The labels put up the money for the projects, and the risk is terrible. If you are a label almost every one of your products loses a lot of money. In fact all of the money you invest! You hope to make it back on a handful of hit acts. In some sense acts that fail commercially come out on the long end of the stick, in that they burn throughs hundreds of thousands in cash and are not on the hook to pay it back. This is why the classic case of hit acts not making any money exists, the deal is structured way in the labels favor. Without this the labels can't make money.
How you all feel about a company that agregated other companies software products and started giving them away for free? Any objections to that? Would you look down on efforts of developers to get as much as they can for their products?
A vital music culture cant exist without some kind of viable business model. Many attempts have been made to build a business on indie bands (my space , mp3.com) it can't work because indie artists don't have near the resources to create a true modern music product. Not to mention most indie music is not that good, and nobody wants to hear it.