Why Do Musicians Still Need Record Companies?

Raise money to pay for the recording. Hook up with a sympathetic producer. Eat and have a roof over head during recording. Promote record release. Distribute recording to industry influentials and actually get them to listen. Book tour dates. Arrange travel and lodging. Promote record on AM talk shows/promote record on late night talk shows. Tour. Get song on movie soundtrack. Appear as guest artist on another artist's album. Equipment van stolen, replace all instruments. Become the opening act for mega-star's Australian tour. Get replacement drummer (passport problems). Live the dream for three weeks. Get back home and continue touring, but now you realize how crappy your tour bus really is. Feel good as you hear one of your songs over the radio at a convenience store. Finish tour and have accountant tell you you're $65,000 in debt. Start writing songs for next album...

Digital distribution is vastly cheaper than sending out physical media (CD, vinyl or tape) and should substantially cut record company's cost and increase profits. It's similar to the digital distribution of movies to cinemas.

Record labels have and will continue to evolve if they want to survive. To say that they are not necessary is a myth. Do we still need book publishers since everybody can self publish? Do we need TV stations when you can stream content? Why have financial advisors when everyone can trade on E-trade? Why have police departments when everyone can openly carry a gun?