Leonard was very adamant about this last point.
Record companies still make CDs, but anyone can have CD's made. Distribution? Amazon and iTunes store are all you need to get your album "out there." So what do record companies bring to the table? Promotion. Take labels such as Sugarhill or Compass Records: they specialize in particular genres so their PR departments know how to make sure a new CD gets into the hands of reviewers and radio stations.
But even if you self-produce, you can hire an independent PR firm. The best ones concentrate on particular types of music. Kissy Black with LotosNile and Mark Pucci both handle primarily Americana and roots music. Carol Kaye (who was one of the pioneering woman bass players in the 60's and 70's) deals primarily re-releases of older rock material. So if an artist looks around they can find plenty of first-class promo groups to work with them.
So what are record labels good for? Not much...