Adapted from a conversation elsewhere...
Recording contracts with RIAA companies are more or less equivalent to signing away your payday. Many smaller acts, even those who tour frugally, end up in debt because of the contract they signed regarding promotional costs and so on.
The recording/music publishing industry as a whole does a really neat trick of making it look like they are doing the band a favor, making them work their tails off, and still have to pay for the privilege of having a contract.
In geek terms, here's how recording industry works:
