It sounds like a losing proposition, but it isn't, necessarily. A record label can hook someone talented up with word-class producers, session musicians and recording facilities, as well as setting up collaborations with established artists.
Some people can produce a great song in their home studio, but many can't. Mariah Carey has a superb voice, for example, but as far as I know she doesn't play any instruments and her interest in technology is limited to playing video games. A 360 degree deal can be a good option for a performer armed with a decent manager. The teevee and the music industry likes to lump everyone together as 'artists' but the reality is that many excellent performers aren't especially creative and just happen to be lucky enough to do something well, without necessarily being driven to explore any new musical frontiers. for this kind a of person, a managed career makes vastly more financial sense because they don't have a big prospect of making money from licensing their own tunes.
I imagine the relationship between the artist, and its contractor to be similar of small groups of hackers, and their investors. At any given time a record label has several "good enough" artists in their incomming tunnel to be able to make them sign just about anything.
