There is an old adage: It takes money to make money. Each one of these package types has a substantial cost associated with its production, and there is no guarantee that simply because you make an album or video people will buy it. To add to the risk, there are also the costs associated with making these products available to as many people as possible and selling it in a way that will make them want to buy it.
The risks associated with the music business boil down to four areas:
- Production - The process of recording, shooting or otherwise capturing the art form on some media
- Manufacturing - The actual fabrication of the physical CD or DVD and packaging
- Distribution - Getting the CD on the shelves of every possible record store, Web site and sales outlet
- Marketing - The flashier side of the business that involves the "look" and "feel" of the product -- how it's sold, how it's portrayed, and most important, how many eyes see that the product is available
All of these business elements have something in common: They are very expensive. Enter the record company. The reason the record contract is the brass ring of "making it" is because it means, in many cases, that a well-funded, well-connected company will now be handling these very important aspects of the business. The record company will pay to have the album recorded and manufactured. The record company will use its distribution muscle to put the product in stores. The record company will have its marketing people spin their magic to make sure everyone knows about the product. But it all comes at a cost, and anybody taking the risk of fronting the cash for manufacturing, distribution, and marketing is going to want some say in how the product is made.