Gonna pull the lid off this box again, because I love the topic.
"Back in the day" you had to slip a demo to an A&R guy, get him to come down the club to see you perform and hopefully if you caught him in the right mood he'd submit your stuff for consideration, or if you were really lucky the guy would fall in love with your band and you'd become his pet project. At the very least you end up with a production deal that would get you in a real recording studio where you could do a real demo.
For us, in '84, we got two sorts of answers from this -
Christian: Wow, that really, really heavy...we don't do that sorta thing.
Secular: Guys, you've got something here. If we could just take care of the Jesus thing, you don't have to compromise your beliefs, just pick another topic...
So we took a third route that proved useful to a lot of Christian bands...turn that "Demo" into a "self-produced" EP and sell it via fanzines and appearances until someone recognizes that there is a market and money to be made for the people with enough courage to take you to "the next level".
That was then, this is now.
What record labels do is broker deals.
They "loan" artists the money to hire the various parts of the machine necessary to get the music in front of a broader audience (it is quite incestuous, most of these resources for hire are either owned by the label or working on kick-back…they loan you the money to hire themselves).
But many of the components of the machine have now become obsolete, maybe even the recording?
Today, all the music we listen to comes to us in a format that was determined to be "good enough" in the early '80's (late '70's?).
I remember as a young "hi-fi" salesman the Pioneer rep came in to treat the entire staff to a pizza dinner and while we were eating and gabbing he threw out these shiny silver disks.
He let us play with them over the course of dinner and then asked for them back. Then he wrote on them and cleaned them off and generally tried to get the point across that these things were in no way fragile and popped them into his new magic box called a compact disc player and out came beautiful music without vinyl pops or even tape hiss.
Now back in '81 vinyl was king and good audiophiles knew to never even touch the face of a record for fear of destroying the media.
Within just a few short years CD becomes ubiquitous, a few more years kids are asking, "...what's a record?" ...a few more years and vinyl is an instrument to be played by DJ's rather than a medium for complete songs and the only turntable an entire generation has ever seen are the ones played on stage.
What I'm getting at is that a lot has changed in the past 30 years or so and the level of technology required to fit something of equal quality down that pipe is now accessible to the general public.
Not only that, but with the way in which we listen to music today recorded music has become more about the automation of, rather than the quality of the mix.
If the point behind recorded music is to get your songs heard by the largest possible audience, then one might be able to make the argument that the days of big record label are over. What the artist needs now is merely a marketing firm.