Come on. I have a different viewpoint. I happen to think it is completely "morally defensible" thank you.
---
One of my best mates at University (in Sydney) graduated in Law and set up business helping unsigned Bands on equitable terms for low fees.
Unfortunately for him, there were not enough bands who sought his low-cost, equitable contracts. They preferred the expensive, "morally-indefensible" contracts with terrible terms.
My friend is now a primrary school-teacher and enjoying life a lot more.
What do you have to say about that? Or will you just say I'm "missing something"? or "you don't get it"
What they are missing, however; is the payment from the band. Presumably they agreed to pay back the full amount out of their pockets in the original contract. And where does their personal income flow from? Royalties. This is how I see the numbers if they were to pay back the loan:
Gross Profit: $4,000,000 TMJ Share: 400,000 Warner Share: 3,600,000
TMJ Profit: $0 Warner Profit: $4,000,000
Warner Bros. will essentially make a 10x ROI before TMJ earns a dime. Just because bands willingly sign these contracts does not make them morally defensible. The record labels are clearly making a killing off artists who simply break-even, and I think people are finally starting to realize this...perhaps your friend's business was just ahead of its time.