OK, I am going to dip my toes in this hot water.
I see it as a gamble. The Record company hands over 200k with no guarantee they will make a penny.
You yourself say that 6-7 out of 10 bands make a loss/break even but they still get their 200k advance, correct?
You make it sound like the artists get nothing for the first 100k sales. BUT they got their advance.
If they chose to see this as the first of many payments and blow it all on blow and hookers (or cribs) then thats their fault. If the album tanks, then its theirs and no one elses fault.
I agree the unscrupulous contracts is unecthical and should not have a place in any industry.
But to say they are hard done by, seems a little rich, 200k is a lot of cash for a lot of people, even split amongst a band. Considering it takes maybe 3-4 months to make an album.
The allofmp3 issue; I would argue the RIAA or whoever should, and probably are, more interested in sites that pay zero royalties. Deal with lesser contributors later IF there is any case.