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From what I understand, having a contract with a record label usually gets you certain things. The music business can be very expensive, and musicians are usually broke, so the record company fronts you the cash (the "advance") to do some of the expensive things, like record an album, pay the independent promoters to get on the radio, pay for advertising and promotion, and that sort of stuff. That money comes with strings attached, and you have to pay it back. If you don't sell enough records as a result of all the money you spend, you wind up in the hole to a company that doesn't like you.
There are a lot of success stories and a lot of horror stories about making deals with giant companies. It works out for some people, and it screws other people over.
Steve Albini wrote up a neat article that breaks down the numbers. It's called The Problem with Music. |