You guys are missing a whole slew of people that the money goes to besides the record companies. You've got publishers, agents, tour managers, equipment rentals, lighting, gas, hotels, airlines, distributors, merchandising, advertising, clothing, makeup, food, wages to truck drivers, onstage mixers, mixers, lighting man, guitar techs, drum techs...
then there's studio costs, microphone rentals...tape costs, mastering...
Basically I can go on for a whole page naming where all the money goes to...
So what happens when you download music is that the next band to come along can't get as much support from their record company because they know they aren't goint to make their money back... they start signing bands that are easier to record with basic simple chords and song structures...in and out of the studio in a week...and easy to send on tour, so the music suffers and the concerts get crappier. Eventually it gets to the point where big 'stadium' bands never happen anymore because no record company would ever front a band money to go into the studio for 5 months and play large venues around the world. So instead ya get rap and dance music which is easy and cheap to produce and pretty people to sing badly and write crappy songs. 10 years from now you'll have a whole collection of amazing free music from the 70's to the 90's that was paid for by the record companies and the fans..and the rest of your collection will consist of garage bands and internet musicians making inferior music because they can't compete with what the record industry used to produce.
The dream of being signed to a record label just on the strength of a demo tape is gone already...you have to have a fan base and demonstratable sales. Record companies don't offer development deals anymore.
Instead of signing 15 bands to their roster, they only sign 4 and can really only afford to fully promote 2 of them.
Then the A&R guy goes into a local bar and hears something like this and decides to pass on the band because the record company can't afford anymore bands this year.
