I agree with almost everything you said... until you got to the end when you said there's "literally no reason" for any band to need a record label these days.
While they may not need a label in the traditional sense, they DO need some form of support to get their own asses out there to venues to play. Even IF they know where all the available places are to play, they still need the resources to get there, such as gas costs, food costs, and if they value hygiene at all a place to sleep & shower. And even though MP3's are overtaking CD's, people STILL buy CD's just as they still buy vinyl records.
This is why it is so difficult for bands starting out to say no to labels. It's not JUST the music. It's all the practical applications of putting the band out there. Besides, it's a little uninformed to say that a band doesn't need a record label at all. FYI, not every record label is a major record label. The vast majority aren't. And even though there are indie labels out there who operate with a major label mentality, there also record labels out there who offer artists more artistic control over their music. They just offer a more structured way for an artist to promote themselves.
Ok... so if it was supposedly easier to pirate music when people used cassettes than it is now (btw, ISP's generally don't police their connections for p2p usage) then were is the loss of music sales coming from?
In any other business there are better defined regulations against this type of highway robbery. On top of that, many bands/artists/singers feel pressured to sign those types of contracts because of the idea that they may not get another shot at a record deal. Some just aren't as concerned with the business side of things as they are with the music. Many musicians play music for the love of playing music and any opportunity for them to do that is a good one in their eyes. And there are also always plenty of sell-outs ready to take your place if you turn down the deal.
So while many of those people maybe have been ignorant in signing those contracts, that doesn't excuse the actions of these labels nor should it absolve them of responsibility to play more fairly with their artists.